Metro Area Housing Wealth Gains

Homeownership is the largest source of wealth among households. Housing wealth contributes positively to the homeowner’s and children’s economic condition because the home equity can be tapped for expenditures such as investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement.

Housing wealth (or net worth or equity) is built up over time via the home price appreciation and the principal payments that the homeowner makes on the loan. NAR calculated the gains in housing wealth (equity) over a 5, 10, 15, 30 year holding period using NAR’s median existing home price data, assuming a 20 percent down payment and a 30-year fixed rate mortgage. These calculations are illustrative of the magnitude of the wealth gains over time. Actual wealth gains will vary by property and type of financing.

Nationally, most of the wealth gains accrue from the appreciation in home values. As of 2018, a homeowner who purchased a typical existing home five years ago (2013) gained $79,488 in wealth (equity), of which $64,200, or 81 percent was from the home price appreciation ($197,400 in 2013 to $261,600 in 2018). Homeowners who move typically do so in 10 years, so a homeowner who bought a home 10 years ago (2008) would have $91,081 in home equity gains as of 2018).[1] The longer the holding period, the larger is the increase in wealth due to the home price appreciation and the cumulative principal payments, which reduce the loan balance.

Graph: 2018 Housing Wealth Equity Gains for a Typical Single-Family Existing Home

Download the .pdf reports for 181 metropolitan statistical areas.

Expand all

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

[1] To be clear, these are changes in wealth or home equity between two time periods or over n holding periods. If one wants the level of the home equity at a point in time, one has to add the down payment.

That's Who We R

The campaign ads rally consumers to "Look for the R" for reassurance, resources, and reliable guidance on their path to property ownership.

Coronavirus

The latest from NAR about about COVID-19 (coronavirus), its impact on the real estate industry and events, and federal programs affecting REALTORS®.

@nardotrealtor on Twitter

Follow NAR_Research