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New Study: Homeownership Creates Family Wealth

New Study: Homeownership Creates Family Wealth

Matthew Rognlie, from the Department of Economics at MIT, recently released a paper: Deciphering the Fall and Rise in the Net Capital Share. One of the major findings of the report is that homeownership is and has been for the last fifty years a major component to family wealth.

An article on the study in The Economist notes one of the findings of the study:

“The return on non-housing wealth, in fact, has been remarkably stable since 1970. Instead, surging house prices are almost entirely responsible for growing returns on capital.”

This came as no surprise to us as the Federal Reserve previously reported that the net worth of families that own their own home is 36 times greater than that of families that rent.

Bottom Line

HousingWire’s Senior Financial Reporter, Trey Garrison, summed it up well in his reporting on Rognlie’s study:

“Homeownership has consistently created generational wealth more reliably, and more ‘democratically’, than any other asset class. And it does so in a manner entirely ancillary to its primary purpose of giving you a place to lay your head and keep your stuff.”


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1 reply
  1. Troy Erickson
    Troy Erickson says:

    It is obvious that owning a home can create wealth, but timing is everything, and one must be in it for the long haul. If you buy a home and then sell it within 5 years, you may actually incur a loss, depending on where the market was when you bought, and when you sell.
    Also, there are a lot of expenses to home ownership that will eat into that wealth – Things like updating flooring, light fixtures, replacing appliances, landscaping, pool, and other home maintenance. These are all costs that someone renting may not incur.

    Reply

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