Here is another observation from the homeownership study by Laurie S. Goodman and Christopher Mayer (https://www.urban.org/research/publication/homeownership-and-american-dream) – home ownership is especially prevalent for Americans near retirement age, and this suggests that “most households view homeownership as a critical part of a life-cycle plan for savings and retirement” (p. 43).
The study notes that home ownership rates peak at or near retirement. 80% of Americans aged 65 to 74 own a home. In most European countries, the ownership rate at this age peaks between 75 and 90 percent. This is much higher than the ownership rate for younger households. Home equity for older households in large European countries exceeded 8 trillion euros in 2013. At the same time, seniors in America held 5 trillion euros in home equity.
Regarding home ownership effects on retirement savings, the authors conclude, “This pattern suggests that home equity often plays an important role in retirement savings, although homeowners often don’t access the equity directly except for the rent-free use of the property” (p. 34). The bottom line is that wealth built from home ownership plays a key role in retirement savings for many, many people.
Do you have a friend in Georgia who is renting and laments that she will never be able to retire? Connect your friend with me at Dunwoody Mortgage. We will explore all options to see if we can get her in a home. If not now, we can help her plan for a future home purchase. Then she can start building her wealth every month instead of building wealth for her landlord.
