If you’re a homeowner, we can tell you where 60% of your wealth comes from, without knowing anything about your job, savings, or even your weakness for buying really cute shoes. No, we’re not psychic. We just know that studies show for an average homeowner, 60% of their wealth comes from their home’s equity. (1)

“Oh no!” we hear you saying. “I hear the housing market is terrible, and if 60% of my wealth is in my home, that means I’m in trouble.”

Take a deep breath. The fact is, real estate remains a good long-term investment. You might be surprised to learn after all the doom and gloom you’ve heard lately, that on average, the value of a home nearly doubles every 10 years. In fact, with an average annual appreciation of just five percent, a 10 percent down payment will return 94% after just three years! After five years, the rate of return increases to 225%. (2)

There must be a catch, right? I bet you’re thinking, the average annual appreciation in the Portland metro area isn’t five percent. Okay, okay. You caught us. You’re right. The average annual appreciation over the last six years in the Portland metro area wasn’t five percent—it was a little over nine percent. [3]

Realtors® are on to this idea—that your home actually brings you wealth. And, they practice what they preach.
“In my opinion, real estate will always be the best, safest vehicle for long-term investment. While I make my living selling real estate, I’m providing for my retirement by owning real estate!” notes Gary Majors, principal broker with Ken Hoffman, Inc., Realtors®.
Russ Newcomer, Senior Vice President of RE/MAX Equity Group, Inc., explained, “The tax benefits and appreciation of owning my own home, as well as many single family rentals over the years have helped me finance college tuition, a second home in Bend, my retirement plan, and now a starter home for my children.”

David Tangvald, principal broker with Prudential Northwest Properties, likens owning a home to climbing onto an “equity escalator.”
“I am a young man with a young family, and over half of the wealth we have created for our family is tied directly to our principal residence,” he said. All this adds up to one final statistic: The average homeowner’s net worth is $171,000, compared to the average net worth of a renter of $4,800. [4] Deana Doney, broker with RE/MAX Equity Group, Inc., summed it up another way: “When you pay rent, you are buying a home—it’s just for someone else.”

For additional real estate resources, visit www.pmar.org.

[1] Housing and Urban Development, “Homeownership and its Benefits,” Urban Policy Brief No. 2, 1995
[2] Harvard University’s Joint Center for Housing Studies
[3] Averaged from RMLS™ Market Action Reports from December 2002 through December 2007
[4] Federal Reserve Survey of Consumer Finances