Home values in California rose dramatically over the past two decades while household incomes have not kept pace — a gap having a profound impact on the state's Latinos, which make up almost 4 in 10 residents.
While household incomes rose by about 23 percent from 2000 to 2019, median home values increased by roughly 180 percent, according to a new report by the Terner Center for Housing Innovation at the University of California, Berkeley.
San Joaquin County, where Latinos make up over 40 percent of residents, saw a significant drop in affordable homes for middle-income families: In 2010, 91 percent of homes sold were affordable to middle-income families. The number has dropped to 58 percent, with similar trends in other counties, including Alameda, Santa Clara and Riverside.
“These areas that used to be affordable to working-class families, middle-income households, are increasingly becoming out of reach,” David Garcia, a policy director at Terner Center who co-wrote the report, told NBC News. “I think what a lot of people don’t always realize is that these [people] are essential parts of our workforce. These are people who are gainfully employed, and pay a percentage of their income towards their rent to stay in these residences.”
For Christian Arana, 33, finding affordable housing in an already competitive market was a tense experience.
For almost three months, Arana sought a home within Los Angeles County but was continually being priced out by other offers.
“I would see a place on a Saturday, and then by Monday, I would find out that they had offers of $100,000 over asking. I didn’t have that kind of money,” Arana, the vice president of policy for the San Francisco-based Latino Community Foundation, said.
Garcia said the high prices are resulting in more Californians dedicating a hefty portion of their income to rent, while cutting back on expenses in areas such as food and education.
The reliance on high rent limits future chances of homeownership and wealth-building. About 39 percent of middle-income renters are spending more than 30 percent of their income on housing; 10 percent are severely cost-burdened, according to the report.
“They [Latinos] rent at higher shares than some other groups. And this is a challenge because it makes it difficult to save up for a down payment or to pay a mortgage because homeownership costs have risen so much," Garcia said. "Continuing to pay so much of income towards rent makes it difficult to transition to homeownership, too."
In another recent report by the University of California, Los Angeles, researchers found that low-income Latinos and Asian households were among the lowest demographic groups to apply for rental relief assistance. Latinos ranked the second-lowest in both applications for rent relief and aid received.
In 2019, almost 40 percent of California households were burdened with rent or homeowner costs, according to the Terner Center report. A record 5.2 million households in the state face housing cost burdens.
Renters experienced these burdens at substantially higher levels than homeowners — at 53.1 percent compared to 29.6 percent of owner households.
"I don’t think there’s one silver bullet to solve this crisis. It’s going to take really a spectrum of policy tools to adequately address this, and it won’t happen overnight," Garcia said. "It took decades to get to this point, and it’s going to take several years, several legislative sessions to come up with the ideas and policies to take us out of this hole."