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 makes the most financial sense.
That equation will most likely take into consideration monthly housing costs,
tax advantages, and other incremental expenses. Using these measurements,
recent studies show that it’s still more affordable to own than rent in most of
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. She explains:
“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 has this equity piece meant to homeowners in the
ATTOM Data Solutions, the curator of one of the nation’s
premier property databases, just analyzed the typical home-price gain owners
nationwide enjoyed when they sold their homes. Here’s a breakdown of their
The typical gain in the sale of the home (equity) has
increased significantly over the last five years.
CoreLogic, another property data curator, also weighed in on
the subject. According to their latest Homeowner Equity Insights Report, the
average homeowner gained $17,000 in equity in just the last year alone.
What does the future look like for homeowners when it comes
Here are the seven major home price appreciation forecasts
he 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.
As you make your plans for the coming year, be sure to
consider the equity benefits of home price appreciation as you weigh the
financial advantages of buying over renting. When you do, you may find this is
the perfect time to jump into homeownership.