New Study Finds Homeowners Have 40 Times More Wealth Than Renters
Homeownership is often touted as a means of building wealth, and new data from the National Association of REALTORS® (NAR) provides further evidence of this. The report, titled "Wealth Gains by Income and Racial/Ethnic Group," shows that property appreciation has surged in the last decade, with most homeowners earning more than $100,000 in equity during that time. According to the report, middle-income homeowners have seen their properties appreciate by 68% since 2012, accumulating $122,100 in wealth. Meanwhile, low-income homeowners who earn less than 80% of their area’s median income saw $98,900 in equity gains in the same time period, while upper-income households who earn more than 200% of their area’s median income accrued $150,800 in equity. The report also highlights the benefits of homeownership, noting that homeowners have seen their debt drop by 21% over the last decade. Many homeowners were able to refinance their mortgages and secure an interest rate below 4%, resulting in smaller monthly payments and larger mortgage payments. However, the report also reveals the disparities in homeownership rates among different income and racial/ethnic groups. Black homeowners accrued the smallest wealth gains over the last decade compared to any other racial or ethnic group, and Black homeownership rates continue to lag behind. Despite these disparities, the report emphasizes that homeownership is still a catalyst for building wealth, even for those with lower incomes. It notes that "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." The report also highlights the areas where homeowners have seen the largest wealth gains. Owners in pricey metro areas, such as San Jose, California, have seen some of the largest wealth gains over the last decade, with low-income earners accumulating nearly $630,000 and middle-income earners gaining $643,000 in equity. Overall, the NAR report provides important insights into the benefits of homeownership as a means of building wealth, while also shedding light on the disparities that still exist among different income and racial/ethnic groups.
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