I would like to welcome you to my comprehensive Alaska real estate website. You'll find information on buying and selling in Anchorage, Wasilla, Eagle River, Palmer, Girdwood, and Chugiak.

What's the Financial Benefit of Homeownership?

Dated: March 22 2021

Views: 121

What Is the #1 Financial Benefit of Homeownership?

What Is the #1 Financial Benefit of Homeownership? | MyKCM

There are many financial and non-financial benefits of homeownership, and the greatest financial one is wealth creation. Homeownership has always been the first rung on the ladder that leads to forming household wealth. As Freddie Mac explains:

“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

Odeta Kushi, Deputy Chief Economist at First American, also notes:

"The wealth-building power of homeownership shows that home is not only where your heart is, but also where your wealth is…For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.”

Last week, CoreLogic released their latest Homeowner Equity Insights Report, which reveals the surge in wealth created over the last twelve months through increased home equity. The report makes five key points:

  1. Roughly 38% of all homes are mortgage-free
  2. The average equity gain of mortgaged homes in the last year was $26,300
  3. The current average equity of mortgaged homes is greater than $200,000
  4. There was a 16.9% increase in total homeowner equity
  5. Total homeowner equity reached over $1.5 trillion

Here’s a map that shows the equity gains by state:What Is the #1 Financial Benefit of Homeownership? | MyKCMIncreasing equity is giving homeowners the power to better manage the challenges of the pandemic, especially for those spending more time at home. In the report, Frank Nothaft, Chief Economist for CoreLogic, explains:

“This equity growth has enabled many families to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending."

The financial advantage homeowners have has not gone unnoticed. In the same report, Frank Martell, President and CEO of CoreLogic, states:

“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake.”

Increasing wealth benefits more than just homeowners.

Last year, the Rosen Consulting Group released a report outlining the benefits of homeownership. In that report, they explained what an increase in net worth – which they call the “wealth effect” – means to the economy:

“In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy.”

Bottom Line

Homeownership builds wealth through equity, and this creates a positive impact for homeowners and their communities. Let’s connect today if you’re ready to invest in a home of your own.

 
ANCHORAGE HOMES FOR SALE
SEARCH ALL HOMES FOR SALE
GET PREQUALIFIED
WHAT IS YOUR HOME WORTH?
HOW MUCH HOME CAN YOU AFFORD
FREE GUIDE TO BUYING A HOME
FREE GUIDE TO SELLING YOUR HOME
VISIT MY BLOG
 
 
Yvette Belisle
eXp Realty LLC
Associate Broker/REALTOR®
907-868-2811
Office:
907-519-0095x108
Licensed In: Alaska
License #: 17864
Contact Me

You Can Also Visit Us At:  Facebook Twitter LinkedIn Youtube Instagram
 

Blog author image

Yvette Belisle

I am a lifelong resident of Alaska and have lived in the Anchorage area for over 26+ years. I grew up in the Anchorage bowl and have knowledge of many parts of the city which have added in aiding my c....

Latest Blog Posts

Ways Homeowners Can Use Their Equity

4 Ways Homeowners Can Use Their EquityYour equity is a powerful tool that can help you achieve your goals as a homeowner. And chances are, your equity grew substantially over the past.

Read More

Home Sales Are About To Surge. We May See a Winter Like Never Before!

Home Sales About To Surge? We May See a Winter Like Never Before.Like most industries, residential real estate has a seasonality to it. For example, toy stores sell more toys in October, November,

Read More

Selling Your Home? You’ll Likely Get Multiple Strong Offers This Season

Selling Your Home? You’ll Likely Get Multiple Strong Offers This SeasonAre you thinking about selling your house right now, but you’re not sure you’ll have the time to do

Read More

Things Every Renter Needs To Consider

4 Things Every Renter Needs To ConsiderAs a renter, you’re constantly faced with the same dilemma: keep renting for another year or purchase a home? Your answer depends on your current

Read More