The gap between the share of Black and White households in rental properties that could comfortably afford a mortgage payment narrowed during the pandemic, according to new data from Zillow (NASDAQ:Z, ZG).
Zillow cited American Community Survey statistics from 2022 that found nearly 38.6% of 138 million U.S. families were not homeowners – but out of that number, more than 6.3 million families were considered “income mortgage-ready.” Within that share, about 7.8% of Black non-home owning families were income-ready for a mortgage, compared to 12.5% of White families — a gap of 4.7 percentage points. Ten years earlier, that gap was 7.9 percentage points.
However, both Black and White households faced higher mortgage rates in the post-pandemic years. Zillow pointed out the number of renting families able to afford a mortgage dropped to 6.3 million in 2022 from 12.9 million in 2021 when mortgage rates doubled. While higher mortgage rates and higher prices affected everyone, the median family income of renters rose more for Blacks than for Whites since 2012.
Detroit has the highest share (13.3%) of Black renting families earning enough income to comfortably afford a mortgage, followed by Memphis (12.8%), St. Louis (12.0%), Houston (11.6%) and Cleveland (11.2%). But Zillow also stressed that although home values are relatively lower in those communities and more Black families could afford the typical mortgage payment, access to homeownership remains a challenge.
“Despite the significant decline in mortgage affordability in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner’s cost — the mortgage,” said Zillow Senior Economist Orphe Divounguy. “While some families may choose to rent, many are simply constrained. It’s crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials, like insufficient credit scores and lack of access to credit. These barriers especially impact people of color.”
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So did the gap decrease because more blacks are mortgage ready or fewer whites are?
This is what one actually wants to know if you want to see people buying homes.
That was my question as well. It would appear that although there is less of a gap, fewer of any ethnicity can now afford home ownership.