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Inequality Grows with Declining Homeownership: NAR
Increased wealth inequality among Americans is correlated with decreasing levels of homeownership, a new study from the National Association of Realtors reports.
Of 100 housing markets studied, 93 displayed a worsening homeownership rate between 2010 and 2013, according to the results released Thursday. Areas with lower homeownership rates consequently were found to have higher levels of wealth inequality, with Los Angeles, New York and Las Vegas among the metropolitan areas with the most unequal distribution of wealth.
Homeownership has fallen as weak labor markets, short housing supply and stringent underwriting standards have intervened, according to NAR chief economist Lawrence Yun.
“As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen,” Yun said.
Renters have faced increased housing costs and are less likely to have invested in stocks during the market’s rebound in recent years. Meanwhile, those who have managed to buy homes have benefited from rising values and declining mortgage balances, the study found. In total, homeowners have reaped $5 trillion in housing wealth from the cyclical low of the housing downturn, Yun said.
To remedy inequality then, Yun pointed to the need for improved access to mortgage products and increased new home construction.
This “will help ensure the opportunity is there for more American households to enjoy the potential wealth benefits and long-term stability homeownership provides,” Yun said.