Owning a home\u00a0is both a milestone and a foundational step on the path to financial security. One major reason: the\u00a0equity\u00a0you build as a homeowner increases your net worth . With high\u00a0inflation\u00a0right now, the link between owning your home and building your wealth is especially pertinent.<\/p>\n\n\n\n
In an inflationary economy, prices rise across the board. Historically, homeownership is a\u00a0great hedge\u00a0against those rising costs because you can lock in what\u2019s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. Not to mention, as\u00a0home prices\u00a0continue to appreciate, your home\u2019s value will too. That\u2019s why Mark Cussen, Financial Writer at\u00a0Investopedia<\/em>,\u00a0says<\/a>:\u00a0<\/em><\/p>\n\n\n\n \u201c<\/em>Real estate is one of the time-honored inflation hedges.<\/em><\/strong> It\u2019s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.\u201d<\/em><\/p><\/blockquote>\n\n\n\n A report<\/a> from the National Association of Realtors <\/em>(NAR) details several homeownership trends, including a significant gap in net worth between homeowners and renters. <\/em>It finds:<\/p>\n\n\n\n \u201c. . . the net worth of a homeowner was about $300,000 while that of a renter\u2019s was $8,000 in 2021.\u201d<\/strong><\/em><\/p><\/blockquote>\n\n\n\n To put that into perspective, the average homeowner\u2019s net worth is roughly 40 times that of a renter\u2019s<\/strong>. This difference illustrates how owning a home is a foundational step in achieving financial success.<\/p>\n\n\n\n The net worth gap between owners and renters exists in large part because homeowners build equity. When you own a home, your equity grows as your home\u00a0appreciates in value\u00a0and you make your mortgage payments each month. As a\u00a0renter, you don\u2019t have that same opportunity. A recent article from\u00a0CNET<\/em>\u00a0explains<\/a>:<\/p>\n\n\n\n \u201cHomeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home<\/strong> . . .<\/em> When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.\u201d<\/em><\/p><\/blockquote>\n\n\n\nEquity Gains Can Substantially Boost a Homeowner\u2019s Net Worth<\/strong><\/h4>\n\n\n\n