November 30, 2003

The Importance of Housing To the Accumulation of Household Net Wealth

Zhu Xiao Di, Yi Yang, Xiaodong Liu

W03-5: Housing is the cornerstone of household wealth, especially for low-income households. With the growth in the U.S. homeownership rate, housing wealth is important to more American households than ever before. In fact, according to the 2001 Survey of Consumer Finances (SCF) data released in February 2003, home equity accounted for about 21 percent of household net wealth; on average, a homeowner holds 48 percent of his or her net household wealth in the form of home equity. Is that money well invested in terms of its rate of return relative to alternatives? To what extent does housing tenure choice and housing wealth affect the accumulation of total net wealth in the long run? These are important questions, but the answers are not fully resolved...

Category: Working Papers

Read More About: Housing Markets & Conditions, Homeownership