As rental prices continue to rise to record levels, new research from Zillow indicates that a disproportionate percentage of blacks and Latinos cannot afford to rent.
The lack of access to affordable housing due to racial and ethnic divide is apparent nationwide, but data obscures the racial and ethnic enclaves clustered in several parts of the country, inevitably impacting income and housing costs, according to Zillow.
The divide is so large that in 28 of the largest 50 metros across the country, including San Francisco, Los Angeles and Boston, typical black households can afford fewer than a third of the listings that typical white households can afford.
Similarly, the gap between the share of rental listings that the typical Latino household can afford and those that the typical white household can afford is wider than the national gap, according to the research.
According to Zillow's report, if black households want to live in a rental that does not exceed the recommended 30% of their income, their maximum budget is $991. Latino households maximum budget is $1,205, while higher than the budget for blacks, this still falls below the $1,624 and $2,075 max budget for white and Asian households, respectively.
Notably, even if black and Latino households decided to spend more than 30% of their income on rent, they would have to spend a whopping 45%. This would still provide them with fewer listing options than the typical Asian household.
Earlier this month, data released from RentCafé and Yardi Matrix revealed that rents nationwide crossed the $1,400 threshold, hitting an all-time high.
In June, the national average rent for apartments was $1,405, a 0.9% increase from May and an increase of 2.9% from the same time period in 2017, according to the apartment market report.
Furthermore, the report shows that rent increased in 88% of the nation’s largest 250 cities, whereas rents remained the same in 10% of the top 250 cities and dropped in just 2% of them.
Currently, unemployment is near a historic low, but rent increases are still outpacing wage growth, leaving many renters struggling to afford monthly payments.
Although rent charged to tenants is relatively the same racially, black and Latino income intake remains below their counterparts.
According to Zillow, the typical white household earned $64,944 in 2017 and Asian households earned a median annual income of $83,007. However, the median black and Latino households earned just $39,647 and $48,210, respectively.
In 2017 41.9% of rental listings that appeared on Zillow were considered affordable for the U.S. household, and only 16.2% and 27.3% of black and Latino households could afford these listings. By contrast, white and Asian households could afford 49.7% and 67.4% of all rental listings.
If financially struggling renters are putting a large percentage of their income towards rent, saving money to move to locations with more lucrative jobs, or saving for a down payment, becomes unrealistic. Ultimately, the dream of homeownership will slip away from people of color, as more of their income goes towards rent, according to Zillow.
