Homeownership Still Pays!

Jeff and Sally Hanson purchased their first home three years ago. During that time, and because of the economic recession in the U.S., the value of their home has fallen so low that their home today is valued less than their current mortgage balance.

This hit to their home equity, has given this young couple pause to wonder if it was the smartest financial decision to own a home.

But the good news, based on figures of Federal Reserve data, shows the answer is a resounding "Yes!"

In the Federal Reserve or Consumer Finances, it was announced that in comparison with renters, home owners have much greater household wealth. A typical owner's wealth exceeds that of renters by a factor of 50-to-1; a median of $205,200 versus a median of $4,200.

The main wealth difference between the two is home equity, of course. But even for households who've only owned their home since 2003, home equity gains are the rule rather than the exception.

Sure, times have been tough for homeowners in many struggling markets. And households in these areas who have owned their home for five years or less do have some negative equity.

Yet, in all 150 markets, including those hardest hit by the recession, households who have owned their homes for 10, 15 and 20 years have enjoyed strong equity gain despite the downturn.

This data clearly shows that homeownership remains the largest store of wealth for the typical household, even when markets have been through some rocky years.