Home prices are on the rise, making homeownership unaffordable for many Americans. There are only 245,300 homes currently for sale to those earning the U.S. median income of $75,000 to $100,000, according to the National Association of Realtors. That is a major drop from the 656,200 homes that were affordable in 2019, before the pandemic.
With Black Americans earning a median income of $30,000 per year, this is a another factor that could lock Blacks from homeownership. And the pandemic has made things worse for Black Americans, who have taken major financial blows during the last two years.
“The surging residential real estate market of the last two years led to record-high home prices and record-low inventory,” NAR researchers wrote. “This simultaneous ‘double trouble’ has made it increasingly difficult for consumers, particularly Black Americans, to achieve homeownership.”
Black Americans are still earning less than their peers, and it’s impacting their ability to afford homeownership.
Black Americans have some of the lowest earnings compared with white men, found a study from the Urban Institute. According to the organization, in 1963, white families had a median wealth of about $45,000 more than families of color. By 2019, the gap had grown to about $165,000 more than Black families (numbers were adjusted for inflation).
During the pandemic, Blacks continue to experience wage and job losses and this is diminishing their purchasing power.
“[Before the coronavirus hit] the Black employment rate was improving,” Daryl Fairweather, Redfin chief economist, told USA TODAY. “When employment improves, and incomes improve, that’s when you start to see homeownership rates improve. The pandemic derailed that.”
In 2021, the homeownership rate was 73.8 percent for white households and 45.1 percent for Black households, according to the University of Houston. The homeownership rates represent an almost 29-point difference percentage gap.
“The Black homeownership rate currently remains the lowest in the country, underscoring how the challenging COVID housing market has compounded long-standing systemic issues faced by today’s Black buyers,” George Ratiu, Realtor.com manager of Economic Research, told Business Insider.
Unless more homes are built to meet the growing demand and slow price appreciation, many Black Americans will be squeezed out of homeownership.