Home prices in neighborhoods where Black people bought homes in 2019 were up 7% in July, according to a new from brokerage Redfin. That’s higher than the 6% price increase in neighborhoods where white people purchased homes last year. The pace of price growth remained unchanged from pre-pandemic rates in February in both groups of neighborhoods.
In the months since the pandemic spread across the U.S. (May to July), home sales fell 15% from last year in neighborhoods where Black people bought homes. Meanwhile, home sales fell 13% in neighborhoods where white people bought homes. (Neighborhoods where Black people bought homes and neighborhoods where white people bought homes are not mutually exclusive.) Before the pandemic in February, sales were up in both types of neighborhoods, but were growing twice as fast in neighborhoods where white people bought (8%) as in neighborhoods where Black people bought (4%).
“There may also be an increase in gentrification of neighborhoods where Black people bought homes,” said Redfin Chief Economist Daryl Fairweather, who authored this report. “Black people have struggled more than white people to make mortgage and rent payments during the pandemic. Investors may see that as an opportunity to buy up affordable homes and apartments and renovate them to appeal to wealthier buyers and renters, further reducing the number of affordable homes available to Black people.”
She continued, “This pandemic-driven recession is already disproportionately hurting Black American employment with the Black-white jobless gap widening. After the 2008 recession, the Black-white homeownership gap widened by 5%. And after the pandemic ends, the Black-white homeownership gap may worsen even more than it did following the 2008 recession.”
The higher price growth and deeper sales decline in neighborhoods where Black people bought homes has likely been due to bigger declines in homes being listed for sale, with new listings down 19% year over year in July, compared to a 12% drop in neighborhoods where white people bought homes. Both types of neighborhoods were experiencing declines in new listings in February, before the pandemic began, down 9% year over year in neighborhoods where Black people bought homes and down 6% year over year where white people bought.
Newark, New Jersey saw the biggest annual home price increase (14%) in neighborhoods where Black people bought homes. Meanwhile, in Newark neighborhoods where white people bought homes, price growth was up 6% year over year. Home prices were already rising quickly in neighborhoods where Black people bought in Newark even before the pandemic began — back in February 2020 home prices were up 12% year over year in neighborhoods where Black people bought, and up only 5% year over year in neighborhoods where white people bought.
“The vast majority of homebuyers in Newark are investors,” said local Redfin agent Marci Macedo.
Only 23% of homes are owner-occupied in Newark compared to 64% nationwide. The number of new listings in July declined 13% in neighborhoods where Black people bought homes, but increased 1% where white people bought in Newark from last year. Homebuyers in Newark must compete for the few available homes for sale, with investors looking for safe long-term investments during the pandemic driven recession.
