Home prices nationwide have rapidly accelerated over the past year, and in communities of color, price appreciation is even more intense. That's according to a Joint Center for Housing Studies (JCHS) analysis of Zillow's latest data. Those same analysts found that despite a faster average price growth in majority-residents-of-color tracts, home prices continued to decline in a disproportionate share of these zip codes. It's complicated, say the study's authors.
"Behind this higher-than-average growth lies a more complex story: Even while this was happening, prices were also more likely to fall in communities of color," according to JCHS authors Alexander Hermann and Thomas Shay Hill.
According to JCHS's tabulations of Zillow's numbers, median home values rose 8% annually in December 2020, up from 4% the year prior and climbing to just over $266,000.
One-third of zip codes showed home price growth of 8% or more, including more than half of zip codes that are communities of color. On average, home price growth in communities of color outpaced less diverse zip codes as well over the past year, they show:
The rapid pace of price growth in communities of color was not geographically confined either.
However, communities of color also experienced more variations in price appreciation—"while typical home values have risen fastest on average in communities of color since the start of the pandemic, prices also continued to fall in many of these neighborhoods," the authors note. "Indeed, between 6 and 13% of neighborhoods tracked by Zillow experienced year-over-year home price declines in any given month during the pandemic. In December, prices declined in 6% of all zip codes and 7% of communities of color, including 12% of majority-Black neighborhoods."
The final part of the JCHS paper examines home prices that remained underwater relative to the peaks attained in the mid-2000s.
"Of the 18,000 zip codes where Zillow has home price data going back to 2004, roughly one-fifth had typical home values below the peak of the mid-2000s. Among communities of color, over a quarter had prices below last decade’s peak," they reported. "The rate is even higher—36%—among the 616 communities that are majority Black. This partly reflects a more severe downturn in prices in communities of color following the crash."
It's important to recognize these complexities when it comes to addressing fairness and equality in housing, the researchers point out.
"Looking ahead, both stagnating home prices and extreme price volatility might compound the challenges faced by communities of color, and Black communities in particular, in building wealth ."
The research in full is available at JCHS.Harvard.edu/blog.