Middle-Income Homeowners Gain Wealth From Home Appreciation

While homeownership inequality persists nationwide, a new housing report by the National Association of Realtors revealed middle-income homeowners accumulated an estimated $122,100 in wealth as their homes appreciated by 68% in the last 10 years. The report, Wealth Gains by Income and Racial/Ethnic Group, examines the path to building generational wealth.

While not everyone has the same opportunities for homeownership, data show substantial variations and inequalities in homeownership rates across different income and racial and ethnic groups. For instance, low-income homeowners were able to build $98,900 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of roughly $150,800.

"This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life," said Lawrence Yun, NAR's chief economist. "A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter."

Although Black homeowners experienced the smallest wealth gains among any other racial or ethnic group, these owners were able to accumulate over $115,000 in wealth in the last decade. For the first time in this report, NAR identified the top 10 U.S. metro areas which have recorded the largest wealth gains for Black homeowners over the last 10 years.

Black households in Bellingham, Washington; Ocala, Florida; Palm Bay, Florida; Modesto, California; Greeley, Colorado; and Charleston, South Carolina were among the areas where more than 60% of Black households own their home. Homeowners in these areas were able to accumulate more than $125,000 in wealth in the last decade.

Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners who were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19 may have paid off an even larger amount of their mortgage, Yun noted.

"Your neighborhood Realtor is a champion able to help you achieve the dream of homeownership," said NAR President Kenny Parcell, a Realtor from Spanish Fork, Utah, and a broker-owner of Equity Real Estate, Utah. "Homeownership helps create long-term wealth and financial stability for your family and future generations."

No matter the income level, owners who live in expensive metro areas experienced the largest wealth gains. In the San Jose metro area, low-income owners have accumulated nearly $630,000 in the last decade, and middle-income owners gained $643,000. All of the top 10 areas with the largest wealth gains for low-income owners – surpassing $290,000 – were located in California.

In the top 10 areas with the highest homeownership rates for middle-income households, owners gained $110,000 in wealth on average in the last 10 years. In Ogden, Utah, for example, with 85% of the middle-income households owning their home, homeowners have built nearly $220,000 in wealth in the last decade.

Some significant areas to note include Port St. Lucie, Florida, where homeownership rate for middle-income households was 83%, and middle-income owners gained nearly $200,000 in wealth. The metro areas of Barnstable Town, Massachusetts and Palm Bay, Florida were some other areas where most middle-income households own their home and accumulated a substantial amount of wealth – over $170,000 – in the last decade.

Respectively, in the areas with the highest homeownership rates for low-income households, wealth gains were $140,000 on average. In Prescott, Arizona, while more than 2 out of 3 low-income households (68%) own their own home, owners have built more than $200,000 in wealth in the last decade. Barnstable Town, Massachusetts, as well as the Florida metro areas of North Port, Port St. Lucie, Palm Bay and Deltona, were other areas where most low-income households owned their home and accumulated a substantial amount of wealth – over $120,000 – in the last decade.

While homeownership should be easily accessible to all, factors such as race and gender still pose a challenge. Home price appreciation and wealth gains among ethnic and racial groups still have a large gap to fill.

To read the full report, including more data, charts and methodology, click here.