Homeownership and Building Wealth

Homeownership is the top method for Americans to build wealth in the United States (U.S.). Based on research from the Federal Reserve, the typical homeowner has a median net worth of $396,200, while the typical renter has a median net worth of $10,400. This difference is stark.

The Housing Affordability Crisis in the U.S.

The U.S. is currently encountering a housing affordability crisis due to rising interest rates, home prices, and low housing inventory. With the lack of housing inventory and reduced affordability, first-time buyers have been reduced to historic lows. The current share of first-time buyers from the Profile of Home Buyers and Sellers is just 32%, while the historic norm among primary residence buyers is nearly 40%. Additionally, while there has been a recent rise in minority home buyers, the gap between White and Black homeownership rates sits at approximately 30 percentage points, according to A Snapshot of Race and Home Buying in America.

Financial Literacy in the U.S.

The financial benefits of owning real estate is a topic that is discussed among some families. However, for many, this is a topic that is not only never talked about at home, it is never addressed through formal education in high school or even college. More than half of the respondents in this study had no formal training in high school or college on financial literacy, which included the benefits of owning real estate. If respondents had formal training, it was more common to receive this in college than in high school. However, college is not a step all Americans take.

When respondents learn about financial literacy, including the benefits of real estate, outside of school, it is often from their own personal experience once they are a homeowner, from the internet, or from parents.

Awareness of FHA, VA Loans, and Low Down Payment Programs

Among prospective home buyers who are considering purchasing a home, there is a knowledge gap of FHA, VA loans, and low down payment programs. Many prospective home buyers do not even consider these programs due to not understanding them or a lack of awareness that they exist. These programs may help potential buyers break into homeownership sooner than they may think is possible.

The Research in This Report

The research contained in this report shows an opportunity to help narrow the racial gap in homeownership and bring more first-time home buyers into the housing market. Without the knowledge of benefits of homeownership, the financial benefits of real estate, and the knowledge of loan programs to help enter homeownership, it is hard to imagine the American Dream of homeownership.

Download the full report

Advertisement