Give Thanks for Homeownership Wealth

On the eve of Thanksgiving, you may typically find economists writing posts about the inflation-adjusted price of a Thanksgiving dinner (less than last year and 23 percent lower than in 1986), or the global price over time of the meal inputs (that’s economist “speak” for Thanksgiving dinner ingredients).

Instead, as a housing economist, I think it is important to give thanks for the benefits of homeownership. I am passionate about the importance of homewnership as a key part of the American Dream and write about it regularly. Homeownership is  critical to economic mobility and delivering financial and social benefits to families and communities throughout the U.S. but most importantly, homeownership is the single greatest source of wealth generation for most middle-class American households.

So, let’s take stock (pun intended) of the wealth generating ability of homeownership as we celebrate Thanksgiving. The figure shows how much wealth (in percent and dollar terms) a homeowner today will have gained if they had bought a home at the median market price in January 2000 ($141,000). The millennium home buyer generated over $127,000 of household wealth by the housing boom peak in 2006, lost almost $100,000 of that gain in the housing decline, and has subsequently regained almost all that was lost. In 2017, the national median priced home in January 2000 has generated $126,000. 

To put this into context, the median household income in 2016 accoding to the Census Bureau was $56,500 so homeownership over the last 17 years has generated more than double the current median annual household income. The median amount of savings for working age families is just $5,000. But the millennium homebuyer is sitting on 25 times that amount in home equity!

Building wealth has been a roller coaster ride since the start of the millennium and we quite possibly did not give thanks for the wealth lost between 2006 and 2011. This year, building wealth and achieving the American dream is something definitely worth giving thanks for.