'Patterns of housing insecurity and racial and socioeconomic inequality that existed prior to COVID-19 have been exacerbated,' said one analyst.
Recent analysis has found that Black and brown communities have been disproportionately affected during the coronavirus pandemic by an ongoing housing crisis, bearing the brunt of evictions, a mounting housing shortage, skyrocketing home prices, and record-high loan and mortgage rates.
A recent report published by the Washington Post noted that house prices have soared by 14.3% since the beginning of the pandemic, with massive demand but only half as many homes on the market as there were before combining to cause the spike. Last week, new home sale listings were down 27% lower than had been predicted.
Lawrence Yun, the National Association of Realtors' chief economist, told Politico, "I am worried that the price run-up is going to choke off first-time buyers. This simply cannot continue."
CNBC reports that the average rate for a 30-year fixed mortgage is on the rise after dropping sharply throughout the pandemic. Having hit a record low in January of 2.56%, the average interest rate now sits at around 3.16%. Practically, this translates to a loss of some $20,000 in spending power for home buyers, making it more challenging for new buyers to afford a home.
Lenders are tightening restrictions as well, requiring increased credit score minimums that have made buying a home more daunting for low-income Americans.
These factors create record barriers to homeownership for members of Black and brown communities, data shows. An Urban Institute report in May 2020 found that while ethnic disparities in housing long predate the COVID-19 pandemic, they've only been worsened by the pandemic's economic impact.
The homeownership disparity between Black and brown communities and white communities has reached record levels in the past year, the report noted.
Even before the pandemic, Black people and people who identify as Latino were twice as likely to rent instead of own their homes, and during the pandemic they have been twice as likely to have fallen behind on mortgage and rent payments.
The Urban Institute notes that Americans of color are disproportionately represented in low-wage jobs and jobs that they were unable to do from home during COVID-19 lockdowns. Black people make up 13.4% of the U.S. population and almost 18% of low-wage workers.
Recent studies show that frontline workers in low-wage professions and those whose jobs provide inconsistent income have been most affected by the housing crisis during the pandemic.
Michael Spotts, a fellow at the Urban Land Institute's Terwilliger Center for Housing, told the real estate news site Inman.com, "Patterns of housing insecurity and racial and socioeconomic inequality that existed prior to COVID-19 have been exacerbated by the pandemic and the associated economic downturn. ... many of the people who were critical in getting the population at large through this crisis face years of economic uncertainty and hardship as the country recovers."
Many people have been unable to maintain jobs in the past year. Unemployment rates for Black Americans and those who identify as Hispanic or Latino reached record highs of 16.7% and 18.9% respectively in April 2020.
According to the most recent data from the Bureau of Labor Statistics, Black Americans and people who identify as Hispanic still remain disproportionately unemployed, widening the gap between those who can afford housing and those who cannot, with 5.6% of white Americans remaining jobless, 9.9% of Black Americans, and 8.5% of Hispanic Americans.
As a result, eviction and foreclosure rates also shot up for communities of color in the past year, with a Brooking Institution study noting that those rates during the pandemic were three times higher in Black and Hispanic communities, worsening drastically between June and December.
According to an experts, there are several ways to rectify the situation.
An October report by the Center for American Progress said options include removing legal barriers and unfair practices that prevent people from obtaining housing, "such as barring people with criminalized records from renting or obtaining housing vouchers"; increasing the supply of affordable and accessible housing; prioritizing "community partnerships in developing and implementing solutions"; and funding programs and initiatives aimed at solving housing inequity.
A Brookings Institution study released in December of last year pointed to expansion of housing voucher programs: "A universal housing voucher for those with income below a certain level is an effective remedy."
The American Rescue Plan, signed into law by President Biden last week, allocates $5 billion to pay for emergency housing vouchers, as well as $40 billion for rental and mortgage assistance, of which $21 billion is to be used for emergency rental assistance.
Published with permission of The American Independent Foundation.