If you are deciding whether to rent or buy, the difference in net worth between homeowners and renters deserves a look. But it should be part of your decision, not the whole decision.
The Federal Reserve Board releases its Survey of Consumer Finances, or SCF, every three years. Among other financial measures, the report compares the net worth of homeowners and renters. The figures discussed here show a substantial gap.
The practical question is what that gap means for you. Understanding how home equity contributed to it can help you look beyond a headline and think through whether buying fits your finances.
What the Federal Reserve Data Shows
In the survey comparison cited in the original article, homeowner net worth was $396,200, compared with $10,400 for renters. That puts homeowner net worth at almost 40 times renter net worth.
In the preceding survey, the figures were roughly $255,000 for homeowners and $6,300 for renters. The dollar gap widened substantially between those two reports as homeowner net worth climbed.
One important wording distinction: these figures describe median net worth, rather than average net worth. The original article used the word “average,” but the cited comparison identifies the numbers as medians.
The SCF also described the growth in median net worth over that survey interval as the largest three-year increase in the history of the modern survey, more than double the next-largest increase on record.
Those are historical findings, not a personal forecast. Use them to understand the relationship discussed in the report, rather than as a target for what buying a particular home will do for you.
Why Home Equity Played Such a Big Role
One of the biggest reasons behind the increase in homeowner net worth was home equity. The original article pointed to an unusually strong stretch of home-price growth, sometimes described as the housing market’s “unicorn” years.
During that period, there were not enough homes for sale to meet demand. At the same time, a large influx of buyers wanted to purchase homes and take advantage of mortgage rates that were then at record lows.
That imbalance between supply and demand pushed home prices higher. Most people who owned homes during that stretch saw their equity grow substantially as a result.
This is the central connection behind the headline: rising home values helped increase homeowner equity, and that equity was a major contributor to the increase in net worth.
Separate the Mechanism From the Market Moment
The useful takeaway is the role equity can play in building wealth. The less useful takeaway would be to assume that an exceptional run of appreciation is the normal experience of owning a home.
You do not need to make your decision around trying to repeat that particular period. Instead, ask whether homeownership makes sense for you without relying on a similar surge in prices.
That keeps the focus where it belongs: on a home you are ready and able to buy, rather than on chasing a past increase in wealth.
Does Missing That Price Surge Mean You Missed Your Chance?
If you were renting during that period, it is understandable to wonder whether you missed the opportunity to build equity. But the original article’s broader point was about long-term ownership, not just one unusually strong stretch.
Historically, home prices have tended to rise over time. An article in The Ascent expressed the connection this way:
“Buying a home can be a great way to grow your net worth, since home values have a tendency to rise over time.”
The original article also noted that, after mortgage rates moved closer to 7% to 8%, prices were still rising in many parts of the country because supply remained low relative to demand.
That observation belongs to the historical market conditions being discussed. It is not a statement about the mortgage rate available to you or the direction of prices in your area.
Keep Past Forecasts in Context
The expert forecasts cited in the original article called for continued appreciation over the following several years, but at a pace more typical of the housing market. They did not call for a repeat of the extraordinary price increases that had just occurred.
Those forecasts supported the article’s expectation that buyers could continue building equity. Still, an expectation is not a guarantee. The lasting point is that homeownership can help build net worth over time, not that every purchase will produce a particular financial result.
Compare the Full Cost With the Potential Benefit
A large net worth gap is worth understanding. It is not a reason to skip the practical work of comparing renting with owning.
Jessica Lautz, Deputy Chief Economist at the National Association of Realtors, emphasized that balance:
“When deciding to rent vs buy, one must calculate the total cost of homeownership (maintenance, utilities, commuting, etc.) and the total financial benefit.”
Lautz also cited the Federal Reserve comparison of $396,200 in median net worth for homeowners and $10,400 for renters, emphasizing the wealth gains associated with homeownership.
For your decision, give both sides of that comparison room on the page. Consider the potential long-term benefit of equity alongside the costs of owning and living in the home.
Questions to Work Through Before Buying
- Have you compared renting and buying beyond the headline net worth figures?
- Have you included maintenance, utilities, and commuting in your ownership-cost review?
- Are you ready and able to buy, or does the historical wealth gap make you feel rushed?
- Would the purchase still make sense to you without unusually rapid price growth?
- What do you need clarified before you feel comfortable moving forward?
You do not have to turn survey data into a yes-or-no answer immediately. Use it as a starting point for a more complete conversation about your options.
Your Next Step
Homeownership can be a meaningful part of building net worth. The Federal Reserve figures show a substantial homeowner-renter gap, and the original article highlights how rising home values and growing equity contributed to it.
Start with a written rent-versus-buy comparison that includes the ownership costs discussed above. Then reach out to Ed Parcaut to talk through your mortgage questions and whether buying fits your situation. The goal is a clear, practical decision, not pressure to chase someone else’s results.
