Homeownership: Building Family Wealth
From KCM Blog
The Joint Center for Housing Studies at Harvard University just released a study, America’s Rental Housing: Meeting Challenges, Building on Opportunities. The study discusses the need for a greater supply of quality rental units in America. We agree. However, there were a few nuggets of information found in the study we want everyone to know.
American’s Belief in Homeownership Has NOT Fundamentally Changed
There seems to be some feeling that homeownership has lost its luster and perhaps is no longer a component of the American Dream. Harvard explains:
- To date, attitudes about owning have become only slightly more negative while attitudes about whether now is a good time to buy are little different than before the housing boom. In the latest Fannie Mae housing survey from October–December 2010, the vast majority of respondents—including renters—continued to believe that homeownership makes more financial sense than renting. In addition, nearly two-thirds of all renters surveyed reported their intention to buy homes in the future.
Homeownership Creates Wealth
Because prices have fallen dramatically in many parts of the country in the last five years, some are too easily dismissing homeownership’s role in building family wealth over the last century. The study explains:
- In addition, renters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.
The recent fall in prices can’t wipe out the 100 year history housing has as a good long-term investment.
The study was promoting the need for the construction of more rental housing for the average American family. However, when it came to a discusion on building wealth, Harvard offered:
- “And for individuals as well as businesses, owning rental properties is an avenue for wealth creation.”
And how do these individuals and businesses create that wealth? Owning the real estate and collecting rent from their tenants to offset the mortgage payments. Build your family’s wealth – not your landlord’s. We believe OWNERSHIP almost always makes the most sense.