Millennials Surpass Boomers in Net Worth Growth: The Homeownership Factor

It largely has to do with one important asset.

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Key points

• Homeownership can often lead to an uptick in net worth.
• Because younger Americans are less likely to own homes, they lag behind older generations in that regard.

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Your net worth may not be something you stop and think about often. Or maybe you do. Either way, your goal is probably to see your net worth grow over time, even if you don't have a specific number you're targeting.

Now it stands to reason that the older you get, the higher your net worth might be. That's because the value of your assets, like your stock portfolio, can increase over time.

In a recent report by Self Financial, the average net worth for U.S. households aged 64 to 75 is over $1.2 million. But among millennial households, that number is just $76,000.

And that discrepancy doesn't just boil down to age. It also boils down to the ownership (or lack thereof) of one key asset.

It's all about real estate

Homeownership is often touted as a solid means of growing wealth, and there's a lot of truth to that. When you own a home, there's the potential to build equity in it, which can lend to a higher net worth over time. But because millennials are far less likely to own homes than their older counterparts, their net worth lags in a serious way.

In 2021, baby boomers owned 44.1% of U.S. real estate. By contrast, millennials owned just 11.2%.

Why such a gap? Many millennials took on debt in the course of getting a degree, and that's been a factor in their ability to purchase homes. Also, in recent years, home prices have risen substantially, making it harder for millennials to get a piece of the market.

Can you build a higher net worth without owning a home?

To be clear, owning a home is not your only ticket to growing wealth over time. In fact, if you don't end up buying a home, you might free up cash for other assets, like stocks. Those have the potential to gain a lot of value if you assemble a mix of quality investments and hold them for many years.

You can also build net worth by continuously saving money in the bank. Granted, your money in a savings account may not grow at such a fast pace given how low interest rates are these days. But in time, it's another method of gaining wealth that doesn't involve buying a home.

To be clear, though, owning property is a great way to build your net worth, because homes have a strong history of increasing in value over time. And so if you're interested in owning one, it pays to map out a strategy for making that happen. That could mean reworking your budget to make it easier to free up cash for a down payment.

But if you're not interested in homeownership -- say, you don't want to put in the time to maintain a property or be tied to one specific location -- then know that there are other steps you can take that could cause your net worth to rise steadily in time.