The places where homeownership is leading to the largest wealth gains

A household’s wealth is often mostly represented by the home in which they live, assuming it is owned by those residing in the home.

It has long been understood that homeownership is one of the best ways to build wealth. According to data from the National Association of REALTORS® (NAR), a home represents approximately 90% of the total wealth of a household.

And because there are still racial and gender gaps in the U.S. when it comes to income and wealth inequality, the fastest way to start to close them is to bolster homeownership among those who have been marginalized because of their race and/or gender.

How much wealth can be gained over time just by owning a home? NAR senior economist Gay Cororaton offered the following example:

“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,” Cororaton wrote in the NAR economist outlook blog. “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.”

The average homeowner moves every 10 years. Most of the wealth gain is from price appreciation on a home. This accounts for 82% of the wealth gain over the span of a decade.

“Wealth accumulation takes time, so the earlier households start owning homes, the greater the wealth accumulation,” Cororaton wrote.

And in some places, the wealth accumulates faster than others. Sometimes, much faster.

NAR data show that in certain metropolitan markets, wealth – in terms of equity – is growing at a rate that is about a full decade faster than some others.

A lot of that has to do with job creation, businesses setting up roots in a specific area, and a strong economy.

The areas that saw the greatest wealth gains from homeownership between the fourth quarter of 2010 and the fourth quarter of 2020 were in areas that shouldn’t surprise:

  • San Jose-Sunnyvale-St. Clara, Calif.: $929,471
  • San Francisco-Oakland-Hayward, Calif.: $761,204
  • Anaheim-Sta. Ana-Irvine, Calif.: $509,806
  • Los Angeles-Long Beach-Glendale, Calif: $430,196
  • San Diego-Carlsbad, Calif.: $427,896
  • Urban Honolulu: $412,986
  • Naples-Immokalee-Marco Island, Fla.: $379,243

Higher-priced areas will always see the largest gains from a pure dollars sense because a 30% increase in gains on a $1 million home is always going to be more than a 30% increase on a $350,000 home. But the reality is, even in markets where the home prices haven’t skyrocketed as quickly, equity in the home you own can accumulate quickly.

Other markets in the top 10 include Seattle-Tacoma-Bellevue, Wash. ($374,526), Boulder, Colo. ($370,800) and Reno, Nev. ($324,577).

The metropolitan areas with the smallest wealth growth over a 10-year span were Binghamton, N.Y. ($28,064), Decatur, Ill. ($28,970), Peoria, Ill. ($31,484), Bloomington, Ill. ($32,861), Elmira, N.Y. ($43,669), Springfield, Ill. ($45,821), Waterloo/Cedar Falls, Iowa ($46,749), Charleston, W. Va. ($46,774), Erie, Pa. ($47,940) and Cumberland, Md.-W. Va. ($52,534).

To see the full list of each of the 181 metropolitan areas tracked by NAR and to sort by wealth gains over the past five, 10, 15 or 30 years, click here.