The FINANCIAL — When it comes to buying a home, black homebuyers are at a distinct disadvantage compared with other racial groups.
A homebuyer making the median black household income ($39,466) could afford 55.3 percent of the homes listed for sale in 2017 without paying more than 30 percent of their income on housing, according to a new Zillow analysis. However, a buyer earning the median U.S. income ($58,978) could afford to buy 74.2 percent of available homes last year. In all but three of the 35 largest U.S. housing markets, black buyers had less purchasing power relative to white, Asian and Hispanic buyers. In six markets, they could afford less than a quarter of homes for sale.
Portland, Ore., and Minneapolis had the biggest gaps between the percent of homes a black homebuyer could afford compared with the median buyer in those areas. In Portland, black buyers could afford 15.5 percent of homes listed last year, compared with 68.1 percent for all homebuyers. Black homebuyers in Minneapolis could afford to buy 43.0 percent of available homes, while 88.6 percent of homes were affordable to the median buyer.
Homeownership helps significantly in building wealth, and more than half the overall wealth of American households is held in their primary residence. Black and Hispanic homeowners rely on their homes for wealth more than white homeowners doi. However, despite years of policy efforts, the disparity in homeownership rates between black and white Americans has remained roughly the same since 1900.
“The divide between black and white Americans has proven stubbornly persistent across the long arc of American history, visible in incomes, accumulated wealth and homeownership,” said Zillow Senior Economist Aaron Terrazas. “Greater wealth eases the path to homeownership, and the relationship becomes self-reinforcing: Homeowners have greater access to financial wealth that, in turn, makes it easier to become and remain homeowners. Distinct racial and ethnic gaps in homeownership exist nationwide, which could have long-lasting implications for future generations.”
Like buyers earning the median black income, Hispanic buyers could afford a smaller percent of homes for sale than the typical buyer overall. The gap between what a Hispanic buyer could afford and what a median buyer could afford was narrower than the gulf between black homebuyers and median homebuyers. A buyer earning the median Hispanic income could buy 64.9 percent of homes listed in 2017, and could afford the largest share of homes in Pittsburgh (88.5 percent).
Asian buyers had the most buying power last year. Someone with the median Asian household income could afford to buy 85.2 percent of U.S. homes that were for sale in 2017. White homebuyers could afford 77.6 percent of homes.