The New York Times recently published an editorial entitled, “Homeownership and Wealth Creation.”The housing market has made a strong recovery, not only in sales and prices, but also in the confidence of consumers and experts as an investment.
The study found that the average net worth of a homeowner ($194,500) is 36x greater than that of a renter ($5,400).
One reason for this large discrepancy in net worth is the concept of ‘forced savings’ created by having a mortgage payment and was explained by the Times:
“Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”
“Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”
Potential Boston Luxury Condo Buyers
“As a means to building wealth, there is no practical substitute for homeownership.” If you are a Boston apartment renter who is considering making a purchase, sit with Robert Veek to learn how signing a contract to purchase a Boston condo is bettern than renewing your lease!
Robert Veek can be reached at 617-720-5454.
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Updated: January 2018