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Homeowners gain $8.2 trillion in housing wealth over 10 years Nearly 980,000 middle-income households became homeowners from 2010-2020

Didier Malagies • Mar 15, 2022



From 2010 to 2020, middle-income households gained $2.1 trillion in housing wealth, according to a new study by the National Association of Realtors, released on Wednesday.


NAR’s Housing Wealth Gains for the Rising Middle-Class Markets study examined the distribution of housing wealth between 2010 and 2020 across income groups in 917 metropolitan and micropolitan areas.

The vast majority (71%) of the $8.2 trillion in housing wealth generated during this time period belonged to high-income households, while $296 billion, or 4%, was from low-income households.


During this 10-year period, nearly 980,000 middle-income households became homeowners and 529 of the 917 metro and micropolitan areas examined gained middle-income homeowners. NAR defined a middle-class homeowner as one earning an income of over 80% to 200% of the area median income.


The top 10 areas showing the largest increase in middle-class owner-occupied housing units in 2020 compared to 2010 were Phoenix-Mesa-Scottsdale (103,690), Austin-Round Rock (61,323), Nashville-Davidson-Murfreesboro-Franklin (55,252), Dallas-Fort Worth-Arlington (53,421), Houston-The Woodlands-Sugarland (52,716), Atlanta-Sandy Springs-Roswell (48,819), Orlando-Kissimmee-Sanford (35,063), Portland-Vancouver-Hillsboro (34,373), Seattle-Tacoma-Bellevue (31,284) and Tampa-St. Petersburg-Clearwater (28,979).


On the other side of the spectrum, New York-Newark-Jersey City (-100,214), Los Angeles-Long Beach-Anaheim (-73,839), Chicago-Naperville-Elgin (-34,420), Boston-Cambridge-Newton (-28,953), Detroit-Warren-Dearborn (-25,405) and Philadelphia-Camden-Wilmington (-22,129), all saw a decrease in middle-income homeowner households over the past decade. Despite this decrease, some markets such as Los Angeles and New York, still saw housing wealth rise due to increasing home prices.


As of the fourth quarter of 2021, the largest price gains, as a percent of the purchase price over the last decade were in Phoenix-Mesa-Scottsdale (275.3%), Atlanta-Sandy Springs (274.7%), Las Vegas-Henderson-Paradise (251.7%), Cape Coral-Fort Myers (233.9%) and Riverside-San Bernardino-Ontario (207.6%).


“Middle-income households in these growing markets have seen phenomenal gains in price appreciation,” NAR chief economist Lawrence Yun said in a statement. “Given the rapid migration and robust job growth in these areas, I expect these markets to continue to see impressive price gains.”


Nationwide, the median single-family existing-home sales price rose at an annual pace of 8.3% from the fourth quarter of 2011 through the fourth quarter of 2021, according to NAR, and as of Q4 2021, the median single-family existing-home sales price rose by at least 10% in 67% of 183 metro areas tracked by NAR. This means that a homeowner who purchased a typical single-family existing home 10 years ago at the median sales price of $162,600 is likely to have accumulated $229,400 in housing wealth, with 86% of the wealth gain attributed to price appreciation.


“Owning a home continues to be a proven method for building long-term wealth,” Yun said in a statement. “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.” 


Although home prices fell roughly 30% during the Great Recession, home prices have grown at such a rate that a homeowner who purchased a home just five years ago would have accumulated $146,200 in housing wealth. As mortgage rates continue to remain low and housing inventory continues to decrease, NAR reported double-digit increases in the median single-family existing-home sales price in nearly two-thirds of the 183 metro areas it tracked.


While rising housing prices benefit homeowner, if prices rise too high they become unaffordable and low- and middle-income households cannot share in the wealth creation arising from homeownership.

“These escalating home values were no doubt beneficial to homeowners and home sellers,” Yun said in a statement. “However, as these markets flourish, middle-income wage earners face increasingly difficult affordability issues and are regrettably being priced out of the home-buying process.”


While the number of middle-income homeowners increased over the decade, they made up a smaller fraction of homeowners in 2020 at 43%, down from 45.5% in 2010. In 2020, just 27.7% of homeowners were low-income homeowners, down from 38.1% 10 years prior. Meanwhile, the share of high-income homeowners rose from 16.4% in 2010 to 29.8% in 2020.


According to NAR the homeownership rate across income groups has declined since the Great Recession. The largest drop was seen in the middle-income homeownership rate, which fell from 78.1% to 69.7%

The low-income and high-income homeownership rates fell two percentage points and four percentage points, respectively.



“Now, we must focus on increasing access to safe, affordable housing and ensuring that more people can begin to amass and pass on the gains from homeownership,” NAR president Leslie Rouda Smith said in a statement.




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By Didier Malagies 25 Mar, 2024
Home equity levels among homeowners aged 62 and older are at record levels following the end of the pandemic. As a result, reverse mortgages may no longer be considered a “loan of last resort” as financial planners aim to highlight their uses as part of a comprehensive financial plan in retirement. This is according to a column published this week by Investment News, soliciting input from planner professionals well known to the reverse mortgage business, including Wade Pfau. But other data suggests convincing borrowers of the benefits remains very challenging. Reverse mortgage use as part of a broader financial plan “is really the intention in the financial planning space,” Pfau told the outlet. While reverse mortgage customers benefit greatly from low rates, the current high-rate environment doesn’t fully cancel out their potential use as a planning tool, he explained. “It’s all about the sequence-of-returns risk in retirement planning […] Spending from the home equity helps you preserve more investments, so there is going to be a bigger legacy at the end,” Pfau told the outlet. “The beneficiaries can get more. They can pay off the loan and still have a net windfall.” This perspective is consistent with prior statements Pfau has provided to other outlets, including to RMD . Other financial planners adjacent to the reverse mortgage space offered their own thoughts, including Steve Resch, vice president of retirement strategies at Finance of America Reverse (FAR). “The goal is for the client or the family to always retain an equity position in that property. […] Years ago, that wasn’t the case,” Resch said in the story, describing the housing crisis of 2008 as a “reckoning” for the reverse mortgage industry as well as the larger housing ecosystem. Resch explained that the ballooning length of retirement in America contributes to the potential utility of a reverse mortgage for qualifying borrowers. “It’s simply a matter of demographics,” he told Investment News. “We have an enormous population that is moving into retirement. We’ve got a massive amount of equity available. We’re looking at 20- to 30-year retirements. Bringing home equity into that plan really makes sense.” Another financial planner, Gateway Wealth Management founder David Foster, cited Pfau’s work in particular as helping to bring him around on the product category as a planning tool for clients, but convincing them to take a closer look at a reverse mortgage remains a major challenge. “I think reverse mortgages might be the single most underutilized retirement planning tool,” he told the outlet. “I have found it extremely difficult to have a rational conversation with my clients about reverse mortgages. Most people who’ve paid off their house just cannot fathom the idea of going back into debt. “No amount of logic will be able to convince them that it is wise to borrow against their house in retirement after having worked so hard to pay off their home prior to retirement,” Foster added. “I’ve even had people get borderline angry with me for even suggesting the idea.” Last year, Mutual of Omaha Mortgage released survey data suggesting that education hurdles remain very steep for the reverse mortgage industry when aiming to connect with a variety of different borrowers on multiple potential use cases. 
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