Want to Build Wealth? Buy Rhode Island Real Estate

I’m sure you’d expect to read an article on a real estate website touting the benefits of home ownership. After all, that’s what real estate agents do - they sell homes. They want you to make a decision to stop renting and purchase your first home.

Any good real estate agent or any salesperson for that matter believe in what they’re selling. They really do believe that it’s in your best interest to own your own home.

Well for those of you that are skeptical, check out the recent study by the Federal Reserve comparing those who own a home to those who rent. The study found a huge gap in wealth between these two groups. In many cases, the net worth of home owners was 10 times that of renters. Well you might say “Of course their net worth is higher; they own a home (one of those “which came first, the chicken or the egg” scenarios)”. Well the study actually looked a different income levels and compared the net worth for each income level and the results were very consistent.

So I guess the real question is “why is there such a discrepancy?” The study points out that home ownership allows you to build wealth in two ways. First through what they call “forced savings”. Every mortgage payment you make goes to both the principle (what you owe on the mortgage) and the interest. The second way is through appreciation. Home owners in Rhode Island have really seen this to be true.

According to an article in MSN money “The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait … well, the consequences can be stiff.”

Making a decision to buy a home can really be a win/win for both you and your real estate agent.