Study Links Parental Wealth to Adult Homeownership Rates

Researchers from the U.S. Census Bureau and Carnegie Mellon University analyzed IRS tax records, Census data and property ownership records for 3.4 million families. They tracked children born between 1978 and 1986 and measured whether those individuals owned homes between 2019 and 2021.

A key finding showed that homeownership rates depend more on parental wealth than on adult income, especially in expensive housing markets. Children of homeowners were more likely to own homes and to own higher-value homes than peers who reached similar income levels but whose parents rented.

Max Risch, an economist at Carnegie Mellon University and co-author of the paper, said even when adult earnings are comparable, parental wealth still shapes housing outcomes. He noted that wealth mobility has received less study than income mobility.

The researchers observed that the wealth gap between homeowners and renters is sizable. Federal Reserve data cited in the study showed median homeowner net worth at $396,000 in 2022 compared with $10,400 for renters.

Wealth mobility was lower in high-cost coastal regions including parts of California and cities such as Boston, New York and Seattle. Mobility was higher in parts of the Midwest and Southeast where home prices are lower. The study period ended before the post-2021 rise in housing prices.

Risch said faster price growth relative to incomes could widen the gap between children of homeowners and children of renters.