Source: Fortune
Summary
A new study from the National Bureau of Economic Research found that the correlation between income and wealth generation is decreasing, with family assets becoming a more reliable predictor of wealth. The study analyzed 3.4 million families and their wealth and income records across multiple generations. Even with identical incomes, a child of wealthier parents is substantially more likely to own a home than one without wealthy parents. The researchers also found that higher incomes are no longer enough to secure homeownership, with home prices surging to five times the median income nationally.
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The numbers tell one story.
Max Risch, co-author of the study, notes that the “Bank of Mom and Dad” plays a significant role in wealth generation, with parents helping their children overcome financial barriers to homeownership. The study found that even with a steady income, Americans are increasingly locked out of securing assets to generate wealth. Homeownership has become a fading dream, with home prices surging to historic highs. The researchers found that geographical differences in upward mobility also play a role, with some areas offering more opportunities for income mobility but not for homeownership.
The resilient value of the “Bank of Mom and Dad” is a key factor in wealth generation.
Author: Evan Null
