The $6 trillion in wealth created by the housing boom will help homeowners send their kids to college, launch businesses, and grow their wealth even more

• The pandemic housing boom has driven $6 trillion in new wealth for homeowners.
• The average American now has access to $185,000 in equity that can help them build more wealth.

If you own a home in the US right now, chances are your net worth has gone up in the last two years — and you could tap your equity to access some extra cash.

That's step one in building even more wealth.

Research shows people tend to use that money to pay for big costs like high-debt consolidation, educational expenses like sending their kids to college, or a renovation that could increase their home's value even more.

Of course, that means if you don't have a home in which to store equity, your opportunity gap is getting wider.

US homeowner equity — meaning the current market value of a home, minus what a homeowner owes — has soared to historic highs during the pandemic. Nationally, it's up $6.6 trillion, according to the Federal Reserve. Homeowner equity now stands at an aggregate of $9.9 trillion, according to technology and data provider Black Knight.

"Home price appreciation over the course of 2021 was unlike anything that's come before, and the incredible growth we've seen in homeowner equity is testament to that fact," Ben Graboske, Black Knight data and analytics president, said in a housing report, adding that 2021's total accounts for a 35% annual growth rate.

Overall, the uptick translates to an increase of $2.6 trillion in tappable equity — the amount available for homeowners to access while retaining at least 20% equity in their homes — in a single year and marks the largest annual increase on record. It also means the average homeowner now has access to $185,000 in available equity.

"I don't think that there's a viable alternative to homeownership at this point in time in terms of building wealth," Cy Richardson, the senior vice president for programs at the National Urban League, told The New York Times.

The U.S. housing market may be hot, but it's also facing a dearth of homes available for sale. The imbalance between housing inventory and buyer demand has driven prices to record highs. While this has boosted purchasing power for homeowners, it's simultaneously plummeted affordability for everyone else. As homeownership is a key driver of wealth, Americans yet to purchase a home are falling behind — and that could limit their chances of upward mobility.

Rising homeowner equity could lead to greater economic inequality.

The wealth created by the housing boom is likely to serve as a gateway to economic mobility for many Americans, but for non-participants, it could lead to greater inequality.

According to researchers at the University of Sydney, homeownership has the potential to greatly enhance professional and educational outcomes of homeowners in comparison to renters — many of whom are now cost burdened as inflation puts pressure on everyday expenses.

"Homeownership is generally associated with benefits such as residential stability, better housing conditions, and civic engagement," researchers wrote. "Children in owner-occupied dwellings achieve better education outcomes, including high school completion and college attendance, than children in rental households."

Data from the Association of Public & Land Grant Universities shows that those who pursue higher education often go on to recieve better paying jobs. The orgnization determined that in 2019, the median income for bachelor's degree holders aged 22–27 reached $44,000 a year, whereas high school graduates of the same age were earning a median of $30,000 a year.

The difference in income could impact non-college attending Americans' ability to start businesses, invest in financial markets or purchase a home — all of which could lead to greater intergenerational wealth.

"On an annual basis, bachelor's degree holders earn about $32,000 more than those whose highest degree is a high school diploma," APLU's researchers wrote. "The earnings gap between college graduates and those with less education continues to widen."