Redress News Wrap – Latest Harvard Housing Report Shows Households of Color Excluded from Home Market Despite Making Up Most U.S. Household Growth

Each year, the Harvard Joint Center for Housing Studies releases a seminal report detailing key statistics, issues, and trends in the nation’s housing. Though certain details change year-by-year, the reports annually remind us of the housing market’s persistently regressive and racially unequal nature. The most recent report for 2021-2022 details how record-breaking increases in home values and rents have left many Americans, and particularly Black and Brown Americans, locked out of the home market. This is despite the fact that households of color have made up the majority of U.S. household growth. It additionally shows how record home equity gains have disproportionately benefited white and wealthy homeowners, while renters, low-to-moderate-income households, and households of color face dire prospects of a continual housing affordability squeeze. To elaborate, here are some of the report’s key details:

  1. U.S. homeowner equity jumped from $4.6 trillion to $26 trillion from 2020 to 2021 as a result of home price spikes. Whiter and wealthier homeowners were the prime beneficiaries of this boost. Per the report, the median household wealth of white homeowners ($299,900) remains nearly two-to-three times that of Black ($113,100) and Hispanic ($164,800) homeowners. Additionally, since the white homeownership rate (over 70 percent) remains higher than Black and Hispanic homeownership rates (less than 50 percent), whites not only typically have more home equity than Black and Brown homeowners, but proportionately own more homes. This is the sum of decades of policy failures to redress the racial homeownership gap that has not budged since the passage of the Fair Housing Act in 1968.
  2. Per the JCHS report, rising interest rates and a median home price of $391,200 as of April 2022 essentially puts homeownership out of the question for households making less than six figures and who have less than $28,000 in savings to put towards a 3.5 percent down payment and closing costs. Most Americans fall outside of these criteria. As of 2020, the median U.S. household income was $67,521. Black and Hispanic median household incomes, meanwhile, were respectively $45,870 and $55,321.
  3. Renters, and particularly renters of color, will likely see little relief from the housing market’s recent price hikes any time soon. Due to high demand and low vacancy rates, from 2021-2022 rents for professionally managed apartments climbed by more than 10 percent, rising at the fastest rate in decades. Nearly half of all U.S. renters, who on average have lower levels of household income and wealth than homeowners, were at least moderately cost-burdened from 2021-2022, meaning that they paid 30 or more percent of income toward rent. Nearly a quarter were severely cost-burdened, paying at least 50 percent of income toward rent. More than half of Black households and Hispanic households in the U.S. are renters compared to just over a quarter of white households.
  4. The stream of incoming apartments under construction to respond to surging rental demand will mostly consist of higher-end units with rents hundreds of dollars above median rental costs. For newly created, younger white households priced out of the homebuying market but with enough income to afford these newer rentals, the incoming rental supply will help meet demand for higher-quality, larger housing units that do not require homeownership. However, for households of color with comparably lower incomes and who have median levels of household wealth many times lower than white households, the inability of this new stream of apartments to make up for disappearing affordable housing stock bodes poorly for closing racial wealth or homeownership gaps. 

These issues highlighted by the report have ramifications for the entire nation, though, as already emphasized, their immediate impacts will be most felt by households of color, low-to-moderate income households, and renters. Given that households of color have been a key driver of U.S. household growth for the last decade even as U.S. population growth has otherwise slowed (last year the population grew 0.1 percent, its slowest rate since 1900), ensuring that households of color have access to both the financial resources necessary to afford homes and a supply of affordable homes will be crucial for stabilizing the housing market moving forward. This is perhaps the driving reason behind the creation of Freddie Mac and Fannie Mae’s first ever Equitable Housing Finance (EHF) plans in 2022, which seek to help close the racial homeownership gap by providing a range of new special home financing programs targeted to Black homeowners and renters. Hopefully, various levels of government will also work to continue or expand upon relief programs that help avoid home deterioration, tax liens, and foreclosure. Such programs can help maintain existing levels of Black, Hispanic, and low-to-moderate income homeownership amid price surges that also connect to increased home maintenance costs and rising property taxes that can disproportionately burden these same groups.    

Additionally, given that most new housing supply coming online in the near future exceeds median home prices and rental costs, it is crucial to expand affordable housing programs and to stabilize naturally occurring affordable housing (i.e. housing that is affordable without government designation or subsidy) where it exists to help quickly alleviate rising housing costs and avoid potential spikes in evictions, displacement, and homelessness. Beyond the disruption and traumas these events create for individual households, they are also costly to local communities, disruptive to labor markets, and reinforce patterns of segregation

Without redress, this latest housing report also shows that the racial wealth gap will only widen as housing equity disproportionately grows in the hands of wealthy white households and rising rents cut disproportionately into the wealth of households of color. Without redress, the report also shows that the hot housing market, even as it cools, bodes poorly for the future stability of renters, LMI households, and households of color, as well as the communities they inhabit.  

At the Redress Movement, we are interested in building community power to address these and other issues related to segregation by agitating for actions of redress responsive to segregation’s history. To engage with more news stories related to redress and to hear more about our work, sign up to join our mailing list and keep an eye out for news updates in this section of our website. Also be sure to explore our resource pages where you can learn more about the history and consequences of segregation, read through the vocabulary of segregation, or use our Citizens’ Guide to discover how segregation affects your community.

–The Redress Movement Research Team