Remote Work Could Most Help Black Renters Trying to Buy Homes

Rhea-AI Summary

Zillow's analysis highlights that Black renters may benefit most from pandemic-driven telework, making first-time homeownership more attainable. The study reveals that in high-value metro areas, Black renters are 29% more likely to purchase homes in less expensive regions. Despite this advantage, significant disparities in homeownership persist, with 75% of white households owning homes compared to just 44% of Black households. While telework could assist 4.5% of all renters in affording homes elsewhere, it is not a comprehensive solution to existing affordability challenges.

Positive

• Black renters show increased potential for homeownership due to remote work options.
• 29% higher likelihood for Black renters to buy homes in affordable areas compared to others.
• Telework could assist 4.5% of all renter households in home purchasing.

Negative

• Homeownership gap between Black and white households remains significant.
• Telework does not address core affordability issues for people of color.
• Only a small percentage of renters can benefit from telework for homeownership.

SEATTLE, Nov. 23, 2020 /PRNewswire/ -- The rapid rise in pandemic-driven telework could make first-time homeownership most broadly accessible to black renters compared to other renters, based on factors including income, the makeup of local industries, geography and more, a new Zillow® analysis suggests.

Zillow research found that, of the nearly 2 million U.S. renters who are able to take advantage of heightened telework options and could afford monthly payments on homes in less-expensive areas outside of their current metros, Black renters benefit far more than other renters . In large metro areas where typical starter home values are higher than they are nationally, Black renters are 29% more likely than other renters to be able to buy their first home in a less expensive area because of the opportunity to work from home permanently.¹

Black renters have the most opportunity due to their likelihood of working in more "remotable" industries, like educational services and public administration, combined with having relatively low income levels,  pricing them out of where they currently live, but high enough to potentially afford a home in a less-expensive metro.

"Teleworking has opened up more options for my family.  We've made a life here in Maryland, but with two small children being able to purchase a home back in Louisiana and be closer to my parents and our extended family is just what we need," says Jonathon Holloway, a federal employee and Maryland renter who recently made an offer on a home in Louisiana.  "With everything that has happened this year, it makes you stop and realize what is really important. And for us, that's family. Without the ability to telework, we might not have been able to make this transition."

That opportunity is highly dependent on each specific market. In Baltimore, for example, it is more likely for Black households making $30,000 to $40,000 to have primary earners in health care administration and office work, which is highly "remotable", while in Phoenix it is more common that someone in this bracket would be in travel, hospitality and accommodation, or food service, which is not.

The black and white homeownership gap remains as wide today as it was at the dawn of the 20th century. Nearly 75% of white households own their homes, compared with just 44% of Black households. While remote work can open up opportunities to buy a home in more affordable locations, it doesn't address the root of the various affordability issues for people of color. This means, for some people, achieving homeownership in this way will be a tradeoff against living some place they would prefer. For others, though, it could mean the sudden ability to move to an area they would have preferred in the first place. This analysis shows that Black renters are most likely to face this tradeoff decision.

"Although it's well-known that the pandemic has been disproportionately harmful to Black communities, the rapid shift to remote work could make homeownership more broadly accessible," said Zillow economist Treh Manhertz. "It's a rare opportunity for those in a position to take advantage of remote work. Unfortunately, this shift will not be a major factor in closing the homeownership gap nationally. The larger-scale solution must be to create options for affordable homeownership locally. Moving away may be a newer option for some, but it shouldn't be the only option available to achieve homeownership."

Although white and Asian renters are much more likely to work in more "remotable" industries, such as finance, insurance and tech, their incomes more often allow them to buy homes in their current metro areas.

At the national level, teleworking could open homeownership to 4.5% of all renter households, including  9% of Asian renters, 3.7% of Black renters, 5% of Latinx renters, and 4.1% of white renters. While the national numbers show the share of households with "remotable" work who could potentially afford a home in another metro area, they don't paint the entire picture by considering how effects will impact each community differently based on variations in home prices, incomes, and industries geographically.

A starter home in the U.S. is around $132,000, which at recent low rates and a 20% down payment translates to estimated monthly payments of about $725, about 30% of income for a household earning $29,500 per year. Black and LatinX Americans are at the bottom of the ladder when it comes to wages, but for homeownership, the benefits of telework are larger at lower income levels. Job concentration has driven home values especially high in the largest metros and many households have been priced out. Telework has the potential to offer more flexibility and shift the affordability equation just enough for many households to get a foothold in homeownership.

Share of Rental Households Able to Telework to Buy a Home Elsewhere

Metropolitan Area (Table ordered by market size)	Share Overall	Share of White Households	Share of Black Households	Share of Latinx Households	Share of Asian Households
United States	4.5%	4.1%	3.7%	5.0%	9.0%
New York, NY	7.4%	7.4%	8.9%	6.2%	7.5%
Los Angeles-Long Beach-Anaheim, CA	17.2%	20.0%	19.5%	13.2%	19.8%
Chicago, IL	1.1%	1.3%	1.2%	0.8%	0.5%
Dallas-Fort Worth, TX	3.2%	2.5%	5.5%	2.4%	1.7%
Philadelphia, PA	1.2%	1.2%	1.6%	0.7%	1.3%
Houston, TX	1.6%	1.7%	2.5%	0.9%	1.2%
Washington, DC	8.6%	8.3%	10.0%	6.7%	7.0%
Miami-Fort Lauderdale, FL	3.1%	3.2%	3.7%	2.7%	3.0%
Atlanta, GA	2.2%	2.1%	2.5%	2.0%	1.4%
Boston, MA	10.3%	10.6%	12.5%	7.3%	11.1%
San Francisco, CA	22.0%	24.5%	18.0%	16.8%	22.8%
Detroit, MI	0.0%	NA	NA	NA
Riverside, CA	6.4%	5.9%	7.4%	6.0%	7.5%
Phoenix, AZ	7.1%	7.0%	8.9%	6.0%	7.0%
Seattle, WA	12.5%	12.9%	14.3%	10.5%	10.6%
Minneapolis-St Paul, MN	6.6%	6.3%	6.5%	10.1%	4.7%
San Diego, CA	15.4%	16.3%	21.3%	12.8%	14.5%
St. Louis, MO	0.0%	NA	NA	NA
Tampa, FL	2.2%	2.1%	1.9%	2.9%	0.0%
Baltimore, MD	2.5%	2.2%	3.1%	0.5%	2.0%
Denver, CO	14.6%	15.9%	18.3%	10.4%	12.7%
Pittsburgh, PA	0.0%	NA	NA	NA
Portland, OR	11.7%	12.1%	7.5%	10.7%	10.3%
Charlotte, NC	1.6%	1.2%	2.4%	0.9%	1.4%
Sacramento, CA	10.5%	11.6%	9.5%	8.6%	8.2%
San Antonio, TX	1.0%	0.7%	2.7%	0.9%	0.6%
Orlando, FL	3.5%	3.4%	3.6%	3.4%	1.7%
Cincinnati, OH	0.0%	NA	NA	NA	NA
Cleveland, OH	0.0%	NA	NA	NA	NA
Kansas City, MO	0.0%	NA	NA	NA	NA
Las Vegas, NV	5.3%	5.8%	4.7%	4.6%	5.3%
Columbus, OH	0.0%	NA	NA	NA	NA
Indianapolis, IN	0.0%	NA	NA	NA	NA
San Jose, CA	25.2%	26.3%	27.1%	18.7%	27.8%
Austin, TX	9.5%	10.4%	10.8%	7.6%	7.2%
Virginia Beach, VA	2.9%	2.8%	2.8%	3.0%	0.7%
Nashville, TN	5.4%	4.9%	8.1%	1.5%	8.6%
Providence, RI	5.5%	5.6%	5.1%	5.8%	5.7%
Milwaukee, WI	0.0%	NA	NA	NA	NA
Jacksonville, FL	1.2%	0.7%	2.3%	0.7%	0.0%
Memphis, TN	0.0%	NA	NA	NA	NA
Oklahoma City, OK	0.0%	NA	NA	NA	NA
Louisville-Jefferson County, KY	0.0%	NA	NA	NA	NA
Hartford, CT	1.5%	1.4%	2.2%	1.5%	1.4%
Richmond, VA	2.2%	2.1%	2.7%	1.1%	2.2%
New Orleans, LA	0.8%	0.6%	1.1%	0.0%	0.1%
Buffalo, NY	0.0%	NA	NA	NA
Raleigh, NC	5.9%	5.6%	7.1%	3.3%	4.6%
Birmingham, AL	0.0%	NA	NA	NA	NA
Salt Lake City, UT	14.1%	15.8%	6.1%	12.1%	7.5%

* In the metros where the total share of households that can telework to buy is 0%, starter home values are less expensive than the national average.

Editor's note:  For comparability to previous Zillow analysis ,this analysis includes July 2020 Zillow typical home value data, as well as 2018 Census Bureau data.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions. 

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

¹ Odds ratio is taken with each group compared in turn to the group of all other renters.

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SOURCE Zillow

FAQ

How does telework impact Black renters' ability to buy homes?

Telework has increased opportunities for Black renters to purchase homes in less expensive areas, as they are 29% more likely to do so compared to other renters.

What percentage of Black renters could afford homes using telework?

Approximately 3.7% of Black renters could potentially benefit from telework to afford homes in less expensive locations.

What does Zillow's analysis say about the homeownership gap?

The analysis indicates that the homeownership gap between Black and white households remains significant, with 75% of white households owning homes versus only 44% of Black households.

What is the overall share of rental households able to telework to buy a home elsewhere?

Nationally, about 4.5% of all renter households can leverage telework to afford homes in different metro areas.

Which metropolitan area has the highest share of Black renters able to purchase homes?

San Jose, CA, has the highest share, with 27.1% of Black households able to purchase homes elsewhere.