Introduction to the Wealth Disparity in the US
As the saying goes, a rich man is nothing but a poor man with money — and real estate. More than 13% of the country’s real estate assets are owned by the wealthiest 1% of Americans — a circumstance that significantly enriched the well-heeled over the past two years of sky-high rates and housing shortages. The 1% has been so enriched, a recent Redfin analysis revealed, that their combined wealth could now feasibly purchase almost every home in the nation.
The Extent of Wealth Concentration
The analysis further concluded that the top 0.1% alone could purchase every single home in the country’s 25 most populated metro areas, from New York City to San Antonio.
Homeownership is a distant goal for everyday Americans, and a complete boon for the wealthiest.
Billionaire and Oracle founder Larry Ellison owns a $1 billion real estate portfolio.
The Perspective of Redfin’s Economics Research Lead
“It is a striking example of the concentration of wealth in America that the top 1% could hypothetically afford to buy every home in the country — without going into debt — while millions of households struggle to buy or hold onto just one,” said Chen Zhao, Redfin’s economics research lead, in the report.
The Struggle for Homeownership
This stark disparity comes at a time when an outsized percentage of Americans believe that homeownership is no longer a realistic milestone.
Real estate is one of the most valuable investments a person can make.
The Requirements for the 1% Club
To gain entry into the 1% club, according to the Federal Reserve, a minimum net worth of $11.2 million is required. An estimated 1.3 million American households claim membership, and their combined net worth totals $49.2 trillion. Real estate helps put this gargantuan number into perspective — the combined value of 100 million US homes is $49.7 trillion.
Analysis and Findings
It’s these two eye-popping measures upon which Redfin based its report, using Federal Reserve data and the estimated value of 98 million US properties. While net worth and aggregate home values are not directly related, the Redfin analysis demonstrated how the two measures have pretty much tracked together for the last 20 years.
According to Redfin, aggregate home values exceeded the 1%’s collective wealth from 2000 until the housing and global financial crisis of 2008. The wealth of the top 1% surpassed home values through the 2010s until a steep drop-off after 2020, when the market disruption of COVID-19 hit the heavily invested portfolios of the rich.
But America’s fat cats have clawed their way back. The richest 0.1% of Americans grew their wealth by $4.4 trillion, or 25%, in just two years, Redfin reported.
If the 0.1% pooled only that $4.4 trillion earned between 2022 and 2024, they could buy every home in the Chicago, Atlanta, Boston and Houston metro areas, according to Redfin. Their two-year gains exceed the combined wealth of America’s bottom 50%.
Jeff Bezos’ property portfolio is worth more than $500 million.
The median age for first-time buyers is 38 — the oldest on record.
Impact on Everyday Americans
Asset growth has long outpaced wage growth, which makes real estate one of the most valuable investments a person can make. Almost half of the bottom 50% of Americans’ net worth is tied up in real estate. And while the assets of the 1% dwarf those of the bottom 50%, the latter group claims the highest total mortgage debt at $3.1 trillion, Redfin reported.
The analysis adds credence to the frustration of everyday Americans, already discouraged by a real estate market in which the median listing price has long surpassed $400,000.
Conclusion
The wealth disparity in the US, particularly in the context of real estate, highlights a significant issue that affects many Americans. The fact that the top 1% can afford to buy almost every home in the country while millions struggle to own one is a stark reminder of the challenges faced by everyday people in achieving homeownership. This disparity also underscores the need for policies and initiatives that aim to make housing more affordable and accessible to all.
FAQs
- What percentage of the country’s real estate assets are owned by the wealthiest 1% of Americans?
- More than 13% of the country’s real estate assets are owned by the wealthiest 1% of Americans.
- How much wealth is required to be part of the 1% club in the US?
- A minimum net worth of $11.2 million is required to be part of the 1% club in the US.
- What is the combined net worth of the top 1% of American households?
- The combined net worth of the top 1% of American households totals $49.2 trillion.
- How has the wealth of the top 0.1% of Americans changed in the last two years?
- The richest 0.1% of Americans grew their wealth by $4.4 trillion, or 25%, in just two years.
- What is the median age for first-time home buyers in the US?
- The median age for first-time buyers is 38 — the oldest on record.
