U.S. News: Housing Wealth Flowed to Affluent In Past Decade

"The past decade's booming residential real-estate market has enriched almost every U.S. homeowner, but the gains have largely benefited the wealthiest, a new analysis shows.

From 2010 to 2020, about 71% of the increase in housing wealth was gained by high-income households, according to a report released Wednesday by the National Association of Realtors.

Overall, the total value of owner-occupied homes in the U.S. rose $8.2 trillion over the decade to $24.1 trillion, NAR said. Those wealth gains have continued in the past two years, as housing prices have surged because of robust demand and limited supply.

The housing-value gap between households earning more than 200% of their area's median income and other homeowners widened significantly over the decade. In 2010, high-income homeowners held 28% of all U.S. housing wealth. By 2020, that figure rose to 42.6%.

The share of housing wealth held by middle-income households declined to 37.5% in 2020, from 43.8% in 2010. Low-income housing wealth fell to 19.8% in 2020, from 28.2% in 2010.

"It's a wake-up call," said Gay Cororaton, senior economist and director of housing and commercial research at NAR. "Policies have to be focused more on making sure that the lower-income and many more middle-income folks participate in the benefit of homeownership."

Homeownership is a path for building wealth in the U.S. The median homeowner had $254,900 in wealth in 2019, compared with $6,270 for the median renter, according to the Federal Reserve's Survey of Consumer Finances. And for all but the highest-income households, their residential properties accounted for the bulk of their overall wealth, according to First American Financial Corp.

The U.S. homeownership rate peaked at 69.2% in 2004 before sliding below 63% in 2016, as millions of households went through foreclosure or exited homeownership during the housing crash and recession.

It has risen since then to 65.5% in the fourth quarter of last year, according to the Census Bureau.

Middle-income and low-income households' share of total housing wealth declined in the decade ended in 2020 because they made up a smaller proportion of overall homeowners than they did in 2010, the NAR report said.

Accessing the benefits of homeownership has become frustrating for those who aren't already in the market. Fast-rising home prices in the past two years have made it costlier for first-time buyers to become homeowners, especially as mortgage rates have also climbed in recent months." [1]

1. U.S. News: Housing Wealth Flowed to Affluent In Past Decade
Friedman, Nicole.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Mar 2022: A.3.