Rising home prices alongside declining homeownership rates likely are contributing to worsening inequality in the United States, according to new research from the National Association of Realtors.
On one hand, rising home prices in many metros in recent years have helped homeowners all over the country build housing wealth. On the other hand, homeownership rates have continued to decline. The result is that gains are being reaped by fewer people, likely contributing to worsening inequality in the U.S., according to the NAR
The NAR reviewed data on homeownership rates, changes in single-family home prices and the Gini Index (a measure of inequality) between 2010 and 2013 to estimate wealth and income in 100 of the largest metros in the country. The findings showed that more than 90 percent of metro areas have shown declining homeownership rates during a time when home values have risen and income has remained flat.
According to the study, wealth distribution is seen as most unequal in metro areas with the lowest homeownership rates, including Los Angeles, New York and San Diego.
Home prices have recovered steadily in most metros over the past five years, boosting housing wealth by $5 trillion, according to Lawrence Yun, the NAR’s chief economist.
“Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle class families,” Yun said in a statement. “Unfortunately, due to an underperforming labor market, insufficient housing supply and overlystringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen.”
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