- The Washington Times - Tuesday, July 17, 2001

Buying a house is the best way for most people to build wealth, according to a study released by the Consumer Federation of America yesterday.
Most Americans fail to understand that affluence is based more on homeownership than on anything else, according to the study and survey released yesterday by the consumer group and Providian Financial.
Only four in 10 Americans say people's houses are their most important sources of wealth, according to the survey, conducted by the Opinion Research Corporation International last month.
"Even with a modest income you build wealth by getting a home," Stephen Brobeck, the Consumer Federation's chief executive said at a press conference.
For households with net assets of $100,000 to $250,000, houses represent 43 percent of their wealth compared with 17 percent of their wealth in retirement accounts, according to an economic analysis of the survey prepared for the consumer group by Catherine P. Montalto of Ohio State University.
Homes represent 34 percent of the wealth for people who have $100,000 or more in assets, the study said. More than 56 percent of households with net assets of at least $100,000 earned annual income of $50,000 or more in 1998.
The correlation of wealth and homeowners supports the idea that homes are a good financial move, according to the study.
Household affluence also increases with age, according to the group and Providian economic analysis. More than half of all American households headed by someone older than 45 had net assets of at least $100,000 in 1998, according to the analysis.
Buying a house requires saving a good financial habit, Mr. Brobeck said.
"The act of saving is a transforming process," he said. "The most important thing people can do is develop a savings habit."
The first step toward affluence is to start saving money, said Shailesh J. Mehta, Providian's CEO. Save enough for a down payment and buy a home.
Not only do Americans underestimate the importance of saving for homes, but they also underestimate the number of affluent households nationwide, the study said. The study and survey qualified affluence as having more than $100,000 in assets.
Americans think 36 percent of households are affluent, when 42 percent actually are.
But Americans overestimate the number of U.S. millionaires, according to the survey. Only 4 percent of Americans are millionaires, according to the Consumer Fed's analysis.
However, Americans believe that 15 percent of all households have net assets of at least $1 million, according to the survey.
Also, young people are pessimistic about their abilities to build wealth and many do not understand employee-retirement programs, Mr. Brobeck said.
He said many young people just do not want to think about retirement because they feel that such concerns are for older people.
The telephone survey examined 1,022 adults. Its margin of error was plus or minus 3 percent.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide