While the COVID-19 crisis is widening the gap between lower- and higher-income homeowners, it is also widening a racial gap, according to data from the Urban Insitute. According to the report, titled "How Economic Crises and Sudden Disasters Increase Racial Disparities in Homeownership," the homeownership gap between people of color and white people often worsens amid a recession because people of color are disproportionately harmed.
As low-price home prices rise, would-be homebuyers with low incomes have trouble finding affordable homes, so they remain in the rental market, drive up rents, and increase the demand for and price of rental properties, Urban notes. As a result, the cost for both owning and renting has gone up substantially for low-income households, while their income growth has not kept pace with that of high-income households.
“A closer look at 285 metropolitan statistical areas (MSAs) suggests that rapid employment growth combined with increased supply constraints from zoning and other regulations contributed to this disproportionate price growth for low-price homes,” said Urban researchers. “If left unaddressed, these same supply constraints will hamper the ability of low-income households to prosper as we emerge from the crisis and will exacerbate income inequality.”
People of color experience disparities independent of economic cycles, but these cycles appear to exacerbate these differences. Urban hypothesizes that this could be in part because black and hispanic households were more vulnerable entering the cyclical downturn.
The COVID-19 pandemic has brought additional challenges as well. COVID-19 could affectthe ability of homeowners and renters to pay their monthly mortgage or rent obligations because of prolonged sickness, job loss, or reduced hours and income. Related income shocks and inability to work for extended periods creates tremendous uncertainty for housing markets in the short and longterm.
Substandard housing conditions such as pest infestation, lead paint, faulty plumbing, and overcrowding disproportionately affect black families and lead to health problems such as asthma, lead poisoning, heart disease, and neurological disorders