Rising home prices create massive wealth gains for homeowners

Long-term homeowners have seen their wealth grow significantly amid accelerating home prices rises over the past decade, according to a new report from the National Association of Realtors this week.

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The report, Housing Wealth Gains for the Rising Middle-Class Markets, shows that from 2010 to 2020, the total housing wealth of middle-income households grew by a combined $2.1 trillion, across all income groups and metro areas.

The NAR said a homeowner who purchased a typical single-family existing home 10 years ago at a median sales price of $162,600 is likely to have seen an increase in housing wealth of $229,400, according to the report. Of that wealth gain, 86% can be attributed to price appreciation. Home prices have continued to grow over the last decade. The price for the median single-family existing home has risen at an annual pace of 8.3% from the fourth quarter of 2011 through the fourth quarter of 2021, NAR reports.

“Owning a home continues to be a proven method for building long-term wealth,” said NAR Chief Economist Lawrence Yun. “Home values generally grow over time, so homeowners begin the wealth-building process as soon as they make a down payment and move to pay down their mortgage.”

More Americans are experiencing this wealth benefit, too. The number of homeowners is growing. Over the past decade, 58% of 917 metro areas tracked by NAR gained middle-income homeowners. (The NAR defines a middle-class homeowner as one earning an income of over 80% to 200% of an area’s median income.) About 6.3 million more new homeowner households sprouted up between 2010 through 2020.

The metro areas with the largest increase in middle-income homeowners in that time: Phoenix; Austin, Texas; Nashville; Dallas; Atlanta; Orlando, Fla.; Portland, Ore.; Seattle; and Tampa, Fla.

“Middle-income households in these growing markets have seen phenomenal gains in price appreciation,” Yun explained. “Given the rapid migration and robust job growth in these areas, I expect these markets to continue to see impressive price gains.”

Meanwhile, the metro areas with the largest home price gains from 2010 to 2020 were Phoenix-Mesa-Scottsdale, Ariz., Atlanta-Sandy Springs, Ga., Las Vegas-Henderson-Paradise, Nev., Cape Coral-Fort Myers, Fla., and Riverside-San Bernardino-Ontario, Calif.

“These escalating home values were no doubt beneficial to homeowners and home sellers,” Yun said. “However, as these markets flourish, middle-income wage earners face increasingly difficult affordability issues and are regrettably being priced out of the homebuying process.”

About Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]

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