Renters have less than 3 percent of the wealth of homeowners, with factors beyond home equity contributing wealth gaps and lower levels of financial stability at all income levels.
Contact: Lizette Olmos Godfrey
The Aspen Institute
lizette.olmosgodfrey@aspeninstitute.org
Washington, DC, November 21, 2024 – This week, the Aspen Institute Financial Security Program (Aspen FSP) released its first comprehensive report on renters’ wealth and financial well-being titled, “From Rent to Riches? A Profile on the Wealth and Financial Well-Being of Renter Households.” Home equity is the largest source of wealth for most Americans, but the path to homeownership is becoming narrow and more difficult to navigate. While many renters will eventually build wealth through homeownership, a growing number will not. Currently, renters possess less than 3 percent of the wealth of homeowners, with a median net worth of $10,400 compared to $400,000 for homeowners.
“We have to take seriously the real challenges and tradeoffs families are facing and deeply consider how families reach and maintain financial prosperity,” said Steven Brown, Director of Insights and Evidence at Aspen FSP. “Certainly, we need greater affordability and access to the opportunity that homeownership provides. But it’s also clear we need a much more robust portfolio of options to help renters grow their wealth and opportunity.”
Key Findings from the Report:
- Renters possess less than 3 percent of the wealth of homeowners, with a median net worth of $10,400 compared to $400,000 for homeowners.
- Even with the increases in asset ownership and net worth, less than half of renters own potentially appreciating assets, compared to 78 percent of homeowners (excluding their primary residence).
- The renter-homeowner wealth gap is not solely due to home equity. Median home equity is about half of the amount of median net worth for homeowners.
- Renter net worth increased by 43 percent between 2019 and 2022—more than the 34 percent increase for homeowners—partly driven by temporary pandemic-era income supports that allowed renters to pay down debt and invest in other asset types, such as stocks and business equity. However these gains are unlikely to be sustained.
- Even with the increases in asset ownership and net worth, less than half of renters own potentially appreciating assets, compared to 78 percent of homeowners (excluding their primary residence).
Recent trends suggest that renter wealth-building is possible. However, most renter households are starting from a low baseline, and progress remains fragile—especially in the face of increasing costs and the end of pandemic-era financial support.
Some of the solutions in the report address rent cost burdens and limited residual cash flow through raising renters’ income and wages, expanding rental assistance, boosting the supply of affordable rental housing, and expanding tools to protect renters from harmful debt.
“Wealth matters in fundamentally different ways than income in how it contributes to household financial well-being and economic mobility,” said Ida Rademacher, Vice President and Co-Executive Director of Aspen FSP. “This report not only illuminates stark disparities in renter wealth, it also calls out the great need and opportunity we have in this country to strengthen alternative on-ramps to wealth and ownership for millions of renters in the U.S. With the right leaders and partners in place, we can help ensure that all households, regardless of homeownership status, have the tools and resources to achieve financial security and resilience.”
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About The Aspen Institute Financial Security Program
The Aspen Institute Financial Security Program (Aspen FSP) aims to illuminate and solve the most critical financial challenges facing American households, making financial security for all a top national priority. We envision a more inclusive economy with reduced wealth inequality and shared prosperity. Through private and public dialogues and evidence-based research, Aspen FSP brings together leaders from all sectors to address the financial health and security of vulnerable Americans. Learn more at AspenFSP.org, join our newsletter at http://bit.ly/fspnewsletter, and follow @AspenFSP on X and The Aspen Institute Financial Security Program on LinkedIn.
The Aspen Institute is a global nonprofit organization whose purpose is to ignite human potential to build understanding and create new possibilities for a better world. Founded in 1949, the Institute drives change through dialogue, leadership, and action to help solve society’s greatest challenges. It is headquartered in Washington, DC and has a campus in Aspen, Colorado, as well as an international network of partners. For more information, visit www.aspeninstitute.org.