Intrinsic Value

Those that have owned homes for a long-time understand what the numbers tell us about homeowners. According to the Federal Reserve, homeowners have a much higher net worth than renters do — the median net worth for a homeowner in 2022 was $396,200, versus just $10,400 for renters. As strong as these numbers are—homeownership delivers more value than these impressive investment numbers.

For example, a home represents protection from inflation. Once you have a fixed-rate mortgage, the majority of the payment will not rise with inflation – the exception being taxes and insurance. Rent is 100% subject to inflation. Homeownership has intrinsic value as well—it represents freedom from landlords and the ability to settle down with the freedom to own pets and paint the walls whatever color you would like. Together, this is why owning is often referred to as the American Dream or the pride of homeownership.

This is also why, despite higher prices and interest rates, there is no shortage of demand from those who would like to purchase. Affordability is an issue for many, but the biggest issue today is finding a home to purchase because many with very low interest rates or no mortgage at all, don’t want to leave their homes. Eventually, homes will become available, but the National Association of Realtors has pointed out that there is a shortage of over five million homes in America. And when there is a shortage of something, that commodity tends to hold its value. Hence, real estate continues to hold significant monetary and intrinsic value.