According to the U.S. Census Bureau, home equity and retirement savings accounts comprise more than 60% of a household’s net worth. Moreover, low-income homeowners have witnessed a significant increase in home values during the last decade.
A post by Housing Wire stated that between 2012 and 2022, the median home value of low-income households (earning no more than 80% of the metro area’s median income) rose by 75%, equivalent to $98,910.
In contrast, middle-income households (earning between 80% and 200% of the metro’s median income) saw a rise of 68%, equivalent to $122,070, during the same period.
Meanwhile, upper-income households (earning more than 200% of the area’s median income) experienced an increase of $150,810.
These statistics were published in the National Association of Realtors (NAR) report last April 11. It used the Federal Housing Finance Agency’s House Price Index data and the American Community Survey Public Microdata Sample data to estimate the median home value for the 200 largest metro areas across the U.S., categorized based on income level and racial/ethnic group.
The data reveals that 47% of low-income households own their homes, compared to 69% of middle-income households and 87% of upper-income households.
Most low-income families are located in the south and west of the U.S., while most middle-income families are in the midwest and parts of the west, and upper-income households are primarily concentrated in the west and northeast.
Ocala, Florida, has the highest homeownership rates for low-income households, standing at 73%, followed by Prescott, Arizona, at 68%, and Barnstable Town, Massachusetts, at 67%.
Between 2012 and 2022, low-income households in these areas gained an average of $140,000 in wealth, with Prescott experiencing the most significant wealth gain of $200,000.
Barnstable Town has the highest homeownership rate at 86% for middle-income households across racial and ethnic groups, followed by Ogden, Utah (85%), and Port St. Lucia, Florida (83%).
Ogden saw the largest wealth gain for middle-income homeowners in all metros, gaining $220,000 from 2012 to 2022.
Rochester, Minnesota, had the highest homeownership at 98.4% for upper-income households, followed by Des Moines, Iowa, and Cedar Rapids, Iowa, at 96.4%.
The data showed that the amount of wealth gained typically increases with the home price level and the number of years someone has owned the home.
Typically, the value of homes owned by low-income households is $65,000 less than the median value of homes owned by middle-income families.
However, despite this difference, low-income households tend to reside in their homes for an average of 19 years, which is longer than 15.8 years for middle-income families.
Regardless of income level, homeowners who live in the most expensive metro areas experienced the most significant wealth gains. For example, low-income homeowners in the San Jose metro area gained almost $630,000 in wealth over the past decade, while middle-income families gained $643,000.
The top 10 areas that experienced wealth gains over the past decade were in California, with an average wealth gain of over $290,000.
White Americans had the highest homeownership rate among what NAR calls “racial/ethnic groups” at 74.5%, followed by Asian Americans (61.9%), Hispanic Americans (48.5%), and Black Americans (44.9%).
Black homeowners experienced the smallest wealth gain among all racial/ethnic groups between 2012 and 2022, amounting to $115,000, compared to $138,430 for white Americans, $162,450 among Hispanic Americans, and $239,430 among Asian Americans.
Between 2012 and 2022, Black homeowners experienced the greatest increase in wealth in Bremerton, Washington ($585,710), Santa Maria, California ($583,980), and Lake Havasu City, Arizona ($574,740).
The report also found that homeownership rates vary significantly by racial/ethnic group across different metro areas.
In some areas, the gap between white and black homeownership rates was particularly large. For example, in the Minneapolis – St. Paul – Bloomington metro area, the homeownership rate for white Americans was 76.5%. In comparison, the rate for Black Americans was only 22.6%.
The NAR report suggests that one possible way to address these disparities is by promoting policies that encourage more affordable housing and increase access to credit.
It also recommends programs supporting homebuyer education and counseling, which can help low- and moderate-income households navigate the process and avoid predatory lending practices.
Overall, the report provides essential insights into homeownership and wealth inequality in the United States. While homeownership rates have increased across income levels and racial/ethnic groups in recent years, there is still a significant gap in wealth accumulation between different groups.
By understanding these disparities and working to address them, policymakers and advocates can help create a more equitable and just society.
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