Tenants who live in predominantly Hispanic or black neighborhoods have to spend more of their income on rent than those in white communities.
Housing has become less affordable for all tenants since 2011, as rent increases significantly outpaced income growth. But for tenants who live in mostly black or Hispanic neighborhoods, the situation is decidedly worse.
New data shows that residents of predominantly white neighborhoods spend an average of 30.7 percent of their income on rent, which is in line with the generally accepted standard of 30 percent. Renters who live in predominantly black neighborhoods spend 43.7 percent of their income on rent, and tenants in predominantly Hispanic communities spend 48.1 percent.
For minority tenants, using such a large proportion of their income on rent limits their ability to save for a down payment, which would allow them to switch their expensive rent to more affordable mortgage payments.
And when rents are unaffordable, tenants make sacrifices such as foregoing necessary medical or dental care and contributions to retirement provision.
Harder all around
In markets where rents are high overall for all residents, minority neighborhoods are even more affected than white communities. In Los Angeles, renters in white communities spend 50 percent of their income on rent – well above the recommended 30 percent, but still far less than renters in black or Hispanic neighborhoods, who pay a premium of 63.7 percent and 63 percent, respectively .
In expensive San Francisco, rent in predominantly black communities accounts for the largest portion of median income (74.8 percent), followed by rents in predominantly Hispanic communities (62.5 percent) and then, after a considerable gap, rents in predominantly white communities ( 48.8 percent). ).
Boston follows a similar trend, with residents of black communities paying 71.2 percent of the median income, followed by 59.5 percent in Hispanic communities and 34.8 percent in white communities.
“This study highlights another example of inequality in the housing market,” says Zillow boss Dr. Svenja Gudell. “Tenants in African American or Hispanic neighborhoods are in a catch-22 situation: While owning a home is a great way to build wealth, you need to save some money to buy it. When you’re spending almost half of your income on rent it becomes incredibly difficult to save on that down payment. “
These differences shift for homeowners, with mortgage payments accounting for the largest portion of income from homeowners in Hispanic neighborhoods at 22.8 percent. Homeowners in white communities spend more of their income on mortgage payments (15.2 percent) than homeowners in mostly black communities (13.6 percent).
Still, the transition from renting to property remains a challenge for minorities, not only because they have less income to save for a down payment, but also because race affects minorities’ ability to obtain a mortgage. Housing values in predominantly black communities also tend to be much lower than housing values in predominantly white communities, which contributes to this difference.