Housing affordability index shows wide homeownership gap and wealth disparity among ethnicities
Housing affordability for black California households is half that of whites
According to the California Association of Realtors Housing Affordability Index by Ethnicity, less than one in five black California households could afford to purchase the $659,380 statewide median-priced home in 2020, compared to two in five white households. C.A.R. officials say this finding illustrates the homeownership gap and wealth disparity for people of color, women, people with disabilities, indigenous people and members of the LGBTQ community.
In 2020, a minimum annual income of $122,800 was needed to qualify for the purchase of a $659,380 statewide median-priced singlefamily home. The monthly payment, including taxes and insurance on a 30year fixed-rate loan, would be $3,070, assuming a 20 percent down payment and an interest rate of
3.30 percent.
The 2020 California median income for whites was $94,390, $107,100 for Asians, $65,510 for Latinx and $56,820 for blacks. The percentage of black households who could afford to purchase a median-priced singlefamily home in California was 19 percent, compared to 38 percent for white households, 20 percent for Latinx households and 43 percent of Asians.
“The wide affordability gap in California between whites and people of color demonstrates the legacy of systemic racism in housing, which has created inequities in homeownership rates across these communities,” said C.A.R. President Dave Walsh. “Closing the homeownership gap is essential to closing the generational wealth gap in our country.”
Walsh said C.A.R. is committed to addressing barriers and disparities to make equity in housing and access to affordable homes a reality for all people. Among legislative actions the state Realtor group is taking to address housing discrimination is introducing several
Fair Housing and Equity bills including requiring California real estate professionals to take implicit bias training, removing discriminatory language in property records, prohibiting discrimination against people living in affordable housing, repealing Article 34 of the California Constitution, and boosting housing construction so homeownership is accessible to all.
In Santa Clara County, in 2020 a minimum annual income of $258,000 was needed to qualify for the purchase of a $1,385,000 county median-priced singlefamily home. The monthly payment, including taxes and insurance on a 30year fixed-rate loan, would be $6,450, assuming a 20 percent down payment and an interest rate of
3.30 percent.
Only 11 percent of Latinx and black households, respectively, could purchase a median-priced home in the county, compared with 32 percent of white households and 37 percent of Asian households. The affordability gap is especially stark in San Francisco County, where a median-priced home of $1,650,000 was only affordable for 8 percent of black households, 15 percent of Latinx households and 22 percent of Asian households compared to 35 percent of white households.
“It is a challenge for first-time homebuyers to afford to purchase a home in our region. The housing affordability index further shows the wide homeownership gap in ethnicity,” said Joanne Fraser, president of the Silicon Valley Association of Realtors. “SILVAR strongly promotes sustainable homeownership for all.
In addition to addressing the serious housing supply problem, we join C.A.R. in seeking to address the homeownership gap and income disparities that exist in our region.”
Fraser announced this week that SILVAR is holding “Faces & Voices of Leadership in Real Estate,” a virtual program which will feature past and present leaders of Bay Area multicultural real estate associations. Key speakers include Santa Clara County Supervisor Otto Lee and Bay East Realtor Mony Nop.“this program seeks to encourage Realtors from all ethnicities to get more involved in organized real estate. It will be followed by the SILVAR Leadership Academy. Both programs are part of a National Association of Realtors grant that seeks to promote diversity and inclusion in real estate and address housing discrimination.”
To say that 2020 was an unprecedented year seems like such an understatement!
When I wrote my last update in July 2020 I was hopeful we were going to round the Covid-corner quickly and get back to some semblance of normalcy…but, that certainly didn’t happen. Combine that with the issues and protests around social injustice and the most divisive, disruptive and destructive election any of us could have imagined…and unfathomable might be a better word.
Prior to the pandemic, the housing market was on a steep upward trajectory. Once the shelter-in-place orders were implemented things came to a screeching halt and the US economy suffered its steepest dip since the Great Depression.
Per Aculist data for Santa Clara County, we saw a 34% decline in sales volume in
April 2020. Our biggest drop was in May at 54%, but by June we were down just 14% year-over-year. And, by July, sales were up 13% and haven’t stopped climbing since.
Overall, 2020 was a very strong year for the region.
The number of homes sold was 9,440, up 1.4% versus 2019 and the average price of $1,691,570 was up 9.1%. Days on market (DOM) was 18, down over 37%. The sales volume for condos/townhomes was 3,571, down 4.7% and the average price dropped .8% to $884,130. DOM was 24, down 29.6%.
The pandemic affected our normal “seasonality”. Our peak selling months of March, April and May got shifted to the summer and fall. We ended up doing 9 months of volume in the last 6 months of the year.
So, where are we going from here…?
In January, national inventory was down over 42% versus last year and the median price of $346,000 was up over 15%. However, in San Jose, listings were up by nearly 25% and San Francisco was up 14%. Overall, Santa Clara County saw a 22% increase in inventory versus 2019. The median sales price was up 13%, and DOM was down 46%.
Per economist, Dr. Elliott Eisenberg — this is going to be a “stellar” year!
Interest rates are incredibly low and are going to stay low — offsetting a 20-25% higher priced home. The anticipated additional round of stimulus checks is also going to help. And, with prices going up .5 to 1% per month, folks have equity!
Many companies and businesses have actually done well because of the pandemic. Online shopping, connectivity, cloud computing and cyber security companies, delivery services, home fitness manufacturers, and social media sites have all benefited. Stocks of Peloton, Amazon, Facebook, Netflix, Servicenow, Google, Zoom (and others) have soared.
However, as we all know, many businesses, and unfortunately their employees, have suffered tremendously. The Bay Area lost hundreds of legacy restaurants, retail shops and even large chain stores.