Clancy DeSmet has given up hope of owning a home after he was denied a mortgage because of his student debt. His chance of building significant wealth is fading too.

“Every generation of parents thinks their kids are going to have as good a life, or better, than they had,” said DeSmet, 40, district coordinator for Vermont’s Natural Resources Board. “That’s not happening for a big chunk of my generation.”

The inability of Americans like DeSmet to buy a home is helping create the widest wealth chasm in three decades. Homeownership has declined to the lowest level since 1993, leaving millions of people without an asset that’s been the main source of wealth accumulation for the middle-class, research by New York University economist Edward Wolff shows.

Economic inequality, traditionally a focus of Democrats, has grabbed the attention of Republicans too. Jeb Bush, the former Republican governor who is expected to run for president, and Democratic contender Hillary Clinton have made the rich-poor divide a campaign issue.

“The decline in homeownership has profound implications,” said Wolff, who is also a researcher at the National Bureau of Economic Research. “It is one of the key reasons why wealth inequality has shot up over the last half dozen years. Homes are the leading asset of the middle class. They stopped buying homes, and their wealth is going to correspondingly decline as we have seen.”

Declining Homeownership

The share of Americans who own homes rose from the mid-1990s through the Internet bubble and peaked at 69.2 percent in 2004. It has steadily fallen ever since to 63.7 percent in the first quarter, the Census Bureau said Tuesday. In the aftermath of the housing crash, tougher lending standards, stagnant wages and rising home prices have posed obstacles to homebuyers.

Homeownership is the single most important buffer against rising inequality, said Wolff, who reviewed household wealth trends over more than five decades in a December NBER study, “What Happened Over the Great Recession?” Housing generated 63 percent of wealth in 2013 for middle-class families, defined as the middle three fifths, the research shows. That compares with just 8.7 percent for the top 1 percent and 28 percent for the next 19 percent.

The wealthiest Americans -- the top 1 percent, 10 percent and 20 percent -- made gains mostly through higher stock prices, Wolff found. The Standard & Poor’s 500 Index has more than tripled since March 2009, helping to boost household net worth to a record $82.9 trillion in the fourth quarter.

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