Shortage in affordable homes prices out many African American families

by Candyd Mendoza17 Oct 2019

African American families continued to be priced out of every major metro area in 2018, as the share of homes affordable to African Americans shrank to a quarter of total listings in the US.

Just 25% of homes for sale last year were affordable to the median African American household, according to Redfin’s latest report. The percentage was a steep drop from 39% in 2012. At least half the homes in any metro were unaffordable to African American families, compared to only 13 metro areas six years ago.

The report showed that increases in home prices (up 70% nationally from 2012 to 2018) and mortgage rates (up from an average of 3.66% in 2012 to 4.54% in 2018) both outpaced income gains for African American families.

"As prices rise, minorities can get squeezed out of a neighborhood," Maryland Redfin market manager Jason Allen said. "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."

In San Jose, only 0.3% of homes for sale in 2018 were affordable to the median African American family. Other expensive California cities, including San Francisco (0.4%), San Diego (1.2%), and Los Angeles (1.3%) rounded up the list of the least affordable areas for African American families

Meanwhile, the most affordable metro area was Memphis, which reported 48.7% of homes were affordable to African Americans last year. Atlanta (42.2%) and San Antonio (41.1%) followed.

However, there’s still a wide gap between the percentage of affordable homes for African American families and white American families. The median white family in Memphis could afford 80.4% of homes for sale in 2018, according to Redfin.

"Home prices have risen 70% since the beginning of the housing crash recovery in 2012," said Daryl Fairweather, Redfin’s chief economist. "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."

Although the rate of affordability for white households also saw declines over the 2012 to 2018 period, the drops in most metros have not been as sharp. Even in metro areas where the percentage of listings affordable to white households has declined more than for African American households, the rate for white families is still much higher.

In Cincinnati, the affordability rate for the median white household was 77.5% in 2018, down 7.6% from 2012, while the rate for the median African American household fell only 1.3 points to 37.5% last year – less than half the rate of white families.

"African American families – especially those with children – often face some hard choices and tradeoffs when it comes time to consider buying a home," Allen said. "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."