90% of Total Wealth

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(R) Economists’ Outlook blog