Want to Build Wealth? Buy a Home This Year
Every year, households across the country make the decision to rent for another year or take the leap into homeownership. They look at their earnings and savings and then decide what is financially sensible for them. That equation will most likely take into consideration monthly housing costs, tax advantages, and other incremental expenses. Using these factors, recent studies show that it’s more affordable to own than rent in most of the country.
There is, however, another financial advantage to owning a home that’s often forgotten in the analysis – the wealth built through equity when you own a home.
Odeta Kushi, Deputy Chief Economist for First American, discusses this point in a recent blog post. Here is her explanation:
“Once you include the equity benefit of price appreciation, owning made more financial sense than renting in 48 out of the 50 top markets, with the only exceptions being San Francisco and San Jose, Calif.”
What does the future look like for homeowners regarding equity?
Here are the seven major home price appreciation forecasts for 2021:The National Association of Realtors (NAR) just reported that today, the median-priced home in the country sells for $309,800. If homes appreciate by 5% this year (the average of the forecasts), the homeowner will increase their wealth by $15,490 in 2021 through increased equity.
~Real Advantage Partners team