The percentage of Black and Latino buyers who could afford to purchase a median-priced single-family home in California in 2020 was 19% and 20%, respectively, compared to 38% for white households and 43% for Asian buyers, according to a report released Wednesday by the California Association of Realtors.
“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 CAR President Dave Walsh.
“Closing the homeownership gap is essential to closing the generational wealth gap in our country, and that’s why CAR is committed to addressing barriers and disparities to make equity in housing and access to affordable homes a reality for all people,” he said.
According to the Census Bureau’s American Community Survey, the 2019 homeownership rate in California was 63.2% for whites, 60.2% for Asians, 44.1% for Latinos and 36.8% for Blacks.
According to CAR’s Housing Affordability Index, a minimum annual income of $122,800 was needed to qualify for the purchase of a $659,380 statewide median-priced, existing single-family home in 2020. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,070, assuming a 20% down payment and an effective composite interest rate of 3.30%.
The 2020 California median income for whites was $94,390; $107,100 for Asians; $65,510 for Latinos; and $56,820 for Blacks, according to CAR.
The affordability gap was especially stark in expensive counties like San Francisco, where a median-priced home of $1.65 million was only affordable for 8% of Black households, 15% of Latino households and 22% of Asian households compared to 35% of white households, CAR reported.
Compared with California, 42% of the nation’s Black households could afford to purchase a $299,900 median-priced home in 2020, which required a minimum annual income of $55,600 to make monthly payments of $1,390, while 62% of white households could afford the same home.
Of the major regions for which CAR tracks affordability by ethnicity, the affordability gap between Black and white households in 2020 was the greatest in San Francisco County with a differential of 27%. Even in relatively affordable areas such as Fresno and Sacramento counties, the affordability differential between Black and white households was high at 23% and 22%, respectively.
For Latino households, the affordability gap was the greatest in Santa Clara (21% gap) and San Francisco, San Mateo and Los Angeles counties (all at 20%). At an affordability index of 8%, San Francisco County was the least affordable for Black households, and San Bernardino County was the most affordable at 46%.
The least affordable county in 2020 for Latino homebuyers was Santa Clara County, and the most affordable was San Bernardino County at 54%. For white households, Orange County was the least affordable, with 29% of households earning the minimum income required, while Fresno was the most affordable at 61%.