Basecamp 1 - Why Homeownership is ESSENTIAL
“When you own your home, you control your environment, your stability, and your future. That’s real freedom.” – Nelson Barss
In this episode we reviewed 3 research reports:
Harvard’s Joint Center for Housing Studies: https://www.jchs.harvard.edu/sites/default/files/liho01-12.pdf
Report from Federal Reserve: https://www.federalreserve.gov/publications/files/scf20.pdf
Report from Census Bureay: https://www.census.gov/content/dam/Census/library/publications/2023/demo/p70br-183.pdf
Why Home Ownership Is Essential
Owning a home is more than a milestone — it’s one of the most effective ways to build wealth, stability, and a secure future. It offers freedom, control, and peace of mind that renting simply can’t match.
The Lifestyle Benefits of Owning a Home
Home ownership provides something renters rarely experience: control over your environment. You can remodel, landscape, decorate, and personalize your home to reflect your life and goals. That freedom builds pride and comfort — a sense of belonging that can’t be measured in dollars.
It also brings stability. When you own your home:
You aren’t at the mercy of rent hikes or sudden moves
Families can put down roots
Kids can stay in the same schools
You can build long-term connections in your community
Owning a home also encourages self-reliance and growth. Homeowners often pick up new skills, develop hobbies, or even start businesses from home. Your property can become a space that evolves with you.
Of course, success in home ownership starts with preparation. Knowing your finances, your lifestyle needs, and your comfort level with maintenance helps you make smart decisions. And working with professionals — a lender and real estate agent who care about your long-term success — can make the process smoother and more rewarding.
The Financial Power of Home Ownership
The numbers are clear: home ownership is one of the most powerful tools for building wealth.
According to the Federal Reserve and U.S. Census Bureau, the average homeowner’s net worth is between $255,000 and $397,000. For renters, it’s only $6,000 to $9,000. That means homeowners typically have over 40 times more wealth than renters.
While education and entrepreneurship can increase net worth, nothing compares to home ownership. It combines steady appreciation with the power of leverage — allowing you to control a valuable asset with a small down payment.
For example, a $12,000 down payment on a $400,000 home can grow into more than $250,000 in equity after 10 years, thanks to appreciation and loan paydown. That’s a 2,000% return on your initial investment.
Because real estate tends to appreciate predictably and mortgages are structured safely, homeowners can build wealth with far less volatility than other investments.
Home Equity: Your Built-In Safety Net
Equity isn’t just profit — it’s protection. Without it, financial setbacks can be devastating. Nelson Barss compares living without equity to “flying too close to the ground.” There’s no cushion if something goes wrong.
Home equity gives you altitude — financial breathing room when life gets hard. It can:
help you refinance debt
fund renovations
start a business
prepare for retirement.
Homeowners often use equity to reset their finances and move forward stronger.
With each mortgage payment, you’re not just covering housing costs — you’re investing in your future safety and flexibility.
The Foundation of Financial Independence
Home ownership improves your lifestyle and builds your financial foundation at the same time. It gives you control, stability, and long-term security — the cornerstones of financial independence.
It’s not out of reach. With preparation, patience, and the right team, owning a home can become the smartest and most empowering financial decision of your life.
Full Transcript
Utah Home Buyers Quest Podcast
Episode 2: Why Home Ownership Is Essential
Host: Nelson Barss
Well, hello, home buyers, and welcome to the first of three Base Camp episodes for the Home Buyers Quest podcast. I'm really glad you're here. Thank you so much for listening.
My name is Nelson Barss. I am a mortgage broker of over 20 years here in Utah. I've helped thousands of people buy homes, and I'm here to help you prepare and guide you on your own quest, your own very worthy quest, of becoming a homeowner.
And congratulations, by the way, for being here. You are taking a step today by listening—getting yourself one step closer to home ownership.
Now, these Base Camp episodes are designed as foundation episodes. Think of it as a home buying seminar—three episodes to cover the basics—and you'll need this knowledge. We're going to build upon that in future episodes as we do some more advanced topics.
This episode is entitled “Why Home Ownership Is Essential,” and that’s important. It’s not just a good option. It’s not just desirable. I believe it is essential for your financial future, and I'm here today to sell you on that idea.
Before we discuss the financial benefits, though, I do want to take a minute and talk about the lifestyle benefits.
Lifestyle Benefits of Home Ownership
I think most of us would agree—even if there were no financial benefit to buying a home—it would still be very desirable. Private property and ownership rights, in some cases, are synonymous with freedom. Having the ability to improve your environment and mold it to your own liking is very important.
There's also something to be said for stability from long-term home ownership, and that’s true for adults and for children. Being able to live and grow in the same community and know that your foundation is stable.
When you're renting, moving is much more common, and rent goes up often. Every year or two, you’re going to see rent increase. Those kinds of instabilities aren’t there with home ownership. In fact, you can often improve your payment over time if you refinance or pay down your debt.
And then, of course, there are so many other lifestyle benefits. We could talk about the safety of having a private yard for your kids and pets. You can develop self-reliance, hobbies, and interests—things like growing a garden or changing your landscape. If you want a shop, a home gym, or a low-cost space to operate a business, there’s a lot of flexibility when you own your own home that really improves your life.
I've experienced that myself. We've moved around and changed many things in our house over the years based on our interests and how we wanted to live. These are the things that make up the American Dream.
However, not everyone finds home ownership to be the American Dream. When I was researching for this episode, I found a study that I'm going to link in the show notes from Harvard’s Joint Center for Housing Studies. They asked whether home ownership contributed to emotional satisfaction, self-esteem, and family stability. They were careful to point out that there is often a correlation, but not always.
Personally, I have worked with some clients who found home ownership to be a burden—like a trap. They found themselves unable to care for the home both financially and physically. I’ve worked with some who felt lucky just to get out with their credit and dignity intact.
My goal here is to make sure that you go into home ownership qualified and prepared for success. I don’t want to overplay the risks involved with home ownership. I’ve had clients who were nervous to make that commitment, but I think home ownership carries similar risks to signing a lease or renting an apartment. If you can’t pay, you have to leave. Whether you have an eviction or a foreclosure, finding the next place to live is going to be difficult.
One of the things I don’t like about renting is that it keeps you closer to that disaster scenario. Renting does nothing to help you build wealth or equity. It’s nothing like owning a home.
If you own a home for five years and then you lose your job or get injured and can’t work, you’ll probably have enough equity to sell, find a new living arrangement, and maybe even walk away with some cash. That’s not usually the case if you’re renting.
And honestly, as a homeowner, even if you never have to use your equity to bail yourself out of a challenge, just knowing that you can does something for you psychologically. You can worry less, spend more energy on positive things, and even take more risks because you have that asset in your back pocket.
I want to see you take advantage of those lifestyle benefits. I truly believe home ownership can be a very rewarding experience. You have to be wise about it. You have to be careful where you buy and how you finance the home. You have to be honest about your skills and your personality because that will help you choose the right kind of home.
If yard work isn’t your thing, you may want to let your real estate agent—and maybe your family—know. That’s one of the reasons why it’s so important to work with a good team of professionals, especially your lender and your real estate agent. Choose someone who is invested in your long-term success.
I’ll tell you, those kinds of people usually don’t work in a call center across the country or even at a local bank or branch where they’re just there to clock in and serve the people in the lobby.
If you choose someone who relies on your happiness for future referrals and business, you’re going to get a much higher level of care and service. It’s a different experience when you’re working with someone who lives by referral. Choose someone who talks about being your agent for life or your lender for life—someone who depends on your happiness for their livelihood.
The real estate agents who are guests and preferred partners of this podcast are those kinds of people, and I would be honored to connect you with one who has your best interests at heart.
Now, there’s nothing wrong with waiting if you feel that’s the best decision. If you want to wait, I’m here to help you do that. That’s what this podcast is about—helping you when you’re not ready to get ready. Not just giving up and walking away, but taking the steps.
I have seen how home ownership has elevated my own life and my clients’ lives—how it generates wealth, stability, and fosters growth. And I want to help you get there.
Financial Benefits of Home Ownership
That’s a good discussion of the lifestyle benefits. I feel like I’m probably preaching to the choir on that, so let’s talk about the financial benefits.
You probably already believe in the financial benefits, but I want to explain how essential it is for your financial future.
What do you think is the best thing you can do to improve your likelihood of gaining wealth or net worth in your lifetime? Spoiler alert— I’m going to tell you that it’s home ownership.
To make this argument, I want to review a report from the Federal Reserve from their most recent Survey of Consumer Finances. It’s really interesting. They broke down the data in an interesting way for us to think about it. They showed us the average net worth of individuals baes on things like like college education, business ownership, age, and even home ownership.
For example, they showed that the median net worth of a college graduate in America is $308,000. For those with just a high school diploma, the average net worth is $74,000—about four times the net worth for college graduates compared to a high school educated person. So you could say that graduating college is likely to help you gain four times the amount of wealth.
How about starting a business? This report is really interesting, the average small business owner has a net worth of $308,000. For those who don’t own a business, it’s $59,000. That’s 3.25 times higher. The gap is even bigger for those who own a business with more than five employees—11.9 times higher. That’s pretty impressive right, it makes you kind of want to start a business.
How about just growing older? They showed the average net worth of someone at retirement age, which is 65 to 7 in America, is $266,000. That’s about three times the net worth of the average 35-to-44-year-old.
So, is getting older the best way to improve your net worth? Owning a business? Going to college? All of those can contribute, and it seems like most cases, it’s three to four times the net worth.
But where do you think the number is for home ownership? Do you think owning a home would make you five times more wealthy? Maybe ten times?
They compared the average renter in America to the average homeowner and found that the average homeowner has a net worth of $255,000. Just so you know what that means, if you pay off everything you owe by selling all your assets and just put the money in the bank. The average homeowner has $255,000. The average net worth of a renter was $6,300. That’s forty times more net worth for homeowners compared to renters.
That is the big differentiator. I knew before I knew before I saw this report that it was important to own a home. I could see how it was helping people’s lives, but these stats make me say it is essential.
In fact, all those other things—the people who went to college and had higher net worth or grew older and had higher net worth—I’d argue they probably also owned a home, which probably contributed even more than any of the college degrees and those things.
It’s very interesting: forty times the net worth.
And I want you to think about this for a minute. What is it like to live an adult life with a net worth of $6,000? It’s very difficult. Things happen. Stuff breaks down. I’ve seen this to be true, most of the first-time buyers that come to me are lucky to have $6,000 in savings, but everything changes after a few years of home ownership.
To back this up, there’s another report here from the U.S. Census Bureau called The Wealth of Households, released in 2023. So, this one’s a little more recent, and it includes some great years for the housing market— though not so great for those listening who don’t own a home, because the gap widened. It shows that homeowners have an average net worth of $397,000 compared to renters at $99,000.
Guys, it’s pretty clear—the most reliable and effective way to build wealth is to be a homeowner. I’m not talking about Rockefeller wealth; I’m talking about the kind of wealth that allows normal people to have options throughout their lives, to survive tough times, and to eventually retire.
This report shows 44 times the net worth—you go from $9,000 as a renter to almost $400,000 as a homeowner.
Why Real Estate Builds Wealth
So, how can this be? We’re talking about 44 times the net worth just by owning a home.
What’s happening in real estate? Honestly, home prices they’re only going up like 5% per year, give or take. That’s not very exciting—so how is it making people rich?
If you’ll give me ten minutes, here, I’m going to get a little bit nerdy, and I can show you how.
In my mind, there are two reasons real estate is such a good investment. First, predictable, steady growth. Housing is just not a volatile investment. Despite some of us who’ve lived through the last 20 years, we’ve seen a couple of scary times. But, the long-term view shows, houses just basically appreciate about 5% annually, even factoring in ups and downs.
The second reason is the availability of safe and cheap leverage. Leverage is a simple concept to understand in physics: you use a lever, and a fulcrum. And the longer the lever is, it makes it easier to lift the weight on the other end of the fulcrum. The lever actually magnifies or increases the upward force on the object. Well, this is a term that also explains how debt acts as a lever in a financial investment.
Let’s face it: nobody’s very excited about getting 3–5% return on any investment. But leverage that you’ll use is going to amplify that return on your investment.
So, I’m going to start with a small dollar example to illustrate leverage, and then I’ll walk you through a big dollar example of owning a home. If you own a $1,000 certificate of deposit at the bank with a 5% yield, you’re going to get $50 of interest after a year. You’re not going to accomplish much with $50 of annual interest. Even if it compounds, unless you give it 200 years to grow.
Now, let’s assume that you’re able to borrow $900 from someone, at an annual rate of 3%. And then you’ll use that plus your own $100 to purchase the same $1,000 CD. It’s the same asset; it’s the same interest rate. At the end of the year, the CD matures. You receive back $1,000 plus $50 of interest. And you pay off the debt along with the interest. So, 3% of $900 is $27 in interest that you owe. You pay that off and what is left, you have $123. You put in $100. So, what is your rate of return, it’s 23%. How much leverage did you use? You used 90% leverage to buy that investment, and that leverage magnified your rate of return from 5% to 23%. The dollar amounts are small here, but I think you can see the power. If you can consistently make 27% returns per year, you could be very rich.
This concept of leverage is very common in stock market investment. A lot of stockbrokers will offer margin accounts to experienced investors where you can borrow money to amplify your investments. But that’s very risky in a volatile market because here’s the ugly side of leverage. Leverage can magnify your rate of return in a good market, but it can also magnify your losses in a bad market. And fortunately, in real estate, there are protections and it’s not as volatile. And so, leverage is readily available to borrow 97% or even 100% of the purchase price of your asset because of the way the housing market is structured. Even the lenders will do it because they come with a lot of government backing and security and they know.
Not only are you dealing with much larger asset values, but we also get to hold the asset for much longer than one year, which means we get the benefit of compounding interest.
Now for the fun part, let’s look at a house.
We’re going to assume that we’re going to buy a $400,000 house. And we’re going to hold it for ten years, and we’re going to do some math. Just prepare to be amazed. So, our purchase price is $400,000, we’re going to borrow 97% of that, so that’s a $388,000 mortgage. And we’ll assume the interest rate is 5%. So, your down payment is $12,000. Your investment is not $400,000; you only invested $12,000. But here’s the thing, you get to keep all of the appreciation. Even though you really only funded 3% of the asset price.
Let’s look at ten years down the road. What numbers should we use for appreciation during that time, cause this piece is variable, every year is different. I’m using a statistic from the website Neighborhood Scout, and as of Q3 of 2024, the 10-year average appreciation for a house in Utah was 8.98%. Now if we use that number, you won’t even believe me. So, let’s get a smaller number. If we zoom out and get a 20-year average, the number is 5.26%. That seems like a very conservative number. That 20-years includes the crazy run up and crash of 2008, as well as the run up during Covid. And the recent stabilization of home prices under the higher interest rates we’ve been seeing for the last couple of years.
So, let’s just make it simple. I’m going to say 5% appreciation. And the math can get complicated here because to be super accurate we need to factor in a lot of other things. And we’ll do that later. For now, let’s keep it simple.
After 10 years of growth at 5% per year, would you believe that house you bought for $400,000 would be worth $651,000? That’s over $250,000 of growth. Now keep in mind that you would also have paid off $72,000 of your mortgage. And if you were the sell, you’d actually get back you $12,000 investment as well. So, your equity is about $335,000.
For now, though, I just want to keep it simple. We’re just going to compare the growth of the assets - $250,00- to your initial investment - $12,000. What kind of rate of return is that? It’s going to sound crazy, so do the math yourself. Take $250,00 divided by $12,000. And the number you get is 20.96. That’s not 20% return; that’s not 200% return. That’s 2096% growth of your %12,000 over 10 years – or 175% annually.
The asset only grew at 5% annually, but because you had 97% leverage, and because of the compounding effect of a huge asset, over 10 years, your actual rate of return was over 2000% percent. This would be much different if the bank kept a portion of the growth, but they don’t. They leave all of that for you. The only thing you pay the bank is a fixed rate of interest. All the asset growth is yours, even though you only funded 3% of the purchase price.
This is why real estate is such an important investment, it’s the essential foundation for your financial future, and it’s not out of reach.
Now I want to move on, but I just want to comment because I know, I’ve presented this analysis many times in live settings and there will be people who say this analysis is too simplistic. I don’t want to bore you, but I did take some time to factor in many more costs and benefits. And if you really want to go deep into this, you can read the full blog post for this article on the episode website. Over there I have factored in all of the variables: closing costs for both transactions, real estate commissions, interest expense (which by the way is less than rent expense in most cases), taxes, repairs, etc. Even then, the numbers are astronomical. And honestly, no matter how you slice it, the proof is in the pudding. Homeowners in America have 44 times the net worth of renters. It’s just the power of leverage and compounding interest. And it’s also a forced savings situation that also improves your lifestyle at the same time.
The Importance of Home Equity
Now, before I wrap up, I want to express why this is not just a good idea, it’s essential.
What happens if your net worth is $6,300 and you lose your job? Or if your car breaks down and suddenly it’s worth nothing but the scrap value? This is what I hate about this statistic, it’s the $6,300, it’s no fun to live that way. It’s literally hell, you’re constantly crashing and scratching and trying to get ahead.
I want to share an analogy, if you were the ask a pilot, is it safter to fly high or low? What do you think the pilot would say? Flying close to the ground is extremely dangerous, there is no room for error. If there’s a malfunction you have no time to make a plan or correct the problem. And if you’re living an adult life with responsibilities and a $6,000 net worth, that’s what it’s like. You’re flying too close to the ground. Every pilot will tell you that the air between them and the ground is very valuable. In this analogy, that air is your home equity.
I have worked with so many clients to help them take advantage of home equity to solve really big problems. We’ve refinanced people to consolidate huge smothering debts, fixed and reset their budgets. Often that’s what happens when you move up to your next home, you’re going to take a portion of that equity and you’re going to reset your budget and pay off some of your debts and hard time of the past, and sometimes even move into a nicer home with a lower monthly nut to crack every month. I’ve seen clients use a part of their equity to start a successful business, to further increase the return on that initial small investment like a $12,000 down payment. I’ve seen clients take money out to remodel, finish a basement, add space, change the living situation, and improve the standard of living. I have clients could never have retired, if it weren’t for the equity of their home. And sadly, I have sat with some clients who are desperate to retire, but they don’t have any assets, and will always have a housing payment, or they’ll be dependent on family.
So, I believe owning a home is the single financial decision that is most likely to raise your standard of living. It happens immediately, as soon as you move in, your lifestyle is better. But it also happens over time, as your net worth grows.
It’s so important not to fly too low to the ground. It’s so important to be a homeowner.
I believe in home ownership. I love what I do. This is why I started this podcast.
A lot of people are postponing home ownership, and that’s fine—but it won’t happen if you don’t put your mind to it. Too many people count themselves out without making the kind of effort that this quest deserves.
It is a quest. It feels like climbing Mount Everest sometimes, and it’s a journey. Right now, more than any other time in my adult life, it is difficult—but it’s worth it.
I’m here to walk with you, to teach you how to succeed, and I hope you’ll keep listening, I hope you keep climbing and planning towards this all-important goal. I hope you’ll reach out, let me help you 1:1, let me be your guide. Let me show you what every next step is until you have made the dream of homeownership a reality in your life.