Everyone knows it’s cheaper for a renter to rent than for a buyer to buy, at least in the beginning. So what are the factors that motivate buyers to attend the closing table?

Last week we looked at three primary reasons people are buying houses today, and the first of those reasons is the promise of a pot of gold at the end of the rainbow.

Call it the American dream, or simply a deep desire to own a piece of the rock. At the end of the day, owners hope to experience financial success.

This reason is primarily economic in nature, and the idea here is that home ownership is closely associated with wealth accumulation and prosperity.

To look at this topic more closely, the National Association of Realtors conducted a survey of home owners in 2001. Their goal was to get a handle on the real value of home ownership and the wealth that it creates for the typical American household. And the result of that survey was no surprise:

* Three out of four homeowners said that equity their home represents a large portion of their wealth. In addition

* Being able to access that equity had an impact on their decision making process when they made important financial moves. And finally

* Those with substantial home equity sometimes changed their spending or savings behavior as a result of that equity.

Typically, we think of real estate as a non-liquid investment, meaning that it’s usually hard to get your money out in a hurry. But with the popularity of today’s home equity lines of credit, the owner simply writes a check against his credit line. The funds are advanced automatically.

In addition, the interest costs for such an advance on equity are typically low when compared to other forms of credit. Often tied to the prime interest rate, these so-called HELOCs may even boast no closing costs.

The survey revealed that owners use their home equity to get cash for emergencies, take vacations, and purchase big-ticket items such as furniture, appliances, and even automobiles. In addition, it turns out that built-up home equity is a significant source of down payment funds for most repeat home buyers.

NAR’s Home Wealth Effect Survey shows the typical homeowner has an accumulation of equity of $50,000. Households with incomes greater than $75,000 typically have a median of $100,000 in equity, while households earning less than $40,000 have a median of $40,000 in equity. Households aged 50 or older have a median equity of $80,000.

And in what might be a reflection of the rocky performance of Wall Street in recent years, the survey found that three out of four home owners say their house wealth is greater than their stock wealth. The good news here is that real estate tends to be a more stable form of investment than other commonly used vehicles, and that stability gives people the confidence to use that equity for a variety of needs.

Just over half of home owners tap into their equity by way of home equity loans or second mortgages. Of those that used this method, 43 percent spent funds largely for debt relief, while 16 percent used the money for a down payment on a second home or vacation home. Eleven percent bought a car, 5 percent was spent on college education and another 5 percent was deposited in the bank.

But there is another way to obtain funds from your home’s equity, and that is through the popular habit of refinancing. As interest rates fell over the past few years, many owners took the opportunity to pull cash out and increase the size of their new mortgage.

In the NAR survey, 22 percent of respondents had pulled cash out of their home when they refinanced their mortgage.

The final way of getting cash from your built up equity was at the closing table when respondents sold. And by far, Americans choose to "re-invest" in real estate with their profits when they sell.

Fully two out of every three who sold and replaced their homes used all of the profits for the down payment on their next home, and another 10 percent put some of the gains back into their new home. Only 15 percent of repeat buyers did not use the gain for the down payment on their next home.

We can draw at least two conclusions:

* For most Americans, their home represents a significant and stable part of their nest egg. That equity allows many to take advantage of other opportunities.

And finally

* A growing equity in real estate is simply not a part of renting. While it may be cheaper in the beginning, renters will likely miss out on equity build-up from inflation, appreciation, and even from loan pay-down over the years.

For owners in Atlanta, the equity ride will probably continue. New figures out recently from the NAR show the median home price in the US to be over $183,000. Atlanta’s median home continues to represent a bargain only $156,800. That means there’s no over-heating here.

Next week: Is "pride of ownership" just a real estate sales gimmick?