Roughly 1 in 5 new mortgages went to low-income homebuyers in 2023, down from 23% in 2020. Meanwhile, high-income buyers have gained share because they’re more prepared to weather the storm of high home prices and mortgage rates

Roughly one in five (20.6%) new mortgages issued last year went to low-income Americans, bringing that group’s piece of the homebuying pie back down to where it was in 2018. That is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Low-income earners gained ground at the start of the pandemic, taking out 23.2% of all new mortgages in 2020, but that progress has since been erased because high home prices and elevated mortgage rates have eroded affordability.

The small bit of progress that Americans earning very low incomes made on taking out mortgages at the start of the pandemic has also been erased. Just under 6% of new mortgages issued last year went to very low income Americans, down from 7.7% in 2020. Very-low-income Americans now make up a smaller percentage of mortgage borrowers than they did in 2018 (7.1%).

Higher-income homebuyers are taking up the share of new mortgages that lower-income homebuyers have lost in the last several years. While low-income borrowers gained share during the pandemic and then lost it, the opposite has happened with high-income borrowers, who are more prepared to weather the storm of high prices and rates. Nearly half (44.8%) of all new mortgages nationwide went to high-income buyers in 2023, bringing that group’s piece of the pie back up to almost exactly where it was in 2018. Their share dipped to a low of 41.2% in 2020.

This is according to a Redfin analysis of Home Mortgage Disclosure Act (HMDA) data covering purchases of primary homes.

Homebuying has become increasingly out of reach for lower-income people because housing affordability dropped to a record low in 2023 due to sky-high home prices and mortgage rates. Affordability hasn’t improved during the first few months of 2024:

• Home prices: Today’s median-home sale price is about $420,000, up 5% year over year. That’s up nearly 40% since the start of the pandemic in March 2020 and up nearly 50% since March 2019.
• Mortgage rates: Today’s average 30-year mortgage rate is about 7.2%, up from 6.43% a year ago and more than double the record low of 2.65% in 2021. It’s also higher than the 4% to 5% levels in 2018 and 2019.
• Monthly payments: The typical homebuyer’s monthly payment is now a record-high $2,886, up 13% year over year. That’s up from just over $1,500 in both March 2020 and March 2019.
• Down payments: The typical down payment for someone putting down 20% is $84,000, up from $80,200 a year ago, $60,800 in March 2020 and $56,800 in March 2019.

While the U.S. economy is fairly strong, unemployment is low and wages are increasing, housing costs are increasing much faster. Hourly wages are up roughly 5% year over year, while monthly housing costs are up 15%. Surging housing costs have an outsized impact on low earners, who are less likely to have money in the bank for down payments and record-high monthly payments.

“There was a sweet spot in 2020 when mortgage rates were ultra low and home prices had yet to skyrocket, allowing some lower-income Americans to break into the housing market,” said Redfin Senior Economist Elijah de la Campa. “But somewhat ironically, the continued strength of the economy has made it harder to afford a home and widened the real-estate wealth gap between rich and poor Americans. The Fed’s interest-rate hikes, meant to help cool inflation and slow a hot economy, have pushed mortgage rates to near their highest level in more than two decades. That’s on top of home prices, which skyrocketed during the pandemic buying boom and have stayed high due to a shortage of homes for sale.”

It’s also important to note that due to the prevalence of all-cash home purchases in today’s market, housing wealth is even more concentrated in the hands of affluent Americans. More than one-third of all U.S. home purchases were made in cash as of February, near the highest level on record, and the share has steadily been rising since 2020.

While high-income Americans made up the biggest piece of last year’s homebuying pie, people at all income levels purchased far fewer homes in 2023 than the year before. The number of U.S. homes bought by high-income earners fell 19% year over year in 2023, and it fell 18% for moderate earners, 22% for low-income earners and 31% for very-low-income earners. That’s because housing costs shot up due to rising home prices and mortgage rates, and inventory dwindled.

Low-income earners take up biggest share of homebuying pie in Minneapolis, Detroit

Low-income earners take up the biggest piece of the homebuying pie in relatively affordable Midwest and East Coast metros, where home prices are lower. Nearly one-third (32.1%) of new mortgages issued last year in Minneapolis went to low-income earners, the highest share of any of the 50 most populous U.S. metros. It’s followed by Detroit (30.8%), Philadelphia (29.9%), Virginia Beach, VA (29.7%) and Baltimore (28.3%).

Low-income earners gained mortgage share from 2020 to 2023 in just three of the metros in this analysis: Chicago (26.5% to 27.7%), Cleveland (26.4% to 27.8%) and Washington, D.C. (26.8% to 27.1%).

Just 1.9% of new mortgages issued last year in Anaheim, CA, went to low-income earners, the lowest share in this analysis. Next come Los Angeles (3.6%), Miami (4.4%), San Diego (5.5%) and San Francisco (6.1%). Those California metros are among the most expensive places to buy a home in the country.

To view the full report, including charts, metro-level data and methodology, please visit:
https://www.redfin.com/news/home-mortgages-by-income-analysis

People of color are taking out a rising share of mortgages because an increasing share of them are of prime homebuying age, and because America is becoming more diverse. They’ve also seen larger income gains than white people in recent years.

The share of U.S. mortgages taken out by white homebuyers has declined over the last five years, while the share taken out by Hispanic, Black and Asian homebuyers has ticked up. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

The report is based on a Redfin analysis of 2018-2023 Home Mortgage Disclosure Act (HMDA) data covering mortgage originations for primary homes. This analysis does not cover originations for investment properties or second homes.

Just under two-thirds (62.2%) of new mortgages issued in 2023 went to white homebuyers. While that’s a far higher share than any other group, it’s down from 64% in 2022 and 70.4% in 2018. It’s also now more in line with the country’s demographics, as 59.5% of the U.S. population is white (as of 2022, the most recent year for which data is available).

Meanwhile, the share of new mortgages taken out by Hispanic buyers increased to 14% in 2023 from 12.6% in 2022 and 11% in 2018. Black buyers represented 8.7% of new mortgage holders last year—little changed from 8.6% in 2022 but up from 7.1% in 2018. Still, these figures lag demographic trends, as 18.8% of the U.S. population is Hispanic and 12.2% of the population is Black.

Asian buyers took out 8.2% of new mortgages in 2023, unchanged from 2022 but higher than the 6.4% rate in 2018. Asian mortgage holders are tracking slightly ahead of demographic trends, as 5.9% of the U.S. population is Asian.

All in all, people who are Hispanic, Black, Asian or two or more races took out 37.8% of new mortgages last year, up from 36% in 2022 and 29.6% in 2018.

“The pool of homebuyers taking out mortgages is becoming less white because America is becoming more diverse, and many people of color are in their prime homebuying years,” said Redfin Senior Economist Elijah de la Campa. “The racial wage gap, while still sizable, has also been shrinking. That has made homeownership more feasible for some Black and Hispanic people, though they’re still significantly less likely to own homes than white people.”

Hispanic, Black and Asian People Have Seen Larger Income Gains Than White People

The median annual income for Hispanic people in the U.S. was an estimated $69,000 in 2023, up 40.2% from 2018. That’s much larger than the gain for white people, whose median income rose 31% to an estimated $86,000. Black and Asian people also saw bigger increases in estimated incomes, which climbed a respective 34.7% to $54,000 and 36.4% to $114,000.

The racial wage gap remains large, but has shrunk in recent years in part due to a tight labor market. When the labor market is tight, employers are often less selective and look for candidates outside of their networks, which provides opportunities for marginalized communities.

It’s worth noting that the unemployment rate in the Black population has ticked up in recent months.

America Is Becoming More Diverse

White people make up 59.5% of the U.S. population (as of 2022), down from 61.6% in 2018, 69.7% in 2000 and 84.1% in 1970. Meanwhile, people of color have taken up a growing share of the population, with Hispanic people seeing the biggest uptick. They represent 18.8% of the U.S. population, up from 18% in 2018, 12.6% in 2000 and 4.1% in 1970.

The Black share of the population is the exception, stagnating in comparison; at 12.2%, it's little changed from 12.4% in 2018 and 12.1% in 2000, but is up slightly from 11% in 1970.

The number of people in the U.S. who identify as white (a different metric than the share) recently declined for the first time since 1790.

“In addition to lower fertility and immigration, much of this loss is attributable to the continued aging of the white population. Fewer births and more deaths resulted in a natural decrease (more deaths than births) for the 2010s decade, even before the COVID-19 pandemic,” William Frey, a senior fellow at the Brookings Institution, wrote in a 2021 report. “In addition, the rise of multiracial marriages has led to an increase in the number of young people who identify as mixed race rather than white alone. The new census results also show a substantial rise in the number of Americans that indicated belonging to two or more racial groups.”

A Rising Share of Hispanic, Black and Asian People Are of Prime Homebuying Age

More than one in five (21.1%) Hispanic people living in the U.S. are of prime homebuying age (25-34), up from 20.6% in 2018 and 16.5% in 2000. Meanwhile, 13.7% of Black U.S. residents are of prime homebuying age, up from 13.4% in 2018 and 12.6% in 2000. The share has also ticked up among Asian people, to 7% from 6.9% in 2018 and 4.9% in 2000.

But the opposite is true for white people, 54.4% of whom are of prime homebuying age. While that’s a higher share than any other group, it’s down from 56.6% in 2018 and 64.1% in 2000. Please note that the most recent year in this dataset is 2022.

The most common age among white people in the U.S. is 60—far beyond prime homebuying age. That’s roughly double the most common ages of Black and Asian people and five times higher than the most common age of Hispanic people.

White People Are Buying Fewer Homes Than They Used to

White people took out 1,582,643 mortgages in 2023, down 22.1% from a year earlier and down 31.3% from 2018. By comparison, Hispanic people took out 355,757 mortgages, down just 11.1% year over year and down 1.3% from 2018. Asian people took out 209,085 mortgages, down 19.9% year over year and down 0.5% from 2018. And Black people took out 220,410 mortgages, down 19.4% from a year earlier and down 5.7% from 2018.

Home purchases have dropped across the board over the past year due to rising mortgage rates and high home prices, but it’s notable that the declines were more severe among white people.

Most white people already own homes, meaning there’s not a lot of room for growth. Nearly three-quarters (74%) of white people in the U.S. own homes, compared with 62.2% of Asian people, 49.9% of Hispanic people and 45.7% of Black people.

While white people are the most likely to be homeowners, it’s worth noting that their homeownership rate has stagnated in recent years while the homeownership rates for Hispanic, Black and Asian people have climbed—helping to narrow the gap slightly.

To view the full report, including charts and methodology, please visit:

The FED didn’t cut rates and some seemed surprised. Inflation is still an issue, and some seem surprised. Stagflation is now a strong possibility, but some seem surprised. The Treasury department is struggling how to continue to borrow money to feed the debt, but some seem surprised. Housing prices and rents continue to rise, but some seem surprised. Credit card debt keeps setting new records, and yet some seem surprised. Job creation keeps growing, but we have fewer full-time workers than we had prior to covid and some seem surprised. There has yet to be any ruling from the judge dealing with the NAR settlement, and yet some seem surprised. It is very important that each of us stay connected to information we can trust so we don’t get surprised!

More information that can move the market happens this morning with initial and continuing jobless claims, and Friday morning we will see the April Jobs Report, and as we have seen in the past, these numbers can make the markets move! So, pay attention this morning and Friday morning to these numbers.

I wanted to take a minute to congratulate Megan Cloud of San Antonio Texas for be recognized by Scotsman’s Guide as the #41 ranked in dollar volume in the country for female loan originators, and #15 in units closed. Far too often, women in the mortgage industry are not properly recognized for their accomplishments. I met Megan a number of years ago when my wife met her at a convention and told me that Megan could be a superstar in the industry with just a little help. Since I never argue with my wife’s opinion about people, it was important for me to speak with her and understand what her vision was for the future. I believed after speaking with her that she was selling herself short in what was possible.

While I have been fortunate to have worked with some of the top producers in this industry over the years, being part of the Megan Cloud story is a true highlight of a more than 40-year connection to mortgage and real estate! Congratulations Megan, there is so much more you can achieve, as long as you believe!

Questions or comments: This email address is being protected from spambots. You need JavaScript enabled to view it.

LendingTree surveyed 2,000 people and found that common causes of friction between landlords and renters include maintenance issues, poor communication and a lack of professionalism. We also found that a third of renters say they’ve been discriminated against based on factors like race and age. Here's a closer look at our findings. 

• 58% of renters say they’ve had at least one landlord they didn’t like, with 1 in 4 (25%) disliking their current one. Among those who disliked a landlord, the bad blood was mainly due to maintenance (68%) and communication issues (53%) or a lack of respect or professionalism (42%).
• 31% of renters say a landlord has entered their home without permission, while 21% have had a legal dispute with theirs.
• Almost half (48%) would rather rent from an individual than a corporation, with 49% of renters believing it’s cheaper. Additionally, 57% of renters think the government should limit how many homes an individual or corporation can own.
• 37% say they couldn’t afford any increase in rent and 36% would only be able to afford an increase of 5% or less.

You can check out our full report here: https://www.lendingtree.com/home/mortgage/landlord-survey/

LendingTree's Senior Economist and report author, Jacob Channel, had this to say. 

"If you’re being discriminated against because of your race, immediately reach out to a local tenant advocacy group, local housing authority or the Department of Housing and Urban Development and ask for help. If a landlord is found guilty of discrimination based on something like race, they may be required to pay for the costs you incurred while you found another place to live."