According to data analysis by Redfin, the number of affordable homes in 2023 has decreased to the lowest level on record. Only 15.5% of available homes are affordable for a typical American family, down from 20.7% in 2022 and significantly lower than the pre-pandemic housing boom period, which was over 40%.

This trend not only impacts the overall housing market but also has a significant effect on different ethnic groups. Data shows that the housing affordability for Black families is three times worse compared to White families.

In 2023, only 6.9% of homes for sale are affordable for a typical Black family, while for a typical White family, this proportion is 21.6%. The situation is similar for Hispanic/Latinx families, with only 10.4% of homes being affordable for them, while Asian families have a relatively higher proportion at 27.4%.

Several factors contribute to this situation. Firstly, rising mortgage interest rates and consistently high home prices restrict the housing supply, keeping housing costs at elevated levels.

Secondly, overall housing inventory is decreasing, leading to a more limited selection of homes. Additionally, some homeowners choose not to sell temporarily to avoid losing the current ultra-low mortgage interest rates, further driving up prices.

However, there are also positive signs indicating that housing affordability may improve in the future. It is expected that by 2024, with declining mortgage interest rates and more homes being listed for sale, the housing market is likely to see a turnaround.

Chief Economist Elijah de la Campa states that mortgage interest rates have recently dropped below 7%, and house price growth is slowing down, with the potential for an increase in housing supply. Furthermore, the wage growth rate for non-White families is faster than that for White families, and rental prices are starting to decline, which will help narrow income gaps and positively impact communities of color.

Nevertheless, despite these encouraging signs, the housing market still faces challenges, especially for lower-income ethnic families who often bear greater economic pressures. They have lower average incomes, less intergenerational wealth, and often face issues of lower credit scores, all resulting from decades of discrimination. This makes it more difficult for them to afford down payments and obtain low-interest-rate mortgages. Additionally, racial bias in the home-buying process often leads to unfair treatment of Black Americans.