Millions of Americans rent because they can’t afford to buy. And many of those people struggle to pay the rent, new research suggests, more so if they are African-American or Hispanic.
A renter who earned $39,647 per year, the median black household income in the U.S., could afford just 16.2% of rentals available on Zillow Z, -1.53% if they kept their housing costs below 30% of their pretax income, according to a new analysis from the real-estate company.
Hispanic renters fared somewhat better: Those who earned the median household income could afford 27.3% of rentals before they risked spending more than a third of their pretax income on housing.
Spending 30% of your gross income on rent is the traditional measure of affordability used by many real-estate experts. Comparatively, white renters who earned the median household income for their demographic could afford 49.7% of rentals, while Asian renters could afford 67.4%.
“Perhaps more so than any other factor, income determines where and how we live in the United States today,” said Zillow senior economist Aaron Terrazas in the report.
“Income disparities across racial and ethnic groups in the United States have remained stubbornly persistent and, as a result, black and Hispanic families encounter far fewer affordable rental options than white and Asian families,” he said.
Matters for black and Hispanic renters were even more dire in some of the country’s largest — and most expensive — metropolitan areas. Black renters in New York could only afford 3.4% of rentals if they earned the median household income and wanted to keep housing costs below 30% of their pretax income. In Los Angeles, only 2.2% of black renters could afford the rental properties listed on Zillow.
Given the limited options, renters were forced to spend more than 30% of their pretax income on housing — and doing so opened up far more options. If black renters making the national median household income for their demographic spent up to 45% of their pretax earnings on their housing, they could afford 49.4% of rentals.
In some cities, like San Francisco, black renters on average had to spend nearly 75% of their income on rent. Even in the most affordable rental market in Zillow’s analysis, the typical rent charged to a black resident required 29.9% of their median income.
Black and Latino households are at a major disadvantage
More than half (55%) of black and Latino households are rent-burdened in the country’s 100 largest cities, meaning they spend more than 30% of their income on rent, according to a separate report released by real-estate website Trulia last year. For the overall population, that figure only stands at 47%.
And research has shown that income inequality faced by people of color makes it difficult to afford housing-related costs, in turn making far more minority households rent-burdened. And the rising unaffordability of rental properties is increasing homelessness rates across the country.
Paying such a large share of one’s income each month toward housing costs can make a sudden change in income much more pronounced, which in turn makes eviction more likely.