In 2022, renters in the United States had less than three percent of the wealth of homeowners, with a median net worth of $10,400 compared to nearly $400,000 for homeowners.
The wealth gap is not solely due to home equity according to a new Aspen Institute report. Modern day homeowners are financially savvy, accumulating their wealth through other assets like stocks and business equity.
While 78% of homeowners own appreciating assets other than their home, only 48% of renters do.
The study defines appreciating assets as markers that drive the increase of wealth over time such as "retirement accounts, stocks and bonds, business equity, other real estate (outside of primary residence) and other financial assets (which includes cryptocurrency)."
A common trend among homeowners with multiple properties is to build wealth through rental homes.
"For renters to dramatically increase their wealth, they need to see large increases in ownership of appreciating assets," said the Aspen Institute.
Renters face significant financial instability, with only 39% earning income that exceeds their expenses, compared to 54 percent of homeowners.
According to the Aspen Institute, "At every income quintile, renters have less positive cash flow, more burdensome debt, fewer savings and lower rates of asset ownership."
Additionally, higher housing costs exacerbate renters' financial challenges.
The U.S. government has taken measures to alleviate these barriers. President Joe Biden unveiled plans to lower housing costs and cap rent increases during his presidency.
New York City recently passed a rule that prevents renters from being forced to pay broker fees.
The Department of Justice and eight states sued RealPage for allegedly implementing a price-fixing scheme which they claim caused rent prices across the country to surge.
Renters' net worth grew by 43 percent from 2019 to 2022, largely due to pandemic-era income support like the Emergency Rental Assistance program, which helped renters reduce debt and invest in other assets like stock ownership and business equity.
Renters make up a third of U.S. households and are more likely to have subprime credit scores, live in a major city and earn under $50,000 a year.
In November, the National Association of Realtors released an annual report that showed the average age for a U.S. homebuyer hit a record high of 56 years as younger Americans get priced out of the home buying process.