Examining Renter Racial Disparities

A new Zillow report reveals the disparities in housing affordability across the U.S., particularly between BIPOC (Black, Indigenous, and Other People of Color) and white renter households. Although the magnitude of rent increases has slowed since peaking in 2022, nearly half of all renter households remain cost-burdened, with BIPOC households disproportionately impacted.

According to Zillow’s data, in 2022, the typical BIPOC renter household in the U.S. spent 34% of their income on rent, while white households spent 29%. Greater disparities appeared in several of the country’s major metro areas, such as New Orleans, where BIPOC households spent 45% of their income on rent, compared to 32% for white households. Notably, the median income of white renter households in New Orleans was 61% higher than that of BIPOC renter households. Although racial income gaps have narrowed over time, Zillow found that these figures underscore significant and persistent inequalities in housing affordability.

“Despite a recent slowdown in rent hikes, rent burdens remain critically high, particularly in BIPOC communities. These financial pressures not only make homeownership increasingly elusive, but also contribute to a broader economic disparity,” said Zillow Senior Economist Orphe Divounguy. “Combined with a persistent housing deficit and lower incomes, people of color have fewer housing options, are less likely to own, and those who do own have lower home values. We need focused efforts to tackle these issues, as stable housing is key to improving health, education and economic opportunities.”

The burden of rent growth

In the report, Zillow also found a critical shortage of housing assistance. During the pandemic, a rapid surge in market rents increased the divide between the number of households in need of assistance, and the number of available housing choice vouchers (HCVs). In 2022, roughly 19 million U.S. households qualified for HCVs based on their income, but only 2.4 million vouchers were made available. Regionally, the study found that in North Port, Florida—a metro located between Tampa and Fort Myers—the number of households eligible for HCVs surged by 43% between 2019 and 2022. When polled, metro areas in the Sunshine State accounted for half of the 10 metros with the most significant increases in households that could be eligible for HCVs. A recent study from LendingTree found that some homeowners, and renters as well, live in poverty. Using data from the latest U.S. Census Bureau American Community Survey (ACS), more than three million families who live in single-family owner-occupied homes in the country earn an income below the poverty threshold for their family size. This shows that while homeownership can be a pathway to long-term wealth creation, it’s far from the only thing needed to secure a family’s financial security.
 

Expanding housing voucher programs

HCVs, also known as Section 8 vouchers, are designed to help low-income families by paying rent subsidies directly to landlords on behalf of the families. Families then pay the difference between the actual rent and the amount subsidized by the program, typically 30% of their income, up to a rent ceiling based on fair market rent estimates from the Department of Housing and Urban Development (HUD). Since 2023, HUD has incorporated the Zillow Observed Rent Index (ZORI) into these estimates, making the voucher program more responsive to current market conditions.

However, finding a suitable housing unit that accepts vouchers remains a challenge. Despite anti-discrimination laws in some regions, many landlords still do not accept vouchers, further complicating the search for affordable housing.

Earlier this year, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Veterans Affairs (VA), in an effort to help homeless veterans and their families find permanent housing, awarded $14 million in HUD-Veterans Affairs Supportive Housing (HUD-VASH) vouchers to 66 Public Housing Agencies (PHAs) across the country for more than 1,400 vouchers. The HUD-VASH program provides housing and an array of supportive services to veterans experiencing homelessness by combining rental assistance from HUD with case management and clinical services provided by the VA.

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Picture of Eric C. Peck

Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for Entrepreneur.com.
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