How Owning a Miami Home Impacts Net Worth
If you live in Miami and are wrestling with buying a home in Miami this year or continuing to rent, you might like to know the impact homeownership has on your net worth.
The Federal Reserve shares its Survey of Consumer Finances commonly known as the SCF every three years. The survey compares the net worth of Americans who own a home and Americans who rent their home. The last survey results were shared in October 2023. The survey shares information from the years 2019 to 2022. Information from this report showed that the average American homeowner had a net worth that is 40 times greater than the average American home renter.
The information gathered of course is reporting averages. The average net worth of a homeowner according to the report is $396,200 and the average net worth of a renter is reported as $10,400.
Looking at these numbers, or reading them, you might think that the numbers for the net wealth of a homeowner are exaggerated. These numbers are in fact very accurate. The reason that the average homeowner has 40 times the net worth of the average renter is that the value of the home is calculated in net worth and this value increases with the home equity. A renter will never see a financial return from paying rent to a landlord. There is little financial portfolio benefit to making rent payments.
The Biggest Portion of Most Homeowner's Net Worth is Home Equity
Except for a small percentage of very wealthy Americans, home equity plays the largest role in a homeowner's overall net worth. Data from First American shows that homeowners' equity makes up most of the net worth for homeowners of almost every income level. Home equity boosted net worth between $104,000 and $300,000 for homeowners with annual incomes between $31,300 and $249,000.
To make a long story short, all of this information boils down to the fact that a home is the largest asset many Americans possess. Purchasing a home has long been the most sound investment of money in America for several decades. It is also worth stating that purchasing a home is not a get-rich-quick scheme. Real estate investment either for the purpose of a roof over your head or to make money is a slow and steady wins the race kind of thing.
If you are considering whether purchasing a home in Miami is worth the investment the answer is almost always a resounding yes. The best way to determine if you should purchase a Miami home is to talk over your goals and financial abilities with a real estate professional.
If you are looking for a home in Miami, I can help. Contact me any time to discover Miami homes that can help increase your net worth.