Many African-American homeowners may fare poorly following the COVID-19 pandemic without the aid of financial planners and banking assistance. (Courtesy photo)
Many African-American homeowners may fare poorly following the COVID-19 pandemic without the aid of financial planners and banking assistance. (Courtesy photo)

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The U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey (HPS) is designed to deploy quickly and efficiently, collecting data on a range of ways in which people’s lives have been impacted by the pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning.

The Household Pulse Survey will ask individuals about their experiences in terms of employment status, spending patterns, food security, housing, physical and mental health, access to health care, and educational disruption. The questionnaire is a result of collaboration between the U.S. Census Bureau and the USDA Economic Research Service (ERS), the Bureau of Labor Statistics (BLS), the National Center for Health Statistics (NCHS), the National Center for Education Statistics (NCES), and the Department of Housing and Urban Development (HUD).

Questions identified as priorities for testing include those that were developed specifically to address the COVID-19 pandemic; items developed for potential future deployment to understand households’ decision-making in light of receiving economic stimulus payments; and questions deemed to be overly complex from a cognitive standpoint.

What the research found was that faster appreciation for low-price homes ma exacerbated income inequality and negatively impact Black homeownership.

The faster rise in low-price home prices impacts low-income homeowners and renters the hardest, specifically those in the bottom quartile of the income distribution. As low-price home prices rise, would-be homebuyers with low incomes have trouble finding affordable homes, so they remain in the rental market, drive up rents, and increase the demand for and price of rental properties. As a result, the cost for both owning and renting has gone up substantially for low-income households, while their income growth has not kept pace with that of high-income households (those in the top quartile of the income distribution).

And according to Urban Institute, despite the labor market turmoil caused by COVID-19, home prices have largely remained where they were before the pandemic, as demand and supply shrank simultaneously. But with rising unemployment and forbearance, lenders have tightened credit to avoid taking greater risks that may further strain their financial capacity.

Credit was already tight before COVID-19, and because of these even stricter standards, low-income households will likely face greater difficulty accessing homeownership, even for homes within their financial reach. It’s likely that those with high incomes and credit scores will have more opportunities to buy homes and build housing wealth as the economy recovers from the COVID-19 shock.

Additionally, a greater share of low-income homeowners and renters are working in industries that are more vulnerable to the COVID-19 shock. Therefore, low-income homeowners may struggle more to sustain homeownership once the forbearance period is over, and many low-income renters are likely to lose the financial ability to become homeowners. At the same time, the home price trajectory is unlikely to change, as all households, both owners and renters, need a place to live. But the homeownership rate is expected to decrease, making it harder for many families to build wealth.

If the supply constraints that existed before the pandemic remain unaddressed, both low-price home and rental prices will continue to increase faster than prices for high-price homes, widening residual income inequality between low- and high-income homeowner and renter households. This could also hurt the ability of low-income households to build financial strength and could make them more vulnerable to future economic shocks.

WI Guest Author

This correspondent is a guest contributor to The Washington Informer.

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