When you’re a Realtor, you realize everyone’s housing needs are different. Some people are looking to expand to make room for a larger family, while other folks are downsizing to have a space that’s more comfortable for their needs.
One constant between these people is that they all want to get the most out of their investment. Owning a home has traditionally been an exceptional way to help build wealth in the long term because it allows you to build equity, which is the difference between your home’s value and the remaining amount of your mortgage.
Over time, your home’s value might appreciate, increasing your equity and net worth. Additionally, owning a home can provide tax benefits, such as deductions for mortgage interest and property taxes.
A new housing report by the National Association of Realtors reveals middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68% in the last 10 years. The report, “Wealth Gains by Income and Racial/Ethnic Group,” speaks to the value agents and Realtors bring to consumers when helping buy and sell homes that build generational wealth.
The NAR released the report during its 2023 Realtor Broker Summit as the association commemorated Fair Housing Month.
While not everyone has the same opportunities for homeownership, data show substantial variations and inequalities in homeownership rates across different income and racial and ethnic groups. For instance, low-income homeowners were able to build $98,900 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of $150,800.
“This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” says Lawrence Yun, the NAR’s chief economist. “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
During Fair Housing Month, I believe it’s important to look at homeownership’s effects on different groups from different backgrounds. Although Black homeowners experienced the smallest wealth gains among any other racial or ethnic group, these owners were able to accumulate over $115,000 in wealth in the last decade.
For the first time in this report, NAR identified the top 10 U.S. metro areas which have recorded the largest wealth gains for Black homeowners over the last 10 years. Owners in these areas were able to accumulate more than $125,000 in wealth in the last decade.
Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners who were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19 might have paid off an even larger amount of their mortgage, Yun notes.
I think Kenny Parcel, the NAR’s 2023 president put it best when he said, “Your neighborhood Realtor is a champion able to help you achieve the dream of homeownership, (which) helps to create long-term wealth and financial stability for your family and future generations.”
Fair Housing is important all year, and this study shows how opening every door to potential homebuyers is crucial for the future wealth of all people.
Realtors work for their clients and their homebuying and selling needs every day. That’s Who We R.
Founded in 1912, Greater Chattanooga Realtors is the voice for real estate in Greater Chattanooga. A regional organization with more than 2,700 members, Greater Chattanooga Realtors serves Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. The association is one of approximately 1,100 local associations and boards of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors owns and operates a Multiple Listing Service that is one of approximately 600 MLSs in the country and services more than 3,000 MLS users. Local association membership consists of Realtors servicing the Greater Chattanooga area and specializing in a variety of disciplines, including appraisal, commercial, industrial, land, multifamily, property management and residential. Affiliate members who represent related industries work alongside these Realtors, including mortgage lenders, home inspectors, title and closing services, pest inspection and control services and insurance providers.