However, affordability issues are anticipated to continue to plague households with low-to-moderate incomes and people of color, according to the researchers.
Rents for apartments and single-family homes rose approximately 12 percent during the first quarter of 2022 compared with the first quarter of 2021. In some markets, rents rose by as much as 42 percent. In 25 markets, rents rose by more than 20 percent during that same period.
Nearly half (46 percent) of renters are considered at least moderately cost-burdened by their rent, meaning they spend more than the recommended 30 percent of their income on their housing payment. Nearly one-fourth (24 percent) spend 50 percent or more of their income on rent.
Harvard researchers estimate that about 4 million renters are priced out of homeownership because of the 20 percent increase in home prices combined with sharply higher mortgage rates. This increases demand for rental housing. While construction of apartments and single-family homes for rent has increased, it is not on pace to match the housing need.
Even among renters who can qualify to buy a home, it can be extremely challenging to find one that fits their budget. The rising share of home purchases by investors has contributed to the lack of homes for first-time buyers, who are increasingly priced out of the housing market.
The investor share of home purchases averaged 28 percent per month during the first quarter of 2022, compared with 19 percent a year earlier, according to the study, and far above the average share of 16 percent in 2017 through 2019. In some markets, such as Atlanta, 40 percent of homes were purchased by investors during the first quarter of 2022.
The wealth gap between homeowners and renters widened further in recent years because of the rapid appreciation in home values, but even before the pandemic and the hot housing market there were wide disparities between the groups. In 2019, homeowners had a median wealth of $254,900, about 40 times the median household wealth of renters of $6,270.
The persistent gap in homeownership rates between Black and Hispanic households and White households has kept many people from gaining wealth through home equity. But the wealth gap exists even between Black and Hispanic families who own homes and White homeowners.
According to the study, “In 2019, the median net wealth of Black homeowners ($113,100) was just over a third of that of White homeowners ($299,900) and the median net wealth of Hispanic homeowners ($164,800) was still roughly half of White homeowners. At least in part, these disparities reflect consistently lower home valuations in neighborhoods that are predominantly Black or Hispanic.”
For the full report, visit jchs.harvard.edu/state-nations-housing-2022.