Jan 1m 2025 Story by: Editor
For many Black Americans, owning a home is a significant milestone in life. Yet, the dream of homeownership remains out of reach for many due to financial constraints. Even so, it continues to symbolize success for the majority within the community.
According to a recent Pew Research Center study, 66% of Black Americans consider themselves successful in some capacity. Among them, 52% define homeownership as a key indicator of success. However, balancing this aspiration with other priorities can be challenging.
The survey, conducted among 4,736 Black adults in the U.S. from September 12 to 24, also revealed that 82% feel most successful when they can provide for their families. This highlights a potential conflict between achieving homeownership and meeting other essential financial responsibilities.
“Being ‘house poor’ doesn’t do much for you,” said Preston D. Cherry, a certified financial planner and president of Concurrent Financial Planning in Green Bay, Wisconsin.
The Hidden Costs of Homeownership
While owning a home is often considered a pathway to building wealth, it also brings substantial financial obligations beyond the mortgage. Taxes, insurance, maintenance, and the upfront costs of a down payment are all factors to consider, Cherry explained.
“Homeownership has a lot more expenses than renting: taxes, insurance, maintenance, down payment. All these factors need to be considered,” added Cherry, who is also a member of CNBC’s Financial Advisor Council.
Kamila Elliott, a CFP and CEO of Collective Wealth Partners in Atlanta, pointed out that utility and maintenance expenses for a home often surpass those for an apartment. “Understand what it is to be a homeowner and how things work,” Elliott advised.
Furthermore, these costs can leave little room for other financial priorities such as paying off debt, supporting family members, or saving for retirement. In some cases, renting may prove to be a smarter financial decision.
“The cost of homeownership versus renting has been [making it] daunting to become a homeowner. It’s less expensive to be a renter in most markets in the U.S.,” said Susan M. Wachter, a professor of real estate and finance at The Wharton School of the University of Pennsylvania.
If renting allows individuals to better provide for their families, “then that’s the way forward,” Wachter said.
Alternative Ways to Build Wealth
While homeownership is often seen as a long-term wealth builder, it is not the only path to financial success. Renting can be a more affordable option initially, as the upfront costs, such as a security deposit or broker fees, are typically much lower than a down payment.
“There’s nothing wrong with being a renter,” said Jacob Channel, a senior economist at LendingTree. He emphasized that many millionaires in the U.S. choose to rent despite having the financial means to own a home.
“At the end of the day, what good is being a homeowner when you can’t provide basic necessities for yourself and your loved ones?” he said.
Cherry also pointed out that wealth can be built without homeownership. “Can you build wealth without homeownership? Yes. Rent and invest the difference,” he suggested.
By maintaining financial flexibility, individuals can address multiple goals rather than focusing solely on one. “Give yourself grace. Homeownership will be there for you when you’re ready,” Cherry concluded. Source: MSN
