Home Ownership: Building Wealth or Flexibility?

Homeownership is a good way to build wealth, but it depends on personal goals and priorities in this economy.

### Home Ownership: A Good Investment for Building Wealth?
* 🏠 " Of course, home ownership is good, and for most Americans, it's the **only way they're actually building wealth**.
* 📈 " If your goal is to own a home and be in one place for a long period of time, **home ownership is a great way to build equity over time**.
* 🔒 " However, if you don't want to be tied down or prefer flexibility, renting can also be a **valid financial choice**.
* ⏳ " Housing needs to be at least a **5 to 10-year decision** due to the **current high prices**.
* 💰 " The **35% increase in net worth through home ownership for Americans** is more of an indication of **poor saving and investing discipline**.
* 📊 " Don't let statistics mislead you into thinking that **houses are the only way to build wealth**.
* 💸 " Houses are a use asset, and to turn them into wealth, you have to **sell the house or borrow against it**.

[Music] Amber has a question. She says, Is home ownership really a quote-unquote good investment? What does building equity even mean? Is renting forever really a bad thing in this economy? Can I give some flavor from data that I know? There's two words that you should respond with, but yes. Well, I want to give some background because this is more of a state of Americans that bothers me a little bit because it will give some flavor to this. Is home ownership good? Every four years, we get the updated information from, I believe, the Fred, you know, the Federal Reserve updates where net worth are for Americans. And most recently, the most recent update that came out, I got super excited because networks were up 35%. Sadly, do you know what pretty much 100% of that increase was? I consider the inflation impact of housing, and people who own their houses, they were up 35%. And I realized how people just aren't actually prioritizing their army of dollar bills and building up liquid assets when we did our net worth by age.

show, this year we actually used that Fred data to show that people just are not saving and investing. So I'll say my short answer is, of course, home ownership is good, and for most Americans, the majority of Americans, it's the only way they're actually Building Wealth, but that is not how I think you ought to look at your army of dollar bills. I think there is a missed element of Building Wealth versus keeping wealth that people are missing. Yeah, Amber, the way that I'll answer your question is, owner, is home ownership a good investment? Depends, yeah, it depends, it depends on what your goals are. If your goal is to own a home and be in one place for a long period of time and build memories and set roots and establish a foundation, home ownership is a great way to do that, and you can over time build equity in that. If you borrow money for it, you pay down the money you borrowed, and houses do generally increase about at the rate of inflation in normal markets over the long term. So can you build equity, and can you build

wealth through home ownership. Absolutely. Does that mean that you have to buy a home? No. If you're someone who doesn't want to be tied down, maybe you don't want to live in one area for more than 5 to seven years, and you want the flexibility to be able to live in different parts of the country, or you want the ability to go travel internationally for a season, or you just don't want to have the maintenance and the upkeep and the responsibility of home ownership, there's nothing to say that you have to own a home in order to be wealthy. You have to buy a home in order to be able to be financially independent because we've seen people do it both ways. Folks who bought homes and did incredibly well, and they, you know, parlayed their first home into their second home and their second home into their final home, that's great. And we've seen other folks who always chose to rent, and what that rent did is it provided them with flexibility because they prioritized flexibility over the

foundation of being in one place for a long time. So I would argue if you, if you've not gone and check out a home buying checklist, and you can't say definitively that I know that I'm going to be doing this and I have some security around this and this is the place that I'm going to stay, home ownership might not be for you. It might not necessarily be for you in this season. And I certainly, you know, for most folks, a home is the single most expensive thing that you will ever buy. It's the number one largest thing you'll ever spend money on. I would never let someone force me into making the largest purchase decision I'll ever make just because someone else told me, Oh, well, that's what I'm supposed to do, or, That's the next step in the process, or, Oh, you have to do this. That may or may not make sense for your situation. So you need to Define for you, is home ownership a good thing. And I even in parenthesis, in this season, is home ownership a good thing in

this season and answer that question honestly. Yeah, and I'd lean heavily on the time component. We typically say housing, it needs to be at least a 5-year decision. I think with where housing prices are right now, it needs to be more of a 5 to 10-year in just this moment in time because we have had such a huge run-up, you know, with inflation. So, pay attention to that. And then, don't look at the stats. This is why you always have to be careful of statistics. It's the fact that because Americans only had money go up 35% through home ownership, does that mean that's the only way for Americans to build wealth? No, I think it's more of an indictment on how bad Americans are being disciplined and saving and investing for the future. It's kind of like when I used to work at the airport in Atlanta while I was in college to make money. I lost a tremendous amount of weight when I was a baggage handler, throwing, you know, bags on the planes. But the reason I

lost a tremendous amount of weight is because it was 100° inside of an airplane, and I'm working my butt off. That doesn't mean you have to go climb into the belly of an airplane to lose 20 lbs of weight. It means you just need to know what is actually creating this result. Don't let somebody tell you just by looking at the statistics and say, Hey, houses are the only way you can build wealth, because that's what the American Research shows you. Just I want you to have money that works for you. Start actually following the financial order of operations because housing is a use asset. The only way you turn that into wealth is you actually have to sell the house, the shelter that you are raising your family in, to get the equity out of the house, or you have to borrow against it. Neither one of those are great options. I'd rather you have your army of dollar bills completely outside of the household so that you can actually live, work, use those assets that are building up in the background. It's great.

Is Homeownership Really A Good Investment? (Can I Rent Forever?)

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The Money Guy Show

The Role of Home Ownership in Building Wealth

Home ownership is a good investment for building equity and wealth, especially considering the increase in net worth for Americans.

However, the focus on home ownership may lead to a neglect of saving and investing in liquid assets.

The benefits of home ownership depend on individual goals, such as establishing roots and building equity over time, but the overall impact on building wealth should be considered.

The Role of Homeownership in Building Wealth

Owning a home is not the only path to financial independence and wealth, as renting can provide flexibility and freedom to travel.

Homeownership is a significant financial decision and should not be undertaken based on others' opinions or societal expectations.

It's important to evaluate whether homeownership is suitable for your current situation and financial goals.

The Impact of Housing Prices on Wealth Building

Housing prices have seen a significant 35% increase, leading to the belief that homeownership is the primary way for Americans to build wealth.

However, this may actually reflect a lack of discipline in saving and investing for the future.

The current housing market trend suggests that decision-making regarding housing should consider a 5 to 10-year timeframe due to the substantial inflation.

The Impact of Temperature on Weight Loss and Financial Wealth

High temperatures inside an airplane can contribute to weight loss.

The key to building wealth is to follow the financial order of operations and have money work for you.

Housing is a use asset and not the only way to build wealth; it's better to have assets outside of the household to use for financial growth.