Americans who mortgaged their homes instead of renting over the past few decades have saved, on average, $289,110, according to a new study by Creditnews Research.

The study, which compared the costs of homeownership versus renting between 2000 and 2023, found that homeowners benefited massively from accumulating equity in their property.

Over the 23-year period, homeowners spent an average of $454,092 on homeownership costs, which was 24% higher than the average rental expenses.

The biggest cost was interest charges, which accounted for 30.9% of total expenditures, followed by principal payments (22.7%) and maintenance costs (21.3%).

But the silver lining is that homeowners accumulated an average of $376,722 in equity over that period, thanks to a 159% surge in home prices.

By comparison, tenants spent a cumulative $366,480 to rent a median-priced home. Although rent cost considerably less than homeownership, it built zero equity in their primary residence.

“The decision to buy versus rent isn’t as clear-cut as many make it out to be,” the report said.

“On one hand, the costs of mortgaging and maintaining a home far exceed the equity homeowners build. On the other hand, factoring in rent costs, mortgaging a home could save you hundreds of thousands of dollars in the long run.”

The cumulative savings over 23 years is nothing to sneeze at.

In fact, homeowners who simply sat on their hands over that period made off better than the majority of Americans who’ve been investing in retirement plans.

Homeowners are better off in the long run

It's no wonder so many Americans choose to buy a home instead of rent—and why so many renters aspire to become homeowners one day.

Buying a home is essentially a “forced savings account” that helps homeowners build net worth, according to Lawrence Yun, chief economist at the National Association of Realtors.

Philadelphia Fed researchers Wenli Li and Fang Yang also acknowledged that homeownership is “the most important way in which the majority of families accumulate wealth” since it “forces households to save more than they otherwise would.”

The wealth effect of homeownership is clearly visible in the data gathered by Creditnews Research.

According to Creditnews Research calculations, the $289,110 in savings over 23 years is two-and-a-half times bigger than the median American retirement portfolio.

It’s also more than two-thirds of the peak net worth of the typical American household.

Other research confirms this. A 2021 study by the Pew Research Center found that home equity accounted for roughly 45% of Americans’ household net worth.