Black and Hispanic renters who aspire own a home may find it more difficult, as they often find themselves required to put more of their income toward housing expenses than whites, according to an analysis by Zillow.
Given the supply and prices of available rentals, black and Hispanic households may find saving for a down payment increasingly difficult as rents eat up a larger share of income.
Zillow found that of the rental listings that appeared on it in 2017, only 41.9% were “affordable” for the typical US household. This means that a household would spend 30% or less of its median monthly income for the rental.
The analysis revealed that rental options were affected by a stark income divide by race. While white and Asian households could afford 49.7% and 67.4% of all rental listings, respectively, those earning the median black and Hispanic household incomes could only afford 16.2% and 27.3% of listings, respectively.
To spend 30% of their income on rent, typical white and Asian households have a maximum budget of $1,624 and $2,075 for rent, respectively. This compares to just $991 and $1,205 for the typical black and Hispanic household, respectively.
Zillow also found that the typical black and Hispanic households would still have had fewer options than the typical Asian household even if they were willing to spend up to 45% of their income on rent.
Even if black and Hispanic households can come up with a down payment, they may still be priced out of homeownership given the level of monthly mortgage payments in many large metros. Zillow said that ultimately, this might prohibit people of color from packing up and leaving their hometowns in search of lucrative job opportunities or social mobility for their families.
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