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The report "Wealth Gains by Income and Racial/Ethnic Group" from the National Association of Realtors (NAR) studied wealth accumulation over the past decade and revealed that homeownership has significant financial advantages over renting. Over the past decade, homeowners have become 40 times wealthier than renters, driven by a remarkable $190,000 increase in the value of median-priced homes in the United States.
Wealth Accumulation Across Income Groups
The report provides valuable insights into wealth accumulation among different income groups. Low-income homeowners, earning up to 80% of the area median income, amassed $98,900 in wealth, while middle-income homeowners, earning between 80% and 200% of the median area income, saw their wealth grow by $122,100. Upper-income homeowners, earning more than 200% of the median area income, enjoyed the highest wealth accumulation, with $150,800 gained.
Factors Driving Homeowners’ Financial Success
Lawrence Yun, the chief economist for the NAR, emphasizes two key factors contributing to homeowners’ financial success. First, homeowners benefit from the appreciation of home prices over time. Second, the financial obligation of monthly mortgage payments compels homeowners to save, unlike renters who do not have this responsibility.
The Long-Term Financial Benefits of Homeownership
Owning a home not only provides the potential for wealth accumulation through home price appreciation, but also encourages responsible financial habits through regular mortgage payments. Aspiring homeowners, especially those with low incomes, should seek opportunities to overcome affordability barriers and explore programs that facilitate homeownership.
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