By Daily Mail (U.S.) | Created at 2026-06-12 03:12:53 | Updated at 2026-06-14 06:50:34
2 days ago
Building generational wealth starts at home - or rather, it starts with the value of your parent's home.
Based on data from 3.4 million US families, a National Bureau of Economic Research (NBER) study found that the value of a family's real estate holdings is a much bigger factor than hard work or personal success in determining how wealthy Americans become
According to Jake Krimmel, senior economist at Realtor.com, the study shows how economic mobility really works in America today.
'It's not just about your parents' income being a predictor of your success,' said Krimmel. 'It's about the importance of housing wealth as a necessary and sufficient condition for reaching higher rungs on the economic ladder.'
Economists have long understood that housing wealth persists generation to generations: Once a family has real estate wealth, they tend to keep it.
The NBER study shows just how much of an outsized role property wealth plays.
And while it's true that wealthier parents tend to have children who earn higher incomes, a child's own career success and salary actually account for less than half of this wealth transmission.
Meanwhile, more than half of it comes from real estate wealth passed down from parents to children, plus other forms of direct financial assistance like gifts and inheritances.
Economists have long understood that housing wealth persists generation to generations: Once a family has wealth based on real estate, they tend to keep it
According to US Census Bureau data, about 65 percent of homes are owned by their occupants, and homes are generally the most valuable assets owned by American families.
But not every family owns a home, making real estate among the biggest drivers of the US wealth gap.
Researchers found that children whose parents own valuable homes are more likely to be successful themselves, and the data shows that housing wealth appears more consistency across generations than labor income.
And while having wealthy parents helps children succeed in the job market, the study found that housing wealth is passed down in other ways.
That included direct financial transfers, help with down payments, inherited property, family support and access to opportunities that make homeownership easier.
According to Newsweek, only 7.4 percent of all property transfers last year were done via inheritance.
'Housing is the primary capital asset for most households in the United States, and is widely viewed as a key stepping stone to wealth accumulation and financial stability,' state the authors of the study.
Home values have dramatically increased since the end of the financial crisis nearly two decades ago, and today mortgage costs remain high. For prospective homebuyers, saving for a down payment has become a huge challenge.
An estimated 340,000 homes were inherited in the United States last year, or about 7.4 percent of all property transfers
In some communities, costs like homeowners insurance and HOA fees make home ownership even more challenging.
That's made financial assistance from parents an even more important part of buying a home.
Todd J. Drowlette of A+E Network's The Real Estate Commission agreed, saying that the majority of American millionaires built and maintain their wealth because of the equity in their homes.
'Home prices have grown by leaps and bounds since,' Drowlette told the Daily Mail. 'Those who have owned homes have benefitted from that appreciation.'
Housing shortages in coveted areas make prices even higher. That also strengthens the passing of economic advantages from one generation to the next.
'If those parents stayed in their homes, they would have benefitted from hundreds of thousands if not over a million dollars in appreciation,' Drowlette added.
The NBER study also examined the racial wealth gap and real estate ownership.
For white families, housing wealth seemed consistent across generations, while black families experienced 'greater downward mobility.'
That means even if black parents owned a home, their children are more likely to have lower housing wealth than white children with a similar background.
Researchers found this gap is driven by differences in homeownership rather than differences in home values. Still, owning a home remains the main avenue for American families to build wealth, regardless of race.
