According to a recent story in USA Today, over the past decade, the median-priced home in the U.S. gained $190,000 in value, making the typical homeowner 40 times wealthier than if they had remained a renter, based on a report released by the National Association of Realtors.
“Over a long period of time, home ownership is a solid path towards building wealth,” says Lawrence Yun, chief economist for National Association of Realtors. “It works in two ways -- first you have the advantage of home price appreciation, and secondly, it forces homeowners to save for monthly mortgage payments which renters don’t have.”
Where did low-income earners gain the most wealth through homeownership?
In the San Jose metro area, low-income owners accumulated nearly $630,000 in the past 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 in California.
Among all segments of income and race, the wealth gain was smaller over the past 15 years compared with the past 10 years, reflecting the loss of equity when people bought at the peak of the housing crisis in 2007.
In the areas with the highest homeownership rates for low-income households, wealth gains were $140,000 on average.
Among the 200 largest metro areas across the country, 38% of these areas had a homeownership rate for low-income households higher than 50%.
What does all this mean?
What these numbers are proving is that over time, homeownership is a beneficial path to accumulating wealth in one’s lifetime the US.