Rising Home Prices Have Significantly Impacted Affordability For African Americans

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Fewer than one in 10 homes for sale last year were affordable to African American households in San Francisco, Los Angeles, Seattle, Denver and Boston, a report from Redfin shows.

In San Francisco, less than 1% of homes for sale were affordable to African American families, the report shows.

The share of homes affordable to African American families has declined in every major metro area since 2012, in some places by 30 percentage points or more.

Just 25% of homes for sale in 2018 were affordable to the median African American household, down from 39% in 2012.

Also in 2018, at least half the homes in any metro areas were unaffordable to typical African American families. Six years earlier, there were only 13 metro areas where that was true.

“As prices rise, minorities can get squeezed out of a neighborhood,” says Jason Allen manager of the Maryland market for Redfin, in a statement. “For a lot of people, homeownership is their main vehicle for building long-term wealth. Many African American families who can only afford to buy homes in communities with fewer amenities, lower-rated schools, and long commutes, end up sacrificing not only long-term appreciation, but also access to better job opportunities for themselves and better educational opportunities for their children.”

The most affordable metro areas for African American families in 2018 were in the South. 

Memphis, Tenn., came closest to having half the homes affordable, clocking in at 48.7% last year.

For comparison, the median white family in Memphis could afford 80.4% of homes for sale last year.

The next-most affordable metros for African American families were Atlanta (42.2%) and San Antonio (41.1%).

All of the least affordable metro areas for African American families were in California. San Jose (0.3% of homes affordable), San Francisco (0.4%), San Diego (1.2%), and Los Angeles (1.3%) made up the bottom of the list.

“Home prices have risen 70 percent since the beginning of the housing crash recovery in 2012,” says Daryl Fairweather, chief economist for Redfin. “African Americans, who were disproportionately affected by the housing crash in 2008 have found it much harder to get back into homeownership, especially as prices skyrocketed out of budget.

“With shortages of affordable homes, the future doesn’t bode well for African Americans who aspire to be homeowners,” Fairweather adds. “However, affordable housing and housing inequality is being taken seriously by 2020 presidential candidates. While some candidates’ proposals are more specific than others, the fact that it is being discussed at the highest level of government is a step in the right direction.”

The rate of affordability for white households has tumbled over the 2012 to 2018 period as well, but in most metro areas, the declines have not been as steep.

Even in metro areas where the share of listings affordable to white households has fallen more than for African American households, the rate for white households is still much higher.

For example, in Cincinnati, the median white household could afford 77.5% of the listings in 2018, down 7.6 points from 2012.

For the median African American household in Cincinnati, the decline was only 1.3 points, but they could only afford 37.5% of homes for sale last year – less than half as many as white families.

Baltimore posted the smallest decline in the share of homes affordable to African American families between 2012 and 2018, when 34.9% of homes for sale were affordable, down from 36.1% in 2012 – a decline of just 1.15 percentage points.

Baltimore was also the only metro area where the share of listings affordable for white households didn’t decrease; it went up 0.1 points to 74.5% in 2018.

Las Vegas saw the most dramatic decline in the share of homes that African American families could afford, down 46.6 percentage points to just 14.7% in 2018 from 61.2% in 2012.

The shares of homes affordable to African Americans in Orlando, Fla., and Riverside, Calif., also fell by more than 30 percentage points.

“African American families – especially those with children – often face some hard choices and tradeoffs when it comes time to consider buying a home,” Allen says. “If they want to find a big home that they can afford, they can end up forced to less desirable areas.”

“In order to help promote healthy diversity, it’s important to have a good mix of housing types – condos, townhomes, single-family – available that are affordable to a diverse group of people,” Allen adds.

Although incomes have been rising for African American families, those gains have been outpaced by increases in home prices – up 70% nationally from 2012 to 2018 – reducing overall home affordability in every major metro area.

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Lora Steffen
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Lora Steffen

I am not an African American, but buying a home is out of reach for myself as well. I am a single income household, life is expensive enough as it is, I just truly don’t understand why housing should cost 50% or more of ones monthly net income for 30 years.