Homeownership Is Primary Driver of U.S. Household Wealth
Abraham Lincoln is remembered for stating in one of his speeches that, “The strength of a nation lies in the homes of its people.” And with specific regard to housing, it should be noted that new research shows a household’s primary residence is its largest asset and continues to provide an important block for long-term financial security.
The latest edition of the Survey for Consumer Finances, published by the Board of Governors of the Federal Reserve System, reports that the primary residence accounts for about one-quarter of all assets held by households in 2016, ahead of other financial assets, business interests and retirement accounts.
In recent comments made by NAHB President, Randy Noel, a custom home builder from LaPlace, La. it was noted that “homeownership is a primary source of net worth for many Americans, and is an important step in accumulating personal financial assets over the long term.”
Building equity and accruing wealth when the value of a home appreciates are among the longer-term financial benefits of homeownership, as evidenced by the fact that Americans had a record-high $14.4 trillion of equity in their homes in the fourth quarter of 2017.
The national homeownership rate of 64.2 percent shows signs of sustained growth after bottoming out to a cycle low of 62.9 percent in the second quarter of 2016. Yet, this number is still down from the peak of 69.2 percent in 2004, and remains below the 25-year average rate of 66.3 percent.
According to Noel, “We must continue to address the obstacles that remain for many potential home buyers, including factors that increase the cost to build new homes, and sky rocketing costs for lumber is the number one challenge for builders at the present time.”
Since January 2017, rising lumber costs have increased the price of an average single-family home by nearly $9,000 nationwide and the market value of a multifamily housing unit by over $3,000. While there are many reasons for increasing lumber costs, the primary factor is the 20% effective tariff rate placed on Canadian softwood lumber.
NAHB, working on our behalf and with our support and hundreds of other associations like ours across the country, are continuing their work on all fronts to find solutions that will ensure a lasting and stable supply of lumber imports in the U.S. at a competitive price. Such is absolutely necessary in efforts to maintain the affordability of housing at all price points.
Our Association recently worked in conjunction with NAHB to secure the support of all our Kansas U.S. House of Representative members by getting them to agree to sign-on to a sponsored letter initiative led by two members of the U.S. House of Representatives urging President Trump to resume talks with Canada to find a long-term solution to this trade dispute.
Working together we are making a difference.