The housing crisis is one of the major challenges facing the city and the nation. Latines face several challenges while also embracing opportunities.
By Jensen Toussaint on October 16, 2024.
In 2021, Philadelphia’s median household income clocked at about $52,650. However, that number was $13,837 less for Latino households, according to statistics from The Economy League of Greater Philadelphia. Photo: Canva.
Over the decades, Philadelphia has held a reputation for being among the more affordable places to buy a home in comparison to peer metropolitan cities, such as New York, Boston, Washington, D.C., and Baltimore.
The housing market, however, looks quite different today than it did in the immediate years before the COVID-19 pandemic, let alone at the start of the millennium, as the entire nation has seen the average cost of homes rise.
According to data from Pew Charitable Trusts, the median price for a home sold in an arms-length transaction in Philadelphia was about $208,000, including sales to investors. Excluding sales to investors, that number rises to $265,000.
However, in Philadelphia, at least 32% of all homes purchased between 2000 and 2021 were made by investors.
When accounting for inflation, the median price of an entry-level, single-family home in the city rose from $59,000 in 2000 to $160,000 in 2021.
Although mortgage interest rates were much lower in 2021 compared to 2000, the shift hasn’t been low enough to offset the price increase.
The changes in the housing market have made affordability more challenging for first-time home buyers, especially those with lower incomes.
Latino income and homeownership
The prospect of home ownership is often a difficult one for those with lower income and wages.
According to Gusto, the median salary in Philadelphia is about $64,006, with 80% of wages falling between $28,754 and $147,900. The median household income in the city, however, is about $75,000 annually.
There is a racial gap in earned income that plays a direct role in the homebuying and homeownership landscape.
In 2021, Philadelphia’s median household income clocked at about $52,650. However, that number was $13,837 less for Latino households, according to statistics from The Economy League of Greater Philadelphia.
Philadelphia’s housing affordability crisis impacts homebuyers and prospective homebuyers, and the Latino community has been hit the hardest.
According to LEDC Philadelphia, 50% of Hispanic households were cost-burdened in 2019, which was the highest of any other demographic group. The home price-to-income ratio for Latines in Philadelphia was 5.0, meaning that it would take over 5 years of income for at least 50% of the Latine population to afford the city’s median home value. Any ratio above 2.6 is considered cost-burdened, and so too is a household where more than 30% of its income is spent on housing costs.
Further, although declining homeownership rates for nonwhite racial and ethnic populations have largely mirrored the city’s overall decline in homeownership, Latinos are facing steeper rates of decline.
Hope isn’t all lost across the country, however.
According to data from the National Association of Hispanic Real Estate Professionals, the Hispanic homeownership rate in 2023 was 49.5%, representing a net gain of 377,000 Hispanic owner-households from the previous year.
The 2024 election could drastically reshape the future of the housing market
With a critical presidential election just a few short weeks away, housing and homeownership prospects are one of several issues that could be drastically shaped and reshaped based on the result.
Vice President Kamala Harris and former President Donald Trump have very different ideas on how to address housing affordability in the U.S.
A key part of Harris’ agenda is to grow the middle class and one of the ways to do that is to make rent more affordable and home ownership more attainable.
Her plan includes building three million more affordable rental units and homes, cutting the red tape to make sure housing is built faster, and penalizing firms that drive up prices for local homebuyers.
Harris also plans to provide first-time homebuyers with up to $25,000 to help with down payments.
Trump has not released a clear agenda on how he plans to address housing. Rather, he has linked housing with other parts of his agenda, namely immigration. Trump’s most prominent promises are to deport millions of immigrants who are in the U.S. illegally and to ban mortgages for undocumented immigrants.
During his first term as president, Trump established the “Preserving Community and Housing Choice,” which repealed regulations that implemented fair housing.
However, he also signed an eviction moratorium that prevented Americans from getting evicted during the height of the COVID-19 pandemic in September 2020.
“Project 2025,” which Trump has denied is correlated with his platform, includes the elimination of the Housing Supply Fund, which according to the U.S. Department of Housing and Urban Development (HUD), is a $35 billion fund toward state and local agencies to remove barriers to affordable housing development.
According to data from the National Low Income Housing Coalition, a little over 20% of people who live in public housing are Hispanic. Therefore, eliminating the fund would impact many Hispanics.
The results of the November 5 election will surely have a big impact on the future of the nation’s housing market.
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