Middle-Income Households’ Housing Wealth Zooms
In the past 10 years, NAR reported that this demographic saw a $2.1 trillion surge.
Total housing wealth rose $8.2 trillion from 2010 through 2020, with 6.3 million more new homeowner households. A homeowner who purchased a typical single-family existing home 10 years ago at the median sales price of $162,600 is likely to have accumulated $229,400 in housing wealth.
NAR found that during those 10 years, nearly 980,000 middle-income households became homeowners. Within that time frame, total housing wealth for this income group surged by $2.1 trillion.
Homeownership is widely recognized as the leading source of net worth among families. Housing wealth itself is primarily achieved by price appreciation gains, and the nation has seen home prices accelerate at a record pace during the course of the last decade.
A new study from the National Association of Realtors examined the distribution of housing wealth between 2010 and 2020 across income groups and in 917 metropolitan or micropolitan areas.
From 2010 through 2020, 529 of 917, or 58%, of metropolitan and micropolitan areas gained middle-income homeowners. NAR identifies these locations as rising middle-income class housing markets, i.e., markets that saw the largest increase in middle-class owner-occupied housing units in 2020 compared to 2010.
Phoenix, Austin, Nashville Rank as Top Markets
The top 10 rising middle-income housing markets, with at least 50,000 more middle-income homeowner households, were Phoenix-Mesa-Scottsdale (103,690), Austin-Round Rock (61,323), Nashville-Davidson-Murfreesboro-Franklin (55,252), Dallas-Fort Worth-Arlington (53,421), Houston-The Woodlands-Sugarland (52,716), Atlanta-Sandy Springs-Roswell (48,819), Orlando-Kissimmee-Sanford (35,063), Portland-Vancouver-Hillsboro (34,373), Seattle-Tacoma-Bellevue (31,284) and Tampa-St. Petersburg-Clearwater (28,979).
NAR defines a middle-class homeowner as one earning an income of over 80% to 200% of the area median income.
The single-family home market has surged in most parts of the country. Redfin reported this week that nationwide, 5,897 homes sold for at least $100,000 over asking price at the beginning of this year, up from 2,241 during the same period last year.
As of Q4 2021, the largest price gains (as a percent of the purchase price) over the preceding decade were in Phoenix-Mesa-Scottsdale (275.3%), Atlanta-Sandy Springs (274.7%), Las Vegas-Henderson-Paradise (251.7%), Cape Coral-Fort Myers (233.9%) and Riverside-San Bernardino-Ontario (207.6%).