Personal wealth—savings and assets minus debts—is a central component of household financial security for families at all income levels. Obtaining homeownership is frequently and justifiably viewed as a primary way to build secure and sustainable wealth in the United States, particularly for low- to moderate-income households. Indeed, home equity is the largest source of wealth for most people in the U.S. But the path to owning a home is becoming narrower and more challenging to navigate; while many of today’s renters will eventually build wealth through homeownership, a growing number will not. Today’s 45 million renters in the United States are relatively young and diverse, representing the future of our economy. Over one-third of U.S. households are currently renters, and both the number and percent of renter households are expected to increase. Yet renters have less than 3 percent of the wealth of homeowners, with a median net worth of $10,400 compared to nearly $400,000 for homeowners.
Authors
- PROGRAM
- Financial Security Program
- Pages
- 49
- Published in
- United States of America
Table of Contents
- Acknowledgments 2
- About the Aspen Institute Financial Security Program 2
- EXECUTIVE SUMMARY 3
- Key Findings 3
- Recommendations 4
- WHATS IN THIS REPORT 5
- INTRODUCTION 6
- Renters should have the supports needed to build greater financial well-being and wealth regardless of whether or not they eventually own their home. 7
- WHO ARE AMERICAS RENTERS 8
- Renter households are diverse and their numbers continue to grow 9
- Renter households have disproportionately lower incomes but a large and growing number of renters have higher incomes 10
- Though concentrated in metropolitan and urban areas renters live in a wide array of housing types and are well represented all across the country 10
- While most renters will own a home at some point there is likely no typical path 11
- While most renters do aspire to become homeownersciting income savings and cost concerns as their primary barriersmany of them are satisfied with their current arrangement. 11
- PANDEMIC-ERA SHIFTS IN RENTER FINANCIAL WELL-BEING 12
- MEASURING THE CURRENT STATE OF RENTERS WEALTH-BUILDING CONDITIONS 16
- Cash Flow 18
- Debt 19
- Well under half of renters had income left over after paying all their expenses for the month. 19
- Savings 21
- Credit 22
- Asset Ownership and Wealth 22
- Households must own some assets to have a positive net worth and they must own potentially appreciating assets to have the best chance at growing wealth over time. 22
- How Renters Fare Across the Wealth-Building Conditions 25
- RENTER HOUSEHOLD PROFILES THREE EXAMPLES 26
- A lower-income renter household with an income of about 25000 a year 27
- A moderate-income renter household with an income of about 65000 a year 27
- A higher-income renter household with an income of about 120000 a year 28
- SOLUTIONS TO ADDRESS AND ACCELERATE RENTER WEALTH 29
- Addressing cost burdens and residual cash flow 31
- Increasing access to and acquisition of a broader portfolio of assets 31
- Smoothing the pathway to homeownership which continues to provide many benefits 32
- CONCLUSION 33
- APPENDIX 34
- RENTER FINANCIAL WELL-BEING IN LOCAL CONTEXT 35
- ADDITIONAL FIGURES AND METHODOLOGY 39
- Net Worth and Asset Values 39
- Age 41
- RaceEthnicity 43
- Methodology 45
- Endnotes 46
