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Housing affordability compared to race/ethnicity across America

NAHB study outlines affordability

New data from the National Association of Home Builders (NAHB) reveals dramatic contrasts correlating with major race/ethnic groups and housing affordability. The NAHB’s Housing Opportunity Index (HOI) was broken down for the first time to analyze metropolitan area housing affordability compared with five different races/ethnic groups.

As a Realtor, you are likely nervous about discussing race or ethnicity given how highly agents regard fair housing, but this study should be read through the lens of the underserved and how affordability is believed by NAHB to be lower for minorities. As an industry topic, it is important that you are aware of the national trends in housing.

73% of all homes sold in 2010 were “affordable”

The national median income in 2010 was $64,400 of all ethnicities combined while the median family income for Asians was $80,500, for Caucasians $69,000, for Hispanics $44,100, for American Indians/Alaska Natives $43,200 and $42,300 for African Americans.

Nationally across all races, the report indicates that 73% of all homes were deemed affordable while 80% of homes sold were affordable to Caucasians’ median income, 76% for Asians, 59% for American Indian/Alaska Natives, 53% for African Americans and 51% for Hispanics.

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That is shocking- half of all homes sold last year were not affordable to the almost half of all Hispanics and African Americans based on median incomes.

Builders’ role in affordability

“By breaking down the HOI by race and ethnicity, we have an even more accurate picture of housing affordability,” said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. “Builders have generally known that their efforts to build affordable housing were especially important to minorities in their communities, and this new report helps confirm that.”

Of large metropolitan areas, only four cities had a higher HOI for African Americans than Caucasians: Strafford County, NH, McAllen, TX, Boulder, CO and Olympia, WA while the HOI was lower for Hispanics than Caucasians in all cases studied.

“Previously, we have only computed a single, global HOI, either for a particular metropolitan area, or for the nation as a whole,” said NAHB chief economist David Crowe. “However, it was evident that affordability differences are dramatic and persistent across racial and ethnic lines. The NAHB/Wells Fargo HOI methodology is a precise way to demonstrate these differences. Policy makers and elected officials may want to consider the differential HOIs for particular minority groups when contemplating policies that would increase home prices or otherwise impact the affordability of housing.”

Download the full report below:

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  1. Joe Manausa

    May 11, 2011 at 5:55 am

    Very interesting report. It is shocking how "globally" everything seems really solid at high affordability levels, but when you drill down, you see the problems. Thanks for a great download to chew through.

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