Growing Your Net Worth with Homeownership

According to Zillow's latest analysis, America's homes have reached a record value of $55.1 trillion. That represents a staggering $20 trillion increase in just five years—a 57% jump since the beginning of 2020. This remarkable growth demonstrates the enduring strength of real estate as an asset class and the tremendous wealth-building potential it offers to homeowners across the country.

The Wealth Gap: Homeowners vs. Renters

Perhaps the most striking evidence of homeownership's financial impact comes from comparing the net worth of homeowners to renters. According to recent analysis from the National Association of Realtors based on Federal Reserve data, the typical homeowner's net worth is now dramatically higher than that of the average renter.

The numbers are eye-opening: homeowners have a median net worth of approximately $430,000, while renters have a median net worth of just $10,000. This wealth gap has actually widened since the pandemic, with homeowners seeing their wealth grow approximately 46% compared to 37% for renters since 2019.

Home Equity Is Just the Beginning

What's particularly interesting is that home equity—while substantial—accounts for only about half of homeowners' total net worth. Median home equity stands at around $200,000, meaning homeowners are also building significant wealth in other areas.

Homeownership appears to establish a foundation that enables broader financial growth and stability. When you own your home, you're not just building equity—you're creating the financial security that allows you to invest elsewhere, save more consistently, and build wealth across multiple fronts.

How Homeownership Builds Wealth

So how exactly does owning a home build wealth? There are several key mechanisms at work:

Forced Savings Through Mortgage Payments

Every monthly payment you make includes a portion that goes toward your principal balance, gradually building equity in your home. Unlike rent, which provides no return, mortgage payments help you accumulate an asset over time.

Property Appreciation

Historically, real estate values have trended upward over the long term. Home prices have nearly doubled since 2009, rising from around $220,000 to over $427,000 by 2024. While markets can fluctuate in the short term, patient homeowners typically benefit from appreciation.

Leverage

Real estate is one of the few assets where you can control a large investment with a relatively small down payment. A 20% down payment means you're gaining the appreciation benefit on 100% of the home's value, magnifying your returns.

Tax Advantages

Homeowners can deduct mortgage interest and property taxes from their federal income taxes, reducing the effective cost of homeownership and freeing up additional funds for savings and investment.

The Current Market Landscape

Today's housing market continues to evolve. While mortgage rates have fluctuated and affordability remains a challenge in many areas, fundamental supply-demand dynamics continue to support home values. The U.S. housing market grew 5.2% in 2024 and continues to show steady gains in 2025, with strong performance particularly in Northeast metros and rural areas.

Millennials have emerged as a major force in the market, now owning more than 20% of all U.S. home value—approximately $9.7 trillion. This generation's growing participation demonstrates that despite challenges, homeownership remains an achievable and valuable goal for Americans building their financial futures.

The Bottom Line

The data is clear: homeownership remains one of the most effective paths to building long-term wealth. With the typical homeowner's net worth 43 times greater than the average renter's, the financial case for buying a home—when you're ready and able—is compelling. While today's market presents challenges, the fundamentals that make homeownership a powerful wealth-building tool haven't changed.