A new paper by NAHB economist Rose Quint examines differences in housing affordability for different racial and ethnic groups in the United States. Using data related to the NAHB / Well Fargo Housing Opportunity Index (HOI), the report finds stark difference among various population groups.
The HOI was launched in the first quarter of 1991 and has been published quarterly during the past 20 years. The national HOI is defined as the share of all homes sold in the country in any given quarter that were affordable to a family earning the national median income. Similarly, metropolitan area/division HOIs indicate the share of homes sold in a particular area that were affordable to families making the area’s median income.
The new analysis examined median incomes and housing affordability for Whites, Blacks, Hispanics, Asians and American Indians/Alaska Natives. The HOI for all race/ethnic groups combined was 72.8 in 2010, meaning that 72.8 percent of all homes sold in the U.S. last year were affordable to families earning the national median income of $64,400.
In comparison, median family income was $69,000 for Whites, $42,300 for Blacks, $44,100 for Hispanics, $80,500 for Asians, and $43,200 for American Indians/Alaska Natives. Thus, 80.3 percent of homes sold in 2010 were affordable to families earning the median income for Whites, compared to 53.0 percent for Black, 51.0 percent for Hispanic, 76.4 for Asian, and 58.7 for American Indian/Alaska Native median family income.
Affordability disparities were clearly apparent in the most populous metropolitan areas. In the New York-White Plains-Wayne, N.Y.-N.J. metropolitan division, for example, 46.1 percent of all homes sold in 2010 were affordable to families earning the median income for White families. In comparison, only 13.8 percent and 8.8 percent of homes sold in this division were affordable to families earning the median income for Black and Hispanic families respectively.
In Los Angeles, 40.3 percent of all homes sold in 2010 were affordable to families earning the area’s median income of $63,000. The applicable share was much higher if based on median family income for Whites (68.2 percent) or Asians (52.3 percent), but much lower if based on median family income for Blacks (29.2 percent), Hispanics (22.8 percent), or American/Indians/Alaska Natives (32.1 percent).
While the contrasts noted in Quint’s paper are primarily driven by differences in ethnic/racial income gaps, they highlight the potential impacts among racial/ethnic groups of policies that would require significant increases in downpayments for home purchases.