Home prices have accelerated at a record pace over the last decade, bringing growing wealth to households from long-term homeownership, according to a new report released by the National Association of REALTORS®.

From 2010 to 2020—across income groups and metro areas—the total housing wealth for middle-income households grew by $2.1 trillion, according to NAR’s report, Housing Wealth Gains for the Rising Middle-Class Markets.

A homeowner who purchased a typical single-family existing home 10 years ago at a median sales price of $162,600 is likely to have seen an increase in housing wealth of $229,400, according to NAR’s report. Of that wealth gain, 86% can be attributed to price appreciation. Home prices have continued to grow over the last decade. The price for the median single-family existing home has risen at an annual pace of 8.3% from the fourth quarter of 2011 through the fourth quarter of 2021, NAR reports.

“Owning a home continues to be a proven method for building long-term wealth,” says Lawrence Yun, NAR’s chief economist. “Home values generally grow over time, so homeowners begin the wealth-building process as soon as they make a down payment and move to pay down their mortgage.”

More Americans are experiencing this wealth benefit, too. The number of homeowners is growing. Over the past decade, 58% of 917 metro areas tracked by NAR gained middle-income homeowners. (NAR defines a middle-class homeowner as one earning an income of over 80% to 200% of an area’s median income.) About 6.3 million more new homeowner households sprouted up between 2010 through 2020.

The metro areas with the largest increase in middle-income homeowners in that time: Phoenix; Austin, Texas; Nashville; Dallas; Atlanta; Orlando, Fla.; Portland, Ore.; Seattle; and Tampa, Fla.

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“Middle-income households in these growing markets have seen phenomenal gains in price appreciation,” Yun says. “Given the rapid migration and robust job growth in these areas, I expect these markets to continue to see impressive price gains.”

Metros With the Largest Home Price Gains

The biggest price increases in the fourth quarter of 2021 as a percentage of the purchase price over the last decade were in:

• Phoenix-Mesa-Scottsdale, Ariz.: 275.3%
• Atlanta-Sandy Springs, Ga.: 274.7%
• Las Vegas-Henderson-Paradise, Nev.: 251.7%
• Cape Coral-Fort Myers, Fla.: 233.9%
• Riverside-San Bernardino-Ontario, Calif.: 207.6%

“These escalating home values were no doubt beneficial to homeowners and home sellers,” Yun says. “However, as these markets flourish, middle-income wage earners face increasingly difficult affordability issues and are regrettably being priced out of the homebuying process.”

Read NAR’s full report, Housing Wealth Gains for the Rising Middle-Class Markets.

Source: https://magazine.realtor/daily-news/2022/03/09/homeownership-fueling-tremendous-wealth-gains