When people discuss rising inequality in America, they often point to CEO compensation, stagnant middle class wages, tax laws that favor investment income, and the role globalization and technology. Another source of rising inequality is the nation’s housing market.
The National Association of Realtors recently indicated that rising home prices were likely helping to produce greater inequality in many metropolitan areas, especially since homeownership rates have fallen across the nation in recent years. As reported in the Wall Street Journal, the Association’s analysis indicates that ninety three of the nation’s one hundred largest metropolitan areas experienced declining homeownership rates between twenty ten and twenty thirteen.
That decline in homeownership occurred as home prices were rising, which means that the gains from a recovering housing market became more concentrated. Homeownership tends to be low in markets like Los Angeles and New York. Not coincidentally, wealth inequality in those markets tends to be very high. The same can be said of markets like San Diego, San Francisco, and Houston.
