Some CVAR markets are among the areas that saw the greatest wealth gains from homeownership between the fourth quarter of 2010 and the fourth quarter of 2020.
A home often represents about 90% of the total wealth of a household. Homeownership often has long been pointed to as a way to build wealth over the long run. It also could help narrow racial income and wealth inequity gaps, writes Gay Cororaton, senior economist for the National Association of REALTORS® (NAR), at the association’s Economists’ Outlook blog.
But how much wealth potential can you gain over time? Cororaton offers the following scenario: Take a homeowner who purchased a single-family existing home 10 years ago at the median sales price of $170,567, with a 10% down payment. Then, they sold the home at the median sales price of $315,700 in the fourth quarter of 2020.
They would have built up a home equity gain of $176,123. Over a 30-year period, that would jump to $307,979, Cororaton notes.
“Wealth accumulation takes time, so the earlier households start owning homes, the greater the wealth accumulation,” Cororaton writes.
Where the Wealth Is
In some metros, homeowners are accumulating equity over a decade faster than others. For example, see below for the areas that saw the greatest wealth gains from homeownership between the fourth quarter of 2010 and the fourth quarter of 2020.
Top 10 Metro areas where homeowners typically accumulated the largest wealth from homeownership over a 10-year period (2010 Q4 – 2020 Q4)
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San Jose-Sunnyvale-Sta. Clara, CA ($929,471)
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San Francisco-Oakland-Hayward, CA ( $761,204)
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Anaheim-Sta. Ana-Irvine, CA (509,806)
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Los Angeles-Long Beach-Glendale, California ($430,196)
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San Diego-Carlsbad, California ($427,896)
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Urban Honolulu, Hawaii ($412,986)
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Naples-Immokalee-Marco Island, Florida ($379,243)
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Seattle-Tacoma-Bellevue, Washington ( $374,526)
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Boulder, Colorado ($370,800)
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Reno, Nevada ($324,577)