Mid-Income Americans’ Equity Up $120K in 10 Years

Small paper house with coins stacked up beside it

Phawat Topaisan / EyeEm / Getty Images

APRIL 18, 2023 By Kerry Smith

NAR report cites Port St. Lucie for its homeownership rate of 83% for mid-income residents, and Ocala and Palm Bay for a Black ownership rate higher than 60%.

KANSAS CITY, Mo. – A new housing report by the National Association of Realtors® finds that middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68% in the last 10 years.

The report, Wealth Gains by Income and Racial/Ethnic Group, speaks to the value agents and Realtors® bring to consumers when helping buy and sell homes that build generational wealth. NAR released the report during its 2023 Realtor Broker Summit.

Variations by income and race

The data found substantial variations in homeownership rates across different income and racial and ethnic groups. For instance, low-income homeowners were able to build $98,900 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of $150,800.

“This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” says Lawrence Yun, NAR’s chief economist. “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”

Although Black homeowners experienced the smallest wealth gains among any other racial or ethnic group, Black homeowners accumulated over $115,000 in wealth in the last decade.

For the first time, NAR also identified the top 10 U.S. metros in which Black homeowners saw the largest wealth gains and homeownership rates over the last 10 years. They include:

  • Bellingham, Washington
  • Ocala, Florida
  • Palm Bay, Florida
  • Modesto, California
  • Greeley, Colorado
  • Charleston, South Carolina

In each metro, more than 60% of Black households own their home, and those owners accumulated more than $125,000 in wealth over the last decade.

Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19, Yun noted.

Homeowners generally gained more equity in areas with high-cost homes. No matter the income level, owners in expensive areas saw the largest wealth gains. In the San Jose metro, for example, low-income owners accumulated nearly $630,000 in the last decade, and middle-income owners gained $643,000. All of the top 10 areas with the largest wealth gains for low-income owners – surpassing $290,000 – were located in California.

In the top 10 areas with the highest homeownership rates for middle-income households, owners gained $110,000 in wealth on average in the last 10 years. In Ogden, Utah, for example, 85% of middle-income households own their home, and they’ve built nearly $220,000 in wealth in the last decade.

Some significant areas to note include Port St. Lucie, Florida, where the homeownership rate for middle-income households was 83%, and middle-income owners gained nearly $200,000 in wealth. The cities of Barnstable Town, Massachusetts and Palm Bay, Florida, were other areas where most middle-income households both owned their home and accumulated a substantial amount of wealth – over $170,000 – in the last decade.

In the areas with the highest homeownership rates for low-income households, wealth gains were $140,000 on average. NAR includes a number of Florida cities in its list of high equity gains for lower-income households. In Prescott, Arizona, more than 2 out of 3 low-income households (68%) own their own home, and owners have built more than $200,000 in wealth in the last decade.

Barnstable Town, Massachusetts, as well as the Florida cities of North PortPort St. LuciePalm Bay and Deltona were other areas where most low-income households owned their home and accumulated a substantial amount of wealth – over $120,000 – in the last decade.

© 2023 Florida Realtors®


U.S. Homeowners Enjoyed $1.9 Trillion of Equity Gains in Early 2021

CoreLogic’s newly released Homeowner Equity Report for the first quarter of 2021 shows U.S. homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.

Residential News » Irvine Edition | By Michael Gerrity | June 10, 2021 8:59 AM ET

While the coronavirus pandemic created economic uncertainty for many, the continued acceleration in home prices over the last year has meant existing homeowners saw a notable boost in home equity. The accumulation of equity has become critically important to homeowners deciding on their post-forbearance options. In contrast to the financial crisis, when many borrowers were underwater, borrowers today who are behind on mortgage payments can tap into their equity and sell their home rather than lose it through foreclosure. These conditions are reflected in a recent CoreLogic survey, with 74% of current homeowners with mortgages noting they are not concerned with owing more on their home than it is worth within the next five years.

“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” said Frank Martell, president and CEO of CoreLogic. “These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”

WPJ News | Frank Nothaft, Freddie Mac's chief economist
Dr. Frank Nothaft

“Double-digit home price growth in the past year has bolstered home equity to a record amount. The national CoreLogic Home Price Index recorded an 11.4% rise in the year through March 2021, leading to a $216,000 increase in the average amount of equity held by homeowners with a mortgage,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This reduces the likelihood for a large number of distressed sales of homeowners to emerge from forbearance later in the year.”

Negative equity, also referred to as underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are currently worth. As of the first quarter of 2021, negative equity share, and the quarter-over-quarter and year-over-year changes, were as follows:

  • Quarterly change: From the fourth quarter of 2020 to the first quarter of 2021, the total number of mortgaged homes in negative equity decreased by 7% to 1.4 million homes, or 2.6% of all mortgaged properties.
  • Annual change: In the fourth quarter of 2020, 1.8 million homes, or 3.4% of all mortgaged properties, were in negative equity. This number decreased by 24%, or 450,000 properties, in the first quarter of 2021.
  • National aggregate value: The national aggregate value of negative equity was approximately $273 billion at the end of the first quarter of 2021. This is down quarter over quarter by approximately $8.1 billion, or 2.9%, from $281.1 billion in the fourth quarter of 2020, and down year over year by approximately $13.3 billion, or 4.6%, from $286.3 billion in the first quarter of 2020.

Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively. Looking at the first quarter of 2021 book of mortgages, if home prices increase by 5%, 195,000 homes would regain equity; if home prices decline by 5%, 260,000 would fall underwater.


Experts Say You Have to Stand Out In Today’s Real Estate Market

My clients are standouts every day. Each helping to provide for and serve their community. Most recently, one runs a community farmers market, one is a federal law enforcement officer and another is a social media guru, community advocate and owner of a small business. Real estate is a people business and I get to work with some outstanding ones.

SOLD


“Laurel is an amazing professional and one of the best in the business. She is well plugged in DMV real estate network – something that comes extremely handy when you are selling your home. She came prepared with a plan to market our home and got us the price we were comfortable with in 3 days. We could not recommend her enough especially for sales in north Chevy Chase neighborhood.” – read more LMRE reviews

First Time Home Buyers


Shout out to @taylorxpatrick for recognizing me on Instagram to her thousands of followers. I feel like this is the beginning of a long standing friendship. Not only in helping you and Asia close on your first home but also working together on some custom client closing gifts.


Are We Headed For A Housing Crash? Is The Market Heading Into A Housing Bubble?

Experts Say Home Prices Will Continue to Appreciate

Experts Say Home Prices Will Continue to Appreciate | MyKCM

It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google reports that the search for “When is the housing market going to crash?” has actually spiked 2450% over the past month.

In addition, Jim Dalrymple II of Inman News notes:

“One of the most noteworthy things that came up in Inman’s conversations with agents was that every single one said they’ve had conversations with clients about whether or not the market is heading into a bubble.”

To alleviate some of these concerns, let’s look at what several financial analysts are saying about the current residential real estate market. Within the last thirty days, four of the major financial services giants came to the same conclusion: the housing market is strong, and price appreciation will continue. Here are their statements on the issue:

Goldman Sachs’ Research Note on Housing:

“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”

Joe Seydl, Senior Markets EconomistJ.P.Morgan:

“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Morgan Stanley, Thoughts on the Market Podcast:

“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

Merrill Lynch’s Capital Market Outlook:

“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”

Bottom Line

If you’re concerned about making the decision to buy or sell right now, let’s connect to discuss what’s happening in our local market.


What’s Driving The Sellers Advantage? An Opportunity For Homeowners Who Are Ready To Move This Season.

3 Graphs Showing Why You Should Sell Your House Now

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

There’s no doubt that 2021 is the year of the seller when it comes to the housing market. If you’re a homeowner thinking of moving to better suit your changing needs, now is the perfect time to do so. Low mortgage rates are in your favor when you’re ready to purchase your dream home, and high buyer demand may give you the leverage you need to negotiate the best contract terms on the sale of your house. Here’s a look at what’s driving this sellers’ advantage and why there’s so much opportunity for homeowners who are ready to move this season.

1. Historically Low Inventory

The National Association of Realtors (NAR) explains:

 “Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February’s inventory . . . Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020.”

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

Even with a slight rise in the number of houses for sale this spring, inventory remains near an all-time low (See graph below):High buyer interest is creating a major imbalance between supply and demand, but as the small uptick in inventory shows, sellers are beginning to reenter the market. Selling your house now enables you to take advantage of buyer demand and get the most attention for your house – before more listings come to the market later this year.

2. Frequent Bidding Wars

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

As a result of the supply and demand imbalance, homebuyers are entering bidding wars at an accelerating rate. NAR reports the average number of bids received on the most recently closed sales is 4.8 offers. This number has doubled since the first quarter of 2020 (See graph below):As buyers face increasingly tough competition while searching for homes to purchase, they’re more likely to be flexible and generous in their negotiations. This gives a seller the opportunity to choose the best buyer for their needs and be selective about things like time to close, contingencies, renovations, and more. Working with your trusted agent is the best way to determine how to navigate the negotiation process when selling your house.

3. Days on the Market

In today’s market, sellers aren’t waiting very long to find a buyer for their house, either. NAR reports:

Properties typically remained on the market for 18 days in March, down from 20 days in February and from 29 days in March 2020. 83% of the homes sold in March 2021 were on the market for less than a month.” (See graph below):

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

NAR Chief Economist Lawrence Yun explains:

“The sales for March would have been measurably higher, had there been more inventory…Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Bottom Line

If you’re thinking about moving, these three graphs clearly show that it’s a great time to sell your house. Let’s connect today so you can learn more about the opportunities in our local area.


Neighborhood Expert Or Expert in Residential Real Estate

I understand that some neighborhoods are unique, thus the value of an expert would apply. But doesn’t it make sense to want an expert in the successful execution of real estate sales not just an expert in one neighborhood.

Here are a few things to consider:

  • One of the most valued characteristics of an agent should be the ability to interpret the market and to be able to position their sellers in the most favorable position to sell each home or property for the most amount of money given market trends.

  • An agent who understands the larger market can speak to why their seller’s neighborhood might be a better fit for buyers over other areas.

  • Marketing consists of location, condition, a property’s pricing and how all three are presented to the public.

  • Buyers are not thinking “Is the listing agent a neighborhood expert?” They are scrolling through myriad listings and know when a listing is in line with area comps. When they find one, they take a look at the photographs to make a decision whether to actually look at the property.

Where Are Home Values Headed Over the Next 12 Months?

As shelter-in-place orders were implemented earlier this year, many questioned what the shutdown would mean to the real estate market. Specifically, there was concern about home values. After years of rising home prices, would 2020 be the year this appreciation trend would come to a screeching halt? Even worse, would home values begin to depreciate?

Original forecasts modeled this uncertainty, and they ranged anywhere from home values gaining 3% (Zelman & Associates) to home values depreciating by more than 6% (CoreLogic).

However, as the year unfolded, it became clear that there would be little negative impact on the housing market. As Mark Fleming, Chief Economist at First American, recently revealed:

“The only major industry to display immunity to the economic impacts of the coronavirus is the housing market.”

Have prices continued to appreciate so far this year?

Last week, the Federal Housing Finance Agency (FHFA) released its latest Home Price Index. The report showed home prices actually rose 6.5% from the same time last year. FHFA also noted that price appreciation accelerated to record levels over the summer months:

What are the experts forecasting for home prices going forward?

Below is a graph of home price projections for the next year. Since the market has changed dramatically over the last few months, this graph shows forecasts that have been published since September 1st.

Where Are Home Values Headed Over the Next 12 Months? | MyKCM

“Between May & July 2020, national prices increased by over 2%, which represents the largest two-month price increase observed since the start of the index in 1991.”

Bottom Line

The numbers show that home values have weathered the storm of the pandemic. Let’s connect if you want to know what your home is currently worth and how that may enable you to make a move this year.


Urban to Suburban Lean

Congratulations Dave and Gulmira! After 14 years in Cleveland Park, DC it was time for more space and a sprawling yard. Despite the challenges of Covid-19, three rejected offers, a rent back and a short time rental they ended up with the perfect house and location for them. Thank you for trusting me to facilitate listing one home and buying the next.

Cleveland Park, DC to Kensington, MD – view listings

Two New Surveys Indicate Urban to Suburban Lean

There has been much talk around the possibility that Americans are feeling less enamored with the benefits of living in a large city and now may be longing for the open spaces that suburban and rural areas provide.

In a recent Realtor Magazine article, they discussed the issue and addressed comments made by Lawrence Yun, Chief Economist for the National Association of Realtors (NAR):

“While migration trends were toward urban centers before the pandemic, real estate thought leaders have predicted a suburban resurgence as home buyers seek more space for social distancing. Now the data is supporting that theory. Coronavirus and work-from-home flexibility is sparking the trend reversal, Yun said. More first-time home buyers and minorities have also been looking to the suburbs for affordability, he added.”

NAR surveyed agents across the country asking them to best describe the locations where their clients are looking for homes (they could check multiple answers). Here are the results of the survey:

  • 47% suburban/subdivision
  • 39% rural area
  • 25% small town
  • 14% urban area/central city
  • 13% resort community/recreational area

According to real estate agents, there’s a strong preference for less populated locations such as suburban and rural areas.

Real Estate Brokers and Owners Agree

Two New Surveys Indicate Urban to Suburban Lean | MyKCM

Zelman & Associates surveys brokers and owners of real estate firms for their monthly Real Estate Brokers Report. The last report revealed that 68% see either a ‘moderate’ or ‘significant’ shift to more suburban locations. Here are the results of the survey:

Bottom Line

No one knows if this will be a short-term trend or an industry game-changer. For now, there appears to be a migration to more open environments.


2019 in REview

By providing market knowledge and experience that lets clients break down the process step by step, we make their experience a positive and exciting one. A metric for Laurel Murphy Real Estate to gauge whether we are achieving our goal is the percent of business we do from referrals or repeat business. 

In our first full year we serviced 50% sellers and 50% buyers with 85% from referrals or repeat clients. Helping family and friends of past clients is a responsibility we appreciate and take seriously.  Going into 2020 we have every intention to increase our numbers, one referral at a time. 


Referral Based Brokerage

My clients are some of the best. When they refer me to their friends and family members, it means that I have accomplished another one of my goals. That is making the process of selling or buying a home a positive experience that they are happy to share.
Congratulations to Tiara and Nelson, celebrating two years in their home in Manassas, Virginia, and to their friend and referral Adrienne, who purchased her first home a month ago.