Home is where the wealth is

Home equity and retirement accounts make up most of U.S. household wealth

Two neighboring houses on Chicago’s North Side: household wealth is highly likely to be preserved in home equity, according to the U.S. Census Bureau. (One Illinois/Ted Cox)

By Ted Cox

Homeowners amass far more wealth than renters, according to data recently released by the U.S. Census Bureau.

In some ways, that’s no surprise and is sort of self-defining. People with wealth are far more likely to own their homes. But the extent of the disparity is stunning.

The Census Bureau released 2017 data last week finding that homeowners’ median wealth is 89 times greater than renters’ wealth. And just two sorts of assets — home equity and retirement accounts — make up the majority of household wealth, 61.7 percent.

First, a reminder that the median is not the average, but the midpoint of the range. According to the Census Bureau report “Gaps in the Wealth of Americans by Households Type in 2017,” the median homeowner had amassed $269,000 in wealth in 2017, meaning half of all homeowners had more than that and half less. But the median renter had just $3,000 in wealth amassed.

The inequality was not entirely due to home ownership. The study found that, even excluding home equity, the median homeowner had $109,000 in wealth amassed. The median value of a homeowner’s property was $118,000, and the median balance of a homeowner’s retirement account was $65,000.

“While many households owned these assets, others did not,” pointed out study authors Donald Hays and Briana Sullivan. They reported that “38.2 percent of households did not own a home, and 42.7 percent of households did not have a retirement account. This gap of ownership in two key assets contributes to wealth inequality.”

Having a bank account proved less indicative of having amassed wealth. According to the study, “Some commonly held assets made up a small portion of household wealth. In 2017, 93.7 percent of households had bank or credit-union accounts. However, the accounts made up only 8.9 percent of total household wealth.”

But some of the statistical breakdowns suggested results of income inequality, and some were more indicative of causes. For instance, the median wealth of those with health insurance was $140,000, while the median wealth of those with no health-insurance coverage for some or all household members during the year was $18,750. Obviously, those with the money to afford health coverage are much more likely to have amassed wealth than those who can’t afford it at all.

But education level was highly indicative of amassed wealth. The median wealth of someone with a graduate or professional degree was almost $400,000. The wealth of someone with a bachelor’s degree was half that, just under $200,000. The median wealth of someone with an associate’s degree was $85,000, with someone with some college at $50,000, high-school graduates at $34,000, and those without a high-school diploma at just $5,000.

The racial breakdown was glaring as well. Whites who identified as non-Hispanic had a median wealth of $172,000. Asian Americans had a median wealth of $157,000. But Hispanics had a median wealth of $25,000, and African Americans had a median value of $10,000.

Breakdowns by sex and marital status also displayed wide variances in household wealth. The median monetary value of a married couple was $233,000, while the median value of a single man was $37,000 and a single woman $28,000. “Unmarried female householders (those who own or rent the home) of any age had a median wealth of $28,290. That represented 75.9 percent of their unmarried male counterparts’ median wealth of $37,290 and only 12.1 percent of their married counterparts’ median wealth of $233,100,” Hays and Sullivan wrote. “Such disparities between genders and marital status persisted over most age groups.”