Buying versus renting: what the net worth numbers show

Every few years the rent-versus-buy debate gets a new set of calculators, and every few years the calculators reach the same shrug: it depends. On the monthly payment, it does. On what a household owns twenty years later, it does not, and the Federal Reserve has been measuring that for decades.

The figure

The Federal Reserve's Survey of Consumer Finances is one of the most detailed measurements of American household wealth. Its 2022 edition, the most recent, puts the median net worth of a homeowning household at $396,200. The median renting household: $10,400. The typical homeowner is roughly 38 times wealthier than the typical renter.

Federal Reserve Board, Survey of Consumer Finances, 2022.

Some of that gap is selection: households with more income and savings are more likely to buy in the first place, and a survey like this cannot say how much of the difference owning itself creates. What is well understood is how owning builds wealth for the people who hold on.

How owning builds wealth

Three mechanisms, none of them exotic.

The first is amortization. Every mortgage payment moves a little money from the bank's side of the ledger to the owner's. It is saving that happens whether or not the household would have saved, which is why economists call it forced saving, and over a decade it adds up. Rent buys a place to live, which is worth a great deal, but it does not build equity.

The second is leverage. A buyer who puts 10 percent down and sees the home appreciate 4 percent has earned 40 percent on the money committed, before costs. Few other investments available to an ordinary household let it control an appreciating asset with a fraction of the price, at a fixed cost, for thirty years. That last part is its own story.

The third is the fixed payment. The principal and interest on a 30-year fixed mortgage are the same in year twenty as in year one; rent is not. Over a long tenure the owner's housing cost falls in real terms while the renter's rises, and the difference compounds in the owner's favor every year.

The honest caveats

Owning is not free money. Transaction costs on both ends mean a home held less than about five years often loses to renting on paper. Maintenance is real and renters do not pay it. And the leverage that multiplies gains multiplies losses in a falling market, which is why the timing of a purchase within a life, not within a market cycle, is the question that matters.

The bigger caveat is that the door is narrowing. In the National Association of REALTORS' 2025 profile, first-time buyers were 21 percent of the market, the lowest share since the survey began in 1981, and the median first-time buyer was 40 years old, a record. The wealth gap in the Fed's data is partly a gap between people who got in and people who did not, and it is getting harder to get in.

What it means on the corridor

Central Indiana is one of the places where the door is still open. The July 2026 median sale price in Lafayette was $240,000, in Lebanon $285,000, in Indianapolis $265,000, against a national median of $434,100. A household that can rent here can, in most cases, own here, and over a long stay the difference in what those two households end up owning can be large.

Sources: Federal Reserve Board, Survey of Consumer Finances 2022 and "Changes in U.S. Family Finances from 2019 to 2022"; National Association of REALTORS, 2025 Profile of Home Buyers and Sellers; Indiana Association of REALTORS Housing Hub, July 2026; National Association of REALTORS, existing-home median price, July 2026. All read at source, September 2026.