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.
“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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