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Rising home prices create massive wealth gains for homeowners

By Mike Wheatley | March 10, 2022

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.

Homeowners Accumulate Wealth

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.”

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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