People who lost income during the pandemic are finding it hard to buy their first homes as real estate prices grew faster than incomes, according to a new Harvard University report.

The dream of homeownership may be further out of reach for people who lost income during the pandemic, with high home prices unlikely to come down any time soon, according to a Harvard University report.

While people in higher-income households bought and sold eagerly throughout the pandemic, buyers from historically disadvantaged groups were more likely to be priced out of the market, the university’s Joint Center for Housing Studies concluded in its June report. 

The report took a particularly close look at how the country’s remarkably low inventory levels, swelling home prices and high demand from wealthy bidders have served as a barrier for less affluent buyers.

“For those households with secure employment and good-quality housing, their homes provided a safe haven from the pandemic,” Chris Herbert, the center’s managing director, said in a statement. “But for millions struggling to cover the rent or mortgage, their housing situations have become increasingly insecure and these disparities are likely to persist even as the economy recovers, with many lower-income households slow to regain their financial footing.”

National homeownership rates rose in 2020, but historic inequalities in homeownership persisted.

The gap between Black and white homeownership rates narrowed slightly last year to 28 percentage points, a number that remained near historic highs.

Black and Latino households made less in income than white households, making it more difficult for first-time homebuyers from these groups to save for a down payment and closing costs, the study said.

The rise in home prices outpaced overall growth in incomes last year, driving the U.S. price-to-income ratio to its highest level in 15 years.

Furthermore, the report said these record-breaking home prices don’t appear to be trending lower any time soon.

“These outsized increases have raised concerns that a home price bubble is emerging,” Daniel McCue, a senior research associate, said in the release. “But conditions today are quite different from the early 2000s, particularly in terms of credit availability. The current climb in prices instead reflects strong demand amid tight supply, aided by record-low interest rates.”

Sales of new single-family homes jumped by 20 percent, compared to 6 percent growth in home sales overall. Still, this hasn’t been enough to meet the frenzied demand for new homes.

But the report found that the pace of new home builds was being held back by more factors than just skyrocketing material prices and labor shortages.

Land-use restrictions and zoning ordinances in many communities reduce the amount of land available for residential development and can bog down the process of approving new builds, the report said.

Email Daniel Houston

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
The best of real estate is gathering in Las Vegas NEXT month! Grab your ticket before prices go up on October 1.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription