A home often represents about 90% of the total wealth of a household. Homeownership often has long been pointed to as a way to build wealth over the long run. It also could help narrow racial income and wealth inequity gaps, writes Gay Cororaton, senior economist for the National Association of Realtors, at the association’s Economists’ Outlook blog. But how much wealth potential can you gain over time?
Cororaton offers the following scenario: Take a homeowner who purchased a single-family existing home 10 years ago at the median sales price of $170,567, with a 10% down payment. Then, they sold the home at the median sales price of $315,700 in the fourth quarter of 2020. They would have built up a home equity gain of $176,123. Over a 30-year period, that would jump to $307,979, Cororaton notes. “Wealth accumulation takes time, so the earlier households start owning homes, the greater the wealth accumulation,” Cororaton writes.
Source: National Association of Realtors Economists’ Outlook blog