FILE - A "for rent" sign is displayed outside an apartment building on Sept. 22, 2022, in Los Angeles, California. (Photo by Allison Dinner/Getty Images)
U.S. renters have less than 3% of the wealth of homeowners, according to a new report that compares the financial well-being between the two.
The report, published by the Aspen Institute, explores the challenges renter households can face without having equity in a home.
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Buying vs renting: How the net worth compares
Homeowners' median net worth is about $400,000, compared to just $10,400 for renters, the report said.
Median home equity was found to be about $200,000, which only accounts for about half of homeowners' median net worth, according to the report.
Beyond that, a majority (78%) were found to own a potentially-appreciating asset other than their primary residence, compared with only 48% of renters.
‘Path to owning a home is becoming narrower’
Homeownership is often viewed as a primary way to build wealth in the U.S., particularly for low- to moderate-income households, the report noted.
It added that home equity is the largest source of wealth for most Americans, but such an asset has become increasingly expensive and difficult to achieve.
Home prices are near record highs, with median sales prices nearly doubling since 2009 – from around $220,000 to over $427,000 by 2024, according to the report. Additionally, the share of first-time homebuyers has dropped to record lows in recent years.
Meanwhile, renters face big financial challenges comparatively, such as relatively higher housing costs, weaker cash flow, and more harder-to-manage debt, the report said.
"The path to owning a home is becoming narrower and more challenging to navigate; while many of today’s renters will eventually build wealth through homeownership, a growing number will not," the Aspen Institute report noted.
The Source: <i>This story was written based on a report published by the Aspen Institute, titled "From Rent to Riches? A Profile on the Wealth and Financial Well-Being of Renter Households." It primarily used data from two surveys from the Federal Reserve: the Survey of Consumer Finances (SCF) and the Survey of Household Economics and Decisionmaking (SHED). The surveys track respondents’ wealth and financial well-being up until 2022 and 2023, respectively. It also drew upon American Community Survey 1-Year Estimates from the U.S. Census Bureau for additional data on demographics, housing types, housing costs, and income. The story was reported from Cincinnati. </i>