Warwick, R.I. – March 22, 2022 — A new study from the National Association of Realtors – Housing Wealth Gains for the Rising Middle-Class Markets – examines the distribution of housing wealth, widely recognized as the leading source of net wealth among families. The study looked at housing wealth between 2010 and 2020 across income groups and in 917 metropolitan or micropolitan areas.
The Rhode Island market made the cut for inclusion in the 58% of areas which gained middle-income homeowners during that decade, with an increase of 7.9%. The homeownership rate of that group however, declined from 2010 to 2020. Middle-income homeowners comprised 69.4 percent of the market in 2020 compared to 78.9 percent in 2010. While homeownership rates declined among all income brackets, the middle-income homeowner rate fell the most.
The markets that gained middle-class homeowners in the NAR study are expected to see price gains according to NAR Chief Economist Lawrence Yun. NAR defines a middle-class homeowner as one earning an income of over 80% to 200% of the area median income.
NAR found that of the $8.2 trillion amassed nationally in housing wealth from 2010 through 2020, high-income homeowners claimed roughly 71% of all wealth accumulation. In Rhode Island, the number of high-income homeowners doubled from 2010 to 2020, rising from 17.1% of all homeowners in 2010 to 31.7% in 2020. It is the only homeowner income group to increase during the decade. By comparison, while the number of middle-income homeowners grew slightly, they accounted for 44.9% of all homeowners in 2020, compared to 48.2% in 2010. Rhode Island’s low-income earners fared worst of all. The number of low-income homeowners fell by 27.2%, and the group’s level of homeownership among all income groups fell from 34.8% to 23.5%.
Nationally, a homeowner who purchased a typical single-family existing home 10 years ago at the median sales price of $162,600 is likely to have accumulated $229,400 in housing wealth. Of this wealth gain, 86% can be attributed to price appreciation, with the median single-family existing-home sales price rising at an annual pace of 8.3% from the fourth quarter of 2011 through the fourth quarter of 2021. In that same time frame, Rhode Island’s appreciation was 6.8%.
While housing wealth grew among all income groups nationally, in Rhode Island, housing wealth fell among low-income homeowners, falling from $33 billion in 2010 to $30 billion in 2020.
In 2020, the median home sale for low-income earners was $270,321 and for middle-income earners, the median sales price was $298,891. In mid-March of 2022, only 146 single-family homes and condominiums under $300,000 were listed for sale in Rhode Island.
“When housing prices become unaffordable, low- and middle-income earners lose the ability to access suitable housing and our labor market suffers. It’s critically important that we take the steps now to shore up our housing inventory to protect our citizens, as well as our economy overall,” said Philip Tedesco, CEO of the Rhode Island Association of Realtors and State-Wide Multiple Listing Service.