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Renting vs. Buying: The Net Worth Gap You Need To See

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Trying to decide between renting or buying a home? One key factor that could help you choose is just how much homeownership can grow your net worth.

Every three years, the Federal Reserve Board shares a report called the Survey of Consumer Finances (SCF). It shows how much wealth homeowners and renters have – and the difference is significant.

On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. Check out the graph below to see the difference for yourself:

Why Homeowner Wealth Is So High

In the previous version of that report, the average homeowner’s net worth was about $255,000, while the average renter’s was just $6,300. That’s still a big gap. But in the most recent update, the spread got even bigger as homeowner wealth grew even more (see graph below):

a graph with green line and orange lineAs the SCF report says:

“. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

One big reason why homeowner wealth shot up is home equity.

Equity is the difference between your home’s value and what you owe on your mortgage. You gain equity by paying down your mortgage and when your home’s value goes up.

Over the past few years, home prices have gone up a lot. That’s because there weren’t enough available homes for all the people who wanted one. This supply-demand imbalance pushed home prices up – and that translated into faster equity gains and even more net worth for homeowners.

If you’re still torn between whether to rent or buy, here’s what you should know. While inventory has grown this year, in most places, there’s still not enough to go around. That’s why expert forecasts show prices are expected to go up again next year nationally. It’ll just be at a more moderate pace.

While that’s not the sky-high appreciation we saw during the pandemic, it still means potential equity gains for you if you buy now. As Ksenia Potapov, Economist at First American, explains:

“Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”

But prices and inventory are going to vary by area. So, lean on a local real estate agent. They’ll be able to give you the local trends and speak to the other financial and lifestyle benefits that come with owning a home. That crucial information will help you decide the best move for you right now. As Bankrate explains:

“Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances. If you’re on the fence about which is right for you, it may be helpful to speak with a local real estate agent who knows your market well. An experienced agent can help you weigh your options and make a more informed decision.”

Bottom Line

If you’re not sure if you should rent or buy, keep in mind that if you can make the numbers work, owning a home can really grow your wealth over time.

And if homeownership feels out of reach, connect with a local real estate agent and lender. They can help you explore programs that may make buying possible.

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Buying Tips

Hoping for (or Dreading) a Housing Crash? The Experts Just Weighed In.

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Half the buyers out there are scared home prices are about to crash. The other half are hoping they will.

A recent survey from Clever found 58% of Gen Z buyers are actually rooting for a crash, just so homeownership feels within reach.

So, what do the forecasts actually say?

Every quarter, Fannie Mae surveys more than 100 housing experts on where prices are headed. The newest results are in. And spoiler alert: they’re not calling for a crash – not even the pessimists.

What the Newest Numbers Actually Say

The panel’s latest forecast has prices climbing every single year through at least 2030.

The panel’s average forecast is that prices will rise by 14.7% in the next 5 years. And here’s where it gets really interesting. If you split these experts into optimists and pessimists, even the pessimists still expect prices to increase about 6.6% by the end of 2030 (see graph below):

a graph showing the price of a home

The takeaway? If you’ve been waiting for prices to fall, you may be waiting a while.

One thing to keep in mind though – these are national numbers. Prices in your area could run a little hotter or a little cooler than this, so it helps to know what’s happening locally, too. But the big picture is prices aren’t crashing. Historically prices usually rise.

How This Quarter Compares to the Past

Here’s something you probably don’t realize. This survey runs 4 times every year, so you can track the panel’s mood over time.

A year ago, the panel expected home prices to grow 2.1% this year. Now they’re forecasting 2.5%. That means the near-term outlook actually got more optimistic. But that’s only part of the story. The years after that shifted, too (see graph below):

a graph of growth in a graph

Zoom out to 2027 through 2029 and the mood has cooled a bit. Each of those years is now expected to see a little less growth than the panel thought a year ago. That’s likely a reflection of where we are right now with everything that’s impacting the housing market.

But again, the overall takeaway here is every bar shows an increase in prices – the size of that increase has just moderated due to some of the factors at play.

A slower climb isn’t a bad thing, though. It’s a sign the market is settling into a more normal pace after a few wild years.

A little more growth here, a little less growth there. What hasn’t budged once is the idea that home prices will keep growing.

What It Means for Your Next Move

Now, percentages are great, but you probably care more about the actual dollars and cents of your move, so let’s graph that out, too.

Run the numbers on a $400,000 home bought in January, and the panel’s latest forecast puts you up about $58,000 in equity in 5 years just from price growth (see graph below):

a graph of growth in a number of green squares

That’s real wealth you could be building while others sit on the sidelines, waiting for a crash the experts don’t see coming. And with prices expected to keep rising, waiting could mean paying more for the same home later.

Bottom Line

Whether you’re bracing for a crash or hoping for one, the verdict is the same – prices are still expected to rise, not fall. Talk with a local real estate agent about what that means for your market and your plans.

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Affordability

The Mortgage Rate You See Online Isn’t Necessarily the One You’d Get.

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You may have seen the headlines saying mortgage rates have climbed to the highest point since January 2025. And if that’s left you reluctant to buy a home, here’s what you need to remember… 

That’s not necessarily the number you’d get. 

It’s a common misconception that the rate you see in the headlines is the same one you’d get when you buy. The truth is, mortgage rates shift often, and the rate you actually end up with can vary a lot from what you may see or hear about. 

What Determines Your Real Rate? 

Advertised rates and “real rates” aren’t always the same. That’s because real rates are based on your specific situation, which includes your overall finances and goals. The rates you see in the headlines can’t possibly reflect that. 

That’s why only a lender can tell you what your real rate will be. To figure out your unique number, they’ll look at:

  • Your credit score: Your credit score includes your payment history (if you’ve made late payments – and how often), credit utilization (are your accounts maxed out, or do you have available credit?), and the length of your credit history (how long have your accounts been open?). For example, someone with an exceptional credit score may qualify for a better rate.

  • Your debt-to-income ratio (DTI): This is calculated by dividing your monthly debt payments by your monthly income before taxes to come up with a percentage. The higher your DTI, the higher your rate could be.

  • The down payment size and Loan-to-Value (LTV): Your down payment is the percentage of the home’s price you will put down. The LTV is the percentage of a home’s sales price that equals your mortgage. 

  • The type and term of loan program options: Your loan officer will walk you through different loan options based on what you qualify for. Mortgage rates can vary between different loan products and programs. 

Even after you find a home you love, other things can have an impact too. For example:

  • A mortgage rate buydown: This helps you get a lower mortgage rate, and by extension, a lower monthly payment, by paying an upfront cost. Sometimes a seller, builder, or another party may even offer to cover that cost themselves as an incentive for you to buy.

  • Seller concessions: Sellers are allowed to pay buyer closing costs according to most loan program guidelines. Seller-paid closing costs can add up to thousands of dollars, which can free up some cash for you to increase your down payment, pay down debt, or make other financial adjustments to try to get a better rate. 

There’s a lot that can ultimately have an impact on your actual rate. 

Your First Step? Getting Pre-Approved.

If you want to know if your number could be higher or lower than the headlines on social, you need to talk to an expert. A simple conversation with a loan officer can help you determine when you’ll be ready to buy, how much you can borrow, and of course, what your real rate will be. 

Your lender may recommend a pre-qualification and pre-approval:

  • Pre-qualification is a general estimate of what you might be able to borrow based on self-reported information. 

  • On the flip side, pre-approval is actually a conditional commitment from a lender based on verified information. 

Just know that, of the two, the pre-approval process gives you a more accurate picture of your options than pre-qualification. Bankrate gives a quick comparison so you can see why:

a blue and white chart with white text

How To Get Ready for the Conversation

Ask your lender what documents you’ll need to gather for that conversation. And keep these questions in your pocket too. They’re good things to go over when you talk: 

  • What will I gain or lose by waiting to buy a home for 3, 6, or 12 months? 

  • Will I get any tax advantages by buying a home – and what are they? 

  • What’s the benefit of buying a home and starting to build equity now versus waiting? And how does that impact my finances in the long run?

  • How will rate changes in either direction affect me?

Once you find out your rate, maybe you can buy now. Or maybe you still need to wait. But at least you’d know your options and can make an informed decision.  

Bottom Line

Headlines and social media make today’s rates sound high. But you have to remember, the rate you’re seeing online and your actual rate could be different. The only way to know what your rate could be is to talk to a trusted lender. 

With the right help, you can find out what your real rate is – and where it can take you.

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Affordability

Why So Many Sellers Are Cutting Their Price Right Now

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Price cuts are turning up everywhere right now, and they read very differently depending on which side of the deal you’re on.

Sellers tend to worry a cut means walking away with less than they hoped. Sometimes that’s true, but more often it just means the market moved faster than the listing did.

Buyers, for their part, often assume a cut means something’s wrong with the house. Most of the time, that’s not it.

This is what’s actually driving all those price cuts, and why it matters no matter which side of the deal you’re on.

42% of Homes for Sale Are Now Carrying a Price Cut

According to HousingWire Data, the share of sellers cutting their asking price has climbed every month for 7 straight months (see chart below):

a graph showing the growth of a straight month 

Today, more than 4 in 10 active listings have had at least 1 price cut, and the typical seller is cutting about $17,560 off their original number. 

Here’s why that’s happening. With rates still elevated and more homes to choose from, buyers can afford to wait for the right number. So, sellers who don’t start there often end up adjusting anyway.

What does that mean for you?

  • If you’re selling, this isn’t a red flag. But it is a sign that pricing it right from day 1 is your best bet. Just know that the market’s been shifting fast enough this year that sometimes even a well-priced house can fall behind within a matter of weeks. If that happens to you, dropping your price to catch up to where pricing actually stands today tends to bring in more buyers and helps you sell closer to true market value.

  • If you’re buying, it’s easy to assume a price cut means something’s wrong with the house. But with cuts happening on more than 4 in 10 homes right now, the reality is sellers are just catching up to where the market already is. And with affordability still tight, that’s exactly the kind of opening you need to get a better deal.

Why Sellers Are Adjusting Faster than Before

HousingWire Data also shows list prices are trending down nationally. That’s often a sign sellers are pricing more realistically from the start instead of listing high and getting stuck cutting later. List prices have fallen about $26,000 from last year’s peak.

Some of that decline is seasonal, since list prices typically soften each winter before rebounding in the spring. So, expect asking prices to keep drifting a little lower before turning back around (see chart below):

a graph of a number of people 

Jake Krimmel, Senior Economist at Realtor.com, explains: 

“That is good news for buyers, who are seeing lower asking prices and more room to negotiate, but it is also good news for sellers: Pricing to today’s demand is helping homes move and keeping more transactions alive in a high-rate environment.”

Translation – with rates still elevated, buyers can only stretch so far. Sellers who meet them where they are instead of holding out for unrealistic prices are the ones actually getting to closing. And doing that up front is always better than chasing the market later.

Buyers, You’ve Got Room To Negotiate Again

At the same time, Redfin data shows sellers now outnumber buyers by about 58%, the widest gap on record (see chart below):

a graph of sales 

That changes the power dynamics of the market – and impacts how homeowners should price their house. Nationally, about 7 in 10 markets now favor buyers or are trending that way.

  • For sellers, that means standing out matters as much as pricing. With more homes to choose from, buyers are comparing you directly against the competition. So, a little flexibility, like covering closing costs or being open on timing, can be what gets your house picked over another.

  • For buyers, it means more room to ask for a lower price, help with closing costs, repairs after inspection, or some combination of all 3. That’s especially true for homes that have already sat for weeks, where sellers are often the most willing to talk.

Bottom Line

Price cuts are a normal part of today’s housing market, and both buyers and sellers can use them to their advantage. Connect with a local real estate agent to look at what’s actually happening with prices in your neighborhood, so you know exactly where you stand before you list or make an offer.

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Copyright © 2020-2025 Mark Sincavage. All rights reserved.  
The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate, Mark Sincavage, and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate, Mark Sincavage and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.