The concept of the “American Dream” traditionally equates to the achievement of homeownership. It is a status symbol for many people, signifying stability, financial success, and the potential to contribute to one’s community positively. As proof, 63% of the net wealth of 80%
of Americans comes from their primary homes.
The continual increase in the number of people who own their own homes in the United States is a direct result of the numerous advantages of home ownership, ranging from social to financial aspects. Owning a home is a catalyst for building your generational wealth. Check out the following points to see how.
You Save on Housing and Invest the Money Elsewhere
North Bay realtors would tell you that clients with their own homes typically use less of their disposable income on housing-related expenses, freeing up more funds for other purposes and investments. This advantage explains why homeownership makes your net worth 80 times greater than renting. Therefore, owning your own home is a key to securing your wealth and your family’s future.
Further, monthly rent can be expensive. For example, according to different sources, renting a two-bedroom apartment in San Francisco is between $200 and $13,766 monthly, depending on the location. This price is still relatively high as a monthly expense. But when you own your own home, you forget about monthly rent. With that cost out of the way, you will save money and direct the savings towards profit-making investments, increasing your generational wealth.
The table below shows the Median monthly rent by the number of bedrooms in Ukiah as an example.
Number of Bedrooms Rent per Month
One-bedroom 908 USD
Two bedrooms 1185 USD
Three bedrooms 1645 USD
Four bedrooms 2028 USD
A Chance to Build Equity
Your share of the property that you own corresponds to the amount of equity that you have. It increases either when there is an increase in the current appraised value of your house or when you make additional payments on your mortgage. If you own a home, you should educate
yourself on how to compute your home’s equity.
Homeownership also gives you the freedom to potentially borrow on your home equity, refinance your mortgage, or redraw your loan to access it.
These funds can subsequently fulfill various purposes; you can opt to buy a rental apartment to improve your cash flow. You can also start different businesses that will increase your net worth and build wealth that will stay on for generations.
Home Value Appreciation
As a homeowner, you have a chance to raise your home value. For example, Mendocino County ranks as among California’s best places to buy a home. This rating is because of its tremendous home appreciation, 12% in the last 12 months and 7.2% over the previous ten years. You can capitalize on such advantages and sell your homes in the future to earn money, upgrade to a superior home, or make it your retirement residence.
When the value of your home appreciates, your net worth also increases, improving your generational wealth. There are a good number of factors that can speed up your home value and build wealth. Below are the main ones:
Upgrades and Updates
Home improvements can increase the value of your property, particularly in older houses that may include components that are no longer in use. An upgrade project’s impact differs according to the market and your home’s value at the time of the project.
Also, a home’s value can increase significantly due to particular renovations, such as installing a swimming pool or wood floors. On the other hand, a home’s value can increase considerably due to a kitchen remodel or the addition of a full bathroom.
Your home value will appreciate when your location is suitable. Your locality should have:
● Availability of learning institutions.
● Ease in accessing jobs.
● Easy to access shopping centers and recreational centers.
● Proximity to medical care facilities.
When determining a home’s value, its location can be even more significant than its dimensions and current condition combined. For instance, closeness to roads, power lines, and public transit can affect the total value of a home in that location. In particular, North Bay has some of the best universities and transport systems. It is also home to leading tech companies like Adobe and eBay, making it an area of opportunities and growth. Hence, buying a home in this location guarantees value appreciation.