Homeownership and Wealth: NAR Report Reveals Disparities in Wealth Gains

A new report from the National Association of REALTORS® (NAR) shows significant inequalities in homeownership rates and household wealth gains across different income levels and racial/ethnic groups. 

As we work to address the homeownership gap across income and racial/ethnic groups, there’s value in reporting progress (or the lack thereof) as well as any steps backward. 

Here’s what you need to know. 

Two ways homeownership builds wealth

Homeownership gives consumers two ways to build wealth:

1. A mortgage is essentially a forced savings account, where every monthly payment pays down a portion of the borrower’s debt while building equity. 
2. Home values increase over time, and the price appreciation adds to the homeowner’s wealth. 

Building on that second point, the median-priced home has gained about $190,000 in value over the past ten years. 

Those two reasons are why the net worth of a typical homeowner in the U.S. is roughly 40 times the net worth of a renter. 

The widening homeownership gap

That said, not everyone has the same opportunities to become homeowners, and some groups in particular face greater challenges in their efforts to achieve homeownership. 

The data shows variations and inequalities in homeownership rates and related wealth gains across different income levels and racial/ethnic groups. For one, the majority of low-income American households rent; fewer than half (47%) of this group are homeowners. 

That rate jumps to 69% for middle-income and 87% for upper-income groups. 

For another, the homeownership rate for low-income households is even lower now than it was ten years ago. It was 48% in 2011. 

Across racial/ethnic groups, the Black homeownership rate continues to lag behind the rate of any other group. At the end of 2022, that rate stood at 44.9%, compared to—

• 74.5% for white Americans
• 61.9% for Asian Americans
• 48.5% for Hispanic/Latinx Americans

Compared to 10 years ago, homeownership rates improved for all four of these racial/ethnic groups, but the homeownership rate for Black Americans hasn’t increased at the same rate as for other groups, further widening the gap between Black and white homeownership rates. 

Thus, the data confirms that significantly fewer low-income and Black households own their home and are able to build generational wealth compared to those of other income levels and racial/ethnic groups. 

Metros with the highest homeownership rates for low- and middle-income residents

The National Association of REALTORS® calculated the homeownership rate for each income group (lower, middle, and upper) and identified metros with the largest shares of low- and middle-income households that own their homes, as well as those with the smallest gap in homeownership rates between income groups. 

Among the 200 largest U.S. metros, the homeownership rate for low-income households varied from 27% to 73%, while the rate for middle-income households varied from 47% to 86%. 

Thirty-eight percent of those metros had a homeownership rate higher than 50% for low-income households. At the top of that list, Ocala, FL had the highest rate at 73%, followed by Prescott, AZ (68%) and Barnstable Town, MA (67%). 

Ocala also topped the list of metros with the smallest gap in homeownership between low- and middle-income households, followed by Prescott, AZ and Salinas, CA. 

The top three metros with the highest homeownership rates for middle-income households:

• Barnstable Town, MA (86%)
• Ogden, UT (85%)
• Port St. Lucie, FL (83%)

Home values and tenures across income and racial/ethnic groups

The amount of homeowner wealth gained increases as home values rise, but also with the number of years spent owning the property. As homes appreciate over time, wealth gains increase right along with them. 

If the value of a median-priced home grows by 10%, for example, the homeowner gains $36,300 in wealth, compared to $50,000 for homes valued at $500,000. 

A median-priced home in the U.S. is now worth $189,000 more than 10 years ago and $151,000 more than seven years ago. 

Low-income households typically own homes valued at $65,000 less than homes owned by middle-income households. But in 2021, low-income homeowners generally spend more years in their properties (19) than middle-income (16) or upper-income (14) homeowners.  

Across racial/ethnic groups, Black Americans typically own homes that cost nearly $64,000 less than homes owned by white Americans. But Black Americans generally stay in their homes longer (19 years) compared to white (16), Asian (12), and Hispanic/Latinx (14) homeowners. 

Wealth gains across income levels and racial/ethnic groups

To gauge wealth gains across different income and racial/ethnic groups, NAR computed how much homes owned by these groups appreciated in the last five, seven, 10, and 15 years. 

Nationwide wealth gains

While the amount of home value appreciation is greater for more expensive homes, the percentage change in home values is significantly higher for homes owned by low-income households. 

In the last decade (2012-2022), the median value of properties owned by low-income homeowners increased by $98,910 or 75%. So, low-income owners were able to build $98,900 in wealth from home value appreciation alone. 

Middle-income homeowners gained $122,100 in wealth as their home values appreciated by 68%. Upper-income homeowners gained $150,800 in home value appreciation since 2012. 

Black homeowner wealth gains at the metro level

While Black homeowners saw the smallest wealth gains among all racial/ethnic groups, they were able to build $115,000 in wealth over the last ten years. 

Page 12 of the NAR report highlights the top 10 areas with the greatest wealth gains for Black homeowners from 2012 to 2022. 

Here are some of the metros where over 60% of Black residents own their home and were able to build over $125,000 in wealth over the last ten years: 

• Bellingham, WA
• Ocala, FL
• Palm Bay, FL
• Modesto, CA
• Greeley, CO
• Charleston, SC

On top of the wealth gains homeowners accumulated from home price appreciation over the last decade, their mortgage debt has also declined by 21%. 

And while many were able to refinance and lock in a rate lower than 4% during 2021, some may have paid off a larger amount of their mortgage during that time. 

Metro-level wealth gains across income groups

In metros with the highest homeownership rates for low-income households, average wealth gains reached $140,000. In Prescott, AZ, where 68% of low-income residents own their home, those owners built over $200,000 in wealth in the last 10 years. 

Other areas where most low-income residents own their home and gained a substantial amount of wealth (over $120,000) included—

• Barnstable Town, MA
• North Port, FL
• Port St. Lucie, FL
• Palm Bay, FL
• Deltona, FL

In the top 10 metros with the highest homeownership rates for middle-income residents, these homeowners gained an average of $110,000 in wealth over the last decade. 

While 85% of the middle-income residents of Ogden, UT own their home, these owners have gained an average of $220,000 during that time, while middle-income homeowners in Port St. Lucie, FL (83%) gained an average of $200,000. 

Other metros where most middle-income residents own their home and gained over $170,000 in wealth over the last 10 years include Barnstable Town, MA and Palm Bay, FL. 

Regardless of income level, homeowners living in expensive metros saw the biggest wealth gains. In the San Jose metro area, low-income homeowners gained nearly $630,000 in wealth over the last decade, while middle-income owners accumulated $643,000. 

All of the top 10 metros with the biggest wealth gains—exceeding $290,000—were in California. 

The Role Real Estate Agents Play

As a real estate agent, it’s important to keep this data in mind as you serve the people in your market. Let it motivate you to learn more about resources in your community for low-income and minority home seekers. 

Whatever you can do to help close the homeownership gap and maximize wealth gains for low-income and minority households will help your entire community.