MReport July 2017

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48 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Major Markets Price Out Middle-Class Buyers Housing affordability for middle-income earning Hispanic and African- American households is down in many of the nation's biggest cities. S ince 2012, homebuy- ers earning median salaries in the 30 largest metros in the United States have found themselves increasingly priced out of their markets. But this middle-class affordability gap has been especially rough on minority buyers—particularly those of Hispanic and African-American descent, according to a new study by Redfin. Redfin's report stated that in 2016, Hispanic families could afford 18 percent of homes for sale in the 30 largest U.S. metros, while African- American families could afford 14 percent. Both rates were down 11 percentage points from 2012. Meanwhile, while middle-class white families saw a 12 percent affordability drop over the same period, white households earning median incomes could still afford 30 percent of the houses in those same markets last year, Redfin reported. Independent of ethnicity, hous - ing affordability for middle-class families overall dropped 12 percent between 2012 and 2016. According to Redfin, though national in - comes rose 2 percent since 2012, a 26-percent jump in national hous- ing prices has caused the gap to widen. Nearly half the houses for sale in the 30 largest metros were affordable to median earners in 2012; less than a third were afford - able to them by 2016. Affordability issues for Hispanic and African-American buyers have been particularly pronounced in the West, Redfin reported. In fact, these buyers have been all but priced out of the mar - ket in Denver, Los Angeles, San Francisco, San Diego, Phoenix, and Portland, Oregon, where fewer than 5 percent of homes for sale were affordable to Hispanic and African-American buyers last year. While Denver had the small - est number of homes available to minority buyers in 2016 (2 percent), the city also was home to the smallest racial gap in housing affordability. Middle-class whites could afford 8.3 percent of homes. On the other side of that coin was Minneapolis, where 66 percent of median-earning whites could afford homes, while Hispanic families could afford about 25 percent and African- American families could afford just over 5 percent. Las Vegas had the largest de - clines in affordability for families making the median incomes from 2012 to 2016, with African- American affordability falling -26.5 points and Hispanic affordability dropping -24.6 points. Meanwhile, metros known for their rela - tive affordability, like Atlanta; Tampa, Florida; and Kansas City, Missouri, saw double-digit declines in the share of listings that were affordable on African- American and Hispanic median incomes, Redfin reported. St. Louis was the only metro that saw increases in afford - ability for both Hispanic (up 5.4 points) and African-American families (up 4.3 points). St. Louis was also the only metro where overall middle-class affordability, including for median-income white households, did not change significantly over this period. "American cities are at risk of losing both the economic and racial diversity that has been their hallmark," said Redfin Chief Economist Nela Richardson. "Middle-class homebuyers are be - ing priced out of America's largest cities at an alarming rate, as the home affordability gap gets wider. Given the significantly lower rates of homeownership among African-American and Hispanic families, the reduction in afford - able listings has even more dire consequences for income inequal- ity when broken out by race." But, Richardson added, there are solutions. "For one, federal and state governments can do much more to be influential in local housing policy," she said. "That's where the crisis starts—at the neigh - borhood level—when people vote against inclusionary zon- ing policies, making it difficult or impossible to build higher- density, affordable housing in a community. Federal and state governments can reward commu - nities that change to inclusionary zoning practices by offering them infrastructure investments to improve the neighborhoods. That way, inclusionary zoning is more appealing to longtime residents."

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