Does Buying a House Really Build Wealth? Why Ownership Is the Real Game-Changer
For generations, the financial story has sounded the same:
Work hard. Buy a home. Build wealth.
It’s advice your parents, your grandparents, maybe even your boss have repeated like gospel. And sure, a home is valuable. It provides stability, roots, and a place to build your life.
But here’s what the data says: buying a house alone does not typically make you wealthy.
A home can feel like wealth because you see its value on paper rising over time. But in reality, homeownership is a defensive move, it provides stability, not necessarily long-term financial freedom.
Real wealth is more often created by owning productive assets, such as businesses.
And here’s the kicker: you don’t need to run a company yourself to be an owner. Every stock in your portfolio is literally an ownership stake in a business: companies that generate profits, adapt to changing markets, and may share profits with you.
The sooner you reframe your mindset from consumer to owner, the sooner you start playing the wealth game the right way.
Does Buying a House Build Wealth? The Flawed Logic
To be fair, a house does have financial benefits:
Tangible asset: You can live in it, raise a family, and enjoy security.
Forced savings: Each mortgage payment gradually builds equity.
Leverage: A down payment allows you to control a much larger asset.
But here’s what often gets overlooked:
High costs: Taxes, insurance, maintenance, and renovations reduce returns.
Illiquidity: You can’t sell a bathroom to pay tuition. Unlocking value usually requires a refinance or sale.
Modest growth: According to the S&P CoreLogic Case–Shiller U.S. National Home Price Index, U.S. homes have appreciated about 4.4% annually from January 1987 through May 2025. By comparison, the S&P 500 index has delivered higher average annual returns over similar long-term periods.
Bottom line: Buying a home is defense. It provides stability, but defense is not the same as building wealth.
Why Ownership of Businesses (or Stocks) Creates Wealth
So where does long-term wealth often come from? Ownership of businesses.
Growth potential: Companies can innovate, expand, and reinvest profits, which has historically driven stronger long-term returns than housing.
Adaptability: Unlike a home that can actually depreciate without proper maintenance, businesses can pivot, scale, and create new revenue streams.
Inflation protection: Many businesses can pass rising costs onto consumers, helping protect revenues and profits.
And here’s the good news: you don’t need to start or run a business yourself. By investing in stocks, you gain ownership in the most successful companies in the world and participate in their growth.
This is offense. It’s what has historically separated those who are financially comfortable from those who achieve greater financial freedom.
And the research supports this: According to Forbes, roughly 88% of millionaires are business owners. While outcomes vary and ownership alone does not guarantee wealth, the pattern is clear: wealth often follows ownership.
House vs. Stocks: A Simple Illustration (Hypothetical Example)
Consider this simplified scenario:
Chris, 42, upgrades to a $1.5M home. It feels great, but mortgage payments, taxes, and upkeep drain cash flow. His net worth rises, but slowly, and most of his wealth is locked inside the property.
Alex, 42, keeps the $900k home and invests $600k in a diversified stock portfolio. Historically, equities have compounded at a faster rate than housing, which could give Alex greater long-term growth and, importantly, liquidity.
Both made responsible decisions. But only one emphasized offense.
Why Homeownership Feels Safe (But May Hold You Back)
When the stock market dips, headlines often scream: Stocks are risky! Houses are safe!
But this thinking ignores how markets evolve. Just 20 years ago, at the end of 2005, financials were the largest S&P 500 sector at ~21%, with technology at ~15%. Today, technology makes up about ~36% of the index, while financials have dropped closer to ~13%.
Comparing “the market” today to decades ago is like comparing yourself at 20 versus 40. Same DNA, but a completely different player.
How Inflation Impacts Homeowners vs. Business Owners
Inflation is a useful stress test for wealth strategies:
As a homeowner, inflation often feels like a burden. Property taxes rise, repairs get pricier, and insurance premiums climb.
As a business owner (or shareholder), inflation may have a different impact. Many companies have the ability to raise prices to offset rising costs, which can help protect revenues and shareholder value.
The Wealth Wake-Up Call: Think Like an Owner, Not a Consumer
This isn’t about dismissing homeownership. A house has its place in your financial life. It provides stability, community, and peace of mind.
But don’t confuse it with wealth creation.
Wealth often comes from ownership of productive assets. Every share of stock is a claim on the future profits of a business. That’s not abstract, it’s one of the most consistently proven ways to build wealth over time.
Wealth Isn’t Built by Chance — It’s Built by Choice
So ask yourself:
Are you over-indexed on defense?
Or are you building an offense with ownership stakes that have historically offered more growth potential?
Because in the end… wealth is built by choice, not chance.
At Julius Wealth Advisors, we help clients design a personalized game plan: balancing the defense of stability with the offense of ownership. If you’re ready to stop thinking like a consumer and start thinking like an owner, let’s talk about building your championship wealth strategy.
Disclosures:
This piece contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. Past performance does not guarantee any future results. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. For additional information about Julius Wealth Advisors, including its services and fees, contact us or visit adviserinfo.sec.gov.