Your Rental Matchmaker

After a year and a half of record-setting rent growth, the past six months have brought a rapid cooldown in the rental market. And even if demand begins to bounce back this year, it remains likely that rent growth in 2023 will be modest at best. That’s because there are currently a record number of new apartment units under construction, and this influx of new supply should keep prices in check. While encouraging, this recent construction boom does not change the fact that the nation is currently in the midst of a broad housing affordability crisis that has built up over many years. And even as multifamily construction remains hot, the construction of new single-family homes has recently begun to sputter.

Over the long run, it is crucial that enough new housing supply is constructed to keep pace with population growth and rising demand. Over the past decade, many of the nation’s large coastal markets – including New York City, Boston, San Francisco, and Los Angeles – have not built nearly enough new housing to keep pace with local job growth, resulting in deep housing affordability crises. In contrast, Sun Belt markets throughout Texas, Arizona and Florida have experienced rapid growth in both jobs and housing. In this report, we dive into decades of building permits data collected by the U.S. Census Bureau to put the latest data into a historical context and to evaluate how these trends have varied regionally.

According to the latest data from the United States Census Bureau, the Black homeownership rate currently stands at 44 percent.¹ Consistent with a broader nation-wide trend, Black homeownership has been rising for the past half-decade, up from a recent low of 40.8 percent in 2016. During the most recent five-year span, the number of Black homeowners increased by roughly 750,000, and the aggregate value of their owned homes has increased $700 million.

But in a broader historical context, Black homeownership remains low and has been mostly stagnant for several decades. According to decennial census data, the only period of significant improvement was 1940 to 1980, when the Black homeownership rate nearly doubled from 23 percent to 45 percent. This boost took place in spite of numerous racist policies that explicitly restricted Black access to homeownership. Racially restrictive covenants written into property deeds openly banned Black families from moving into white neighborhoods, and through the practice of redlining, the Federal Housing Authority refused to insure mortgages in Black neighborhoods. These were legal practices until the passage of the Fair Housing Act in 1968.²

Therefore, Black families were largely excluded from the post-war suburbanization boom. But white flight to the suburbs created vacancies in hollowed-out city centers, allowing more Black households to purchase homes. Black homeownership increased, but so too did segregation as Black homeowners concentrated in disinvested cities. The effects of this residential segregation persist today. Property values increased more slowly in Black neighborhoods than they did in booming white suburbs, meaning even as more Black families purchased homes, homeownership served as a less reliable source of wealth creation. Today, Black households own 8.0 percent of the nation’s homes, but these account for only 5.8 percent of the nation’s aggregate home value. And the median home equity for Black homeowners is half that of the median for white homeowners.

The Great Recession was also damaging to Black homeownership. Black and brown borrowers received a disproportionate share of subprime mortgages in the years leading up to the crash, and when the bubble burst, Black homeowners were 76 percent more likely than white homeowners to experience foreclosure. Black homeownership fell for nine consecutive years, and by 2015 the gap between Black and white homeownership was wider than it had been at any point going back to 1920. These losses have yet to be recuperated. Even after the modest rally that started in 2016, by 2021 Black households owned homes at the same rate that they did in the 1970s.

The widespread adoption of remote work arrangements has played a key role in explaining the turbulence that has characterized the rental market since the start of the COVID-19 pandemic. Newfound geographic flexibility has allowed workers to relocate from expensive markets to more affordable ones, and to spread out from the urban cores of large metros to their farther flung suburbs. Even as some employers have asked workers to return to the office, it seems clear that remote work will continue to be far more prevalent going forward than it was at any point prior to the pandemic. Recent Census data shows that the share of Americans who work primarily from home tripled from 2019 to 2021. In a recent survey, we found that the flexibility afforded by remote work is indeed leading to higher rates of mobility and shifting geographic preferences. Given their heightened propensity to move, remote workers have been having a disproportionate impact on housing market trends, and this is expected to continue into 2023 and beyond.