Home Owners Have Greater Net Worth

By
Real Estate Broker/Owner with MAINE HOME REALTY Lic# BR916095

Home Owners Have Greater Net Worth

Federal Reserve Board statistics tell use there is a significant difference in average net worth between Home Owners and Renters - - Home Owners have greater net worth than Renters.   How can that be, aren't home owners saddled with huge debt that is putting them into foreclosure and bankruptcy?  Yes, many are, but that would be caused by a global economic melt-down and wide-spread job losses rather than one person's decision to buy, or not buy a home. 

What the "financial crisis" and recession did was to re-set home values at lower levels which creates Upward Graphopportunities for gains in the future.

Why do Home Owners have greater net worth?  Leverage - - Buying something with a relatively small up-front investment.  Buying a home is a perfect illustration of leverage.  Example:  A Buyer who originally invests $10,000 to purchase a home can immediately "own" an asset worth, say, $150,000. 

Balance SheetBalance Sheet Basics:  Net worth equals assets (the things you own) minus liabilities (the things you owe) so as you make each mortgage payment and pay down your principal, your net worth increases.  Additionally, if your asset's value appreciates, you get an extra bump to your net worth.  But, remember, you have purchased your home as a long term investment and you also have the value and enjoyment of living in it (try that with a mutual fund).  Additionally, the interest you pay on your mortgage is generally an income tax deduction (for now), as are your local property taxes.  Hopefully, during this time, you will also be growing in your career and your income will have corresponding increases.   You will be a responsible homeowner, maintaining your home and perhaps even updating or making improvements or additions which will further enhance the value of your investment and your net worth.

If you rent a home or apartment, you are helping to increase someone else's net worth! Money down the toilet

•         A rent payment buys you a roof over your head for one month - nothing more

•         Rent payments do not offer any tax advantage

•         Rent payments do nothing to improve YOUR net worth

•         The space you rent is not yours to improve and "make your own"

Click Here to check out an Own vs. Rent Calculator

Home ownership, as a way of life and as an investment, is still extremely desirable, still the American Dream.   When people are asked why they bought the home they live in, it's hard to find someone who bought because the market was right.  We buy our homes because of marriage or a growing family, to downsize when the kids are grown, because of job transfer, divorce or death of a spouse, or because we are just sick of paying rent - because of our personal circumstances.

Right now, the real estate market offers tremendous opportunity for investing in a home (especially for those who don't have a home to sell).  We have some of the lowest home prices in years, lots of inventory to choose from, and interest rates continue (for now) to be at all-time lows.   So if your circumstances are telling you NOW is the time to buy, don't hesitate, call your REALTOR® - Start increasing your Net Worth today!

TERRY DRISCOLL, REALTOR - MID COAST MAINE RESIDENTIAL REAL ESTATE

Cell:  207/449-9696     :    Toll Free:  1-877/277-1010

Caring, Genuine, Personal Service

SEARCH THE MAINE MLS ON MY WEBSITE

ALLEN & SELIG REALTY   .   15 VINE STREET    .   BATH, ME   .   207/443-2200

 

Posted by

Terry Driscoll, REALTOR, Broker, Owner

MAINE HOME REALTY  .  122 FRONT STREET  .  BATH, ME  04530

207.443.4353     207.449.9696

Search for your Home in Maine!

Contact Me Now!

 

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Comments (2)

San Antonio Texas New Homes for Sale
www.sanantoniotexasnewhomesforsale.com - San Antonio, TX
Berkshire Hathaway HomeServices Hill Country

Terry...

You really have created a great outline for the public to understand how buying can really be something that has such a great and good effect on their life (economically)

Great Post !!

Jan 11, 2011 01:10 AM
TERRY DRISCOLL
MAINE HOME REALTY - Bath, ME
REALTOR - Buy or Sell in Any Season!

Robert - Thanks for the nice comment.  I don't think people think about the leverage aspect - it's how millionaires make their millions!  Of course, there are benefits to home ownership that have nothing to do with economics.

Jan 11, 2011 02:06 AM