THE U.S. GOVERNMENT HAS BEEN BUILDING HOMEOWNER WEALTH SINCE 1938 - ARE YOU IN?

Written By Yossi Zomet

This has nothing to do with Trump or Biden. This is a structural policy that has survived every administration for over 80 years - and it's quietly working in favor of millions of American homeowners.

START WITH A QUIZ

Quick question: What percentage of American households own the home they live in?

Most people I ask guess somewhere between 20% and 40%. Almost nobody guesses the real answer.

Almost nobody.

It's 65.6%. Nearly two-thirds of American households are homeowners.

Why does almost everyone guess wrong? Because we've internalized a belief that most Americans can't save, can't afford a home, and are one bad month away from financial trouble. The headlines reinforce it.

But the data tells a different story - and understanding that story changes how you think about long-term investing.

My goal with this post is simple: to show you why betting on long-term home value appreciation isn't a bold move. It's actually one of the more conservative long term bets you can make.

THE WEALTH PLAN MOST AMERICANS DON'T KNOW THEY HAVE

For most homeowner households, the home isn't just an asset - it's essentially the asset. According to Federal Reserve data, home equity represents roughly 60-80% of net worth for middle-class American families. Retirement accounts come in second, but with a median 401(k) balance of just $38,176 (Vanguard, 2024), they're not carrying the load.

Stocks and investment accounts? Largely concentrated at the top. The top 10% of households own approximately 87% of all stocks and mutual funds.

So for the vast majority of American families, real estate is the wealth plan. Not a part of it - the whole thing.

And here's where it gets interesting.

A PRODUCT THAT ONLY EXISTS IN AMERICA

The 30-year fixed-rate mortgage is, in most of the world, a strange and exotic financial instrument.

In Canada, the UK, Australia, and most of Europe, mortgages reset every 2-5 years at whatever the market rate happens to be. If rates go up, your payment goes up. You carry the risk.

In the United States, you can lock in a rate for 30 years. If rates drop, you refinance and capture the savings. If rates rise, you're protected.

This is one of the most borrower-friendly financial products ever created. And the reason it exists is not because banks love you - it's because the U.S. government built the infrastructure to make it possible:

  • 1938: Fannie Mae is created by the U.S. government to buy mortgages from lenders so they can issue more.

  • 1970: Freddie Mac is created to expand the same function.

  • FHA and VA loans further extend access with low or zero down payment options.

These agencies purchase and guarantee trillions of dollars in mortgages. Without them, no private lender would hold a 30-year fixed-rate loan on their books. The government essentially said: we'll absorb that risk, so that ordinary Americans can own homes and build wealth.

THINK LIKE AN INVESTOR: THE GDP ENGINE

Here's the mechanic that separates homeowners who get it from those who just got lucky.

When you buy a home with a 30-year fixed mortgage, three things happen over time:

  1. The value of your property grows - historically at ~3.92% per year on average, closely tracking U.S. GDP growth (as I covered in detail in The 3.92% Gold Standard)

  2. Rents grow - historically at roughly 80% of the appreciation rate, year after year

  3. Your mortgage payment stays exactly the same - locked in nominal dollars, on day one

As the U.S. economy produces more value, that wealth flows into property values and rents. Your income grows. Your asset grows. Your debt payment does not.

This is the investor's edge hiding inside a standard homeowner's mortgage. The gap between rising rents and a flat mortgage payment is where cash flow is born. The gap between rising property value and a flat loan balance is where equity is built.

And because the 30-year fixed exists, you can also access that equity through a cash-out refinance - tax-free, without selling the asset. I cover the full tax picture in this post, but the short version is: you can pull out your equity in today's dollars while the property keeps appreciating - a powerful move that most people never consider.

WHY THE SYSTEM IS DESIGNED TO SUPPORT YOU

Here's what I believe - and the data supports it:

The U.S. government has a structural, bipartisan, multi-decade incentive to keep home values stable and growing.

The logic is simple: if 65% of American households hold most of their net worth in home equity, then a collapse in home values is a collapse in middle-class wealth. No administration wants that on their watch.

Think about it - no U.S. government in the last 100 years has let the housing market fall and stay down. Not through the Great Depression. Not through the 2008 financial crisis. Not through a global pandemic. Every single time, the policy response was the same: protect the housing market.

So the infrastructure - Fannie, Freddie, FHA, the mortgage interest deduction - keeps getting maintained, expanded, and protected across party lines.

The result? U.S. home prices have increased year-over-year in 63 of the last 70 years (90% of the time). The 20-year rolling average appreciation is 3.92% - consistent across good economies and bad. Even the worst 20-year period (1993-2012, which included the 2008 crash) still delivered +2.92% per year.

That's not luck. That's a system working as designed.

YOU DON'T HAVE TO LIVE THERE TO GET ON THE SCOREBOARD

Here's the angle most people miss entirely.

A lot of people tell me: "I'd love to own, but I'm not ready to commit to a location - my job might move, my family situation might change". That's a real and valid concern. But it doesn't mean you have to sit on the sidelines.

You can own as a landlord even if you're renting where you live.

Think about it this way: if you need flexibility in your personal life, you rent where you need to be. But at the same time, you buy an investment property somewhere the numbers work - and your tenant's rent covers the mortgage, the expenses, and ideally generates some cash flow on top.

You stay nimble personally. You stay on the scoreboard as an investor. Your tenant funds your equity while you use your own income to cover your rent. Over time, the property appreciates, the mortgage gets paid down, and you've built real wealth - without ever being "locked in."

This is exactly the long-term investor mindset: you don't need to live in the asset to benefit from the system.

THE BOTTOM LINE

The U.S. government made a structural decision, starting in 1938, to make homeownership the primary wealth-building vehicle for the American middle class - and then built the policy infrastructure to back it up. That decision has been reaffirmed by every administration since, through every economic cycle.

Two-thirds of American households are already benefiting from this system, whether they understand it or not. Their net worth is growing - slowly, structurally, powered by machinery that has survived the Great Depression, World War II, the 2008 financial crisis, and a global pandemic.

Most people think of real estate as a risky, illiquid bet. I'd argue the opposite: with 87 years of policy infrastructure behind it, betting on long-term home value appreciation is one of the most structurally supported, historically consistent bets available to an ordinary investor.

The risk isn't in getting in. For most people, the risk is in waiting too long.

The only question is whether you're in.

Disclaimer: I'm a fellow investor and self-learner, not a financial or legal advisor. This is based on my personal research and experience. Always consult with qualified professionals before making investment decisions.

Sources:

Want to talk through what this means for your situation?

I write these posts because I believe the more you understand the mechanics, the better decisions you make. If something here sparked a question - or made you wonder whether now might be the right time to start - I'm happy to think through it with you.

Book a free intro call with Yossi

Or reach out directly: yossi@mylongterm.com | WhatsApp: +1 (650) 658-1010

Yossi Zomet
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