Homeownership Linked to Wealth- Building

Economists and politicians study homeownership and often emphasize it because homeownership is an effective way to build wealth, especially for low-income households.

Analyzing the difference in wealth between renters and homeowners by income level further underscores the wealth-building power of homeownership. Homeowners are wealthier than renters at every income level, and the majority of homeowner wealth comes from housing for every income category except for the very top earners.

Between 2016 and 2019, housing wealth was the single biggest contributor to the increase in net worth across all income groups, accounting for 32 percent of the overall increase. This was especially true of lower income households.

There are certainly risks from homeownership, and its benefits are not uniform across all markets. However, for the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.

Ksenia Potapov contributed to this blog post.