You’ve undoubtedly noticed that housing prices have exploded since the Covid pandemic emerged in March 2020. And you may have seen that home prices are particularly rising at the top end of the market.
This has been happening for some time. So you probably won’t be surprised that gains in housing wealth, which come primarily from price appreciation, are skewed toward the wealthy.
Indeed, of the $8.2 trillion in housing wealth accumulated from 2010 through 2020, high-income homeowners accounted for $5.8 trillion, or 71% of it, according to a study by the National Association of Realtors (NAR).
Here’s What Makes a Household High-IncomeIt defines high-income households as those with income totaling more than 200% of their geographic area’s median.
Middle-income homeowners accounted for $2.1 trillion of accumulated housing wealth, or 26% of the total. The middle-income designation applies to households with income of more than 80% to 200% of their area’s median.
Finally, only $296 billion, or 4%, of the housing wealth gain came to low-income homeowners. Low-income is defined as households with income of 80% or less than their area’s median.
“Unfortunately, as home prices have become less affordable, the distribution of housing wealth has worsened in the past decade, with low- and middle-income households sharing less of the housing wealth pie,” according to the NAR report.
“A more equitable distribution of housing wealth necessitates policies that will make housing more affordable for low- and middle-income households,” the report says.
What Can Be Done to Bring Down Housing Prices?That includes policies
1) addressing the shortages in capital and lending for the development of affordable housing;
2) incentivizing shifts in local zoning to increase [the] quantity of developable residential space;
3) promoting the conversion of unutilized commercial space; and
4) using federal resources to address rising construction costs and raw material and labor shortages.”
Meanwhile, the homeownership rate dropped among all income groups from 2010 to 2020, the report says.
The largest slide has come in the middle-income category, to 69.7% from 78.1%.
In the high-income category, the rate fell by four percentage points, and in the low-income category, it was two percentage points.