Black, Native American, and Hispanic households are more likely than white households to be extremely low-income renters - with incomes at or below the poverty level or 30% of their area median income – for whom there is a dire shortage of affordable and available homes; nationally there are just 37 rental homes for every 100 extremely low-income renter households. Twenty percent of black households, 18% of American Indian or Alaska Native (AIAN) households, and 16% of Hispanic households are extremely low-income renters. Six percent of white non-Hispanic households are extremely low-income renters.
This racial disparity is the result of higher homeownership rates and higher incomes among white households. Decades of racial discrimination in real estate, lending practices, and federal housing policy have made homeownership difficult to obtain for minorities (Rice & Swesnik, 2012). While overt discrimination was outlawed by the Fair Housing Act, today’s credit scoring system and lending practices continue as barriers to minority homeownership (Rice & Swesnik, 2012; Bartlett, Morse, Stanton, & Wallace, 2018).
Racial disparities in income are the result of historical and current discrimination, and differences in educational attainment, wages, and employment rates, among other factors. Blacks continue to have lower rates of upward mobility than whites (Chetty, Hendren, Jones, and Porter, 2018). In 2016, the median black and Hispanic worker earned 65% and 63% of the median white worker, respectively. The lowest-income black and Hispanic workers earned 54% and 66% of the lowest-income white workers, respectively (Kochhar & Cilluffo, 2018).
Racial disparities also exist among renters alone. Thirty-eight percent of AIAN renter households, 35% of black renter households, and 28% of Hispanic renter households have extremely low incomes, compared to 22% of white non-Hispanic renter households. Regardless of race, the majority of extremely low-income renters are severely housing cost-burdened: 71.5% of Hispanic, 70.9% of non-Hispanic black, and 69.6% of non-Hispanic white extremely low-income renters. Sixty-three percent of AIAN extremely low-income renters are severely housing cost-burdened, but poor housing conditions like low quality and overcrowding are also significant concerns in tribal areas (Pindus et al., 2017).
White renters are more likely than non-Hispanic black, Hispanic, and AIAN renters to have household incomes greater than 80% of AMI. At the same time, white renters (1.1%) with these higher incomes are more likely to be severely housing cost-burdened than Hispanic renters (0.6%), non-Hispanic black renters (0.3%) and AIAN renters (0.1%) with similar incomes. As a result, the majority (73%) of the 88,000 severely housing cost-burdened middle-income renters and 78% of severely cost-burdened above-median income renters are white. In comparison, the racial distribution is more diverse among severely cost-burdened extremely low-income renters: 43% are white, 26% are black, and 21% are Hispanic.
Excerpted (with minor modifications for context) from NLIHC’s The Gap: A Shortage of Affordable Homes 2019 report, available at: https://reports.nlihc.org/gap