Homeownership and Family Wealth

In 1924, a tall and gangly 25 year old man from Indiana named Amiel McCowan wanted to marry his sweetheart Grace Long in Hoquim, WA. He knew he wanted to own his own home but didn't have much money. He made a deal to buy a lot in town and to build a new home for him and his soon-to-be new bride. Since he had some woodworking skills but very little money, he did most of the carpentry on the home himself. His job at the piano factory in town worked him 40 hours a week but he spent almost that many in each week putting sweat equity into him home. 

On July 4th of 1974 Amiel and Grace were married. This was also the very same day he put the final touches on his new home. They moved in that night and began their journey of building wealth for his family the would span his next 70 years.

Amiel and Grace were my mother's parents and my adored grandparents. 

While growing up, we were taught by our parents and grandparents that owning a home is a financially savvy move. They explained how a mortgage is like a "forced savings plan". When you pay rent, that money is lost forever. But when you make a mortgage payment, some of that money accumulates as equity in the home. So, what is equity?

A recent study by CoreLogic explained that homeowners gained substantial equity over the last twelve months, and are essentially sitting on large sums of cash in their homes. In a study, Frank Nothalt, Chief Economist for CoreLogic explained:

   "The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage had $7300 in home equity during the past year, and a total of $177,000 in home equity wealth."

For most families, their home is their largest financial asset. This increase in equity drives net worth, or family wealth of the homeowner. Renters are not earning that benefit. Instead, they are building the net worth of their landlord. 

Bottom Line

Home price growth will moderate during the pandemic. But once a cure is available or at least preventable treatment, most expects agree that home values will again begin to appreciate at levels similar to what we've seen over the last several years. In the long run, our family elders will be proven correct: owning a home is a savvy financial move.

Scott's Advice

Home ownership is no doubt a path to stronger financial personal wealth. If you are not currently a homeowner, now is the time to plan to be. Do you research. Seek out a trusted Real Estate Professional to get a list of the your first steps. Because what you do next may very well benefit you and your family for generations to come.

Call me, I'll get your started.

Scott C. Dickinson is a real estate broker who lives in beautiful Vancouver, WA but helps other with their real estate needs all over the US. He can be reached by email at ScottYourBroker@gmail.com or call him at 360-518-7197. Check him out online at 
linktr.ee/yourbrokerscott.