Households with a median income of $64,000 or less lost their buying gains in 2023, according to Redfin. The share of new mortgages issued to this group dropped 11 percent from 2020 to 2023.
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A little more than 20 percent of new mortgages issued in 2023 (20.6 percent) went to households making a median annual income of $64,000. That’s an 11 percent decrease from 2020 and equal to the share seen in 2018. Households making a very-low median annual income of $41,000 experienced similar losses, with the share of new mortgages going to this group declining 22 percent from 2018.
Meanwhile, households within the moderate ($96,000) and high ($172,000) range have been able to better weather gains in home prices and mortgage rates, which have upped the cost of a 20-percent down payment (+47.8 percent since 2019) and monthly mortgage payment (+92.4 percent since 2019).
Elijah de la Campa | Credit: LinkedIn
“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,” Redfin Senior Economist Elijah de la Campa said in the report. “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,” he added. “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.”
Minneapolis (32.1 percent), Detroit (30.8 percent), Philadelphia (29.9 percent), Virginia Beach (29.7 percent) and Baltimore (28.3 percent) had the highest share of new mortgages going to low-income households in 2023.
However, Chicago (26.5 percent to 27.7 percent), Cleveland (26.4 percent to 27.8 percent) and Washington, D.C. (26.8 percent to 27.1 percent) were the metros where low-income households experienced the biggest gains in mortgage approvals.
On the other hand, Anaheim, California (1.9 percent), Los Angeles (3.6 percent), Miami (4.4 percent), San Diego (5.5 percent) and San Francisco (6.1 percent) had the smallest share of new mortgages going to low-income households — an unsurprising morsel of information considering California has some of the nation’s highest median listing and sales prices.
Although households with moderate-to-high median incomes are, on the whole, faring better than their counterparts with lower median incomes, Redfin said current market conditions have also led to slowing mortgage applications among those groups.
“People at all income levels purchased far fewer homes in 2023 than the year before,” the report read. “The number of U.S. homes bought by high-income earners fell 19 percent year over year in 2023, and it fell 18 percent for moderate earners, 22 percent for low-income earners and 31 percent for very-low-income earners.”
“Housing affordability may improve once the Fed cuts interest rates, which could happen later this year or early next year and which would push down mortgage rates,” it continued. “Alternatively, if rates stay high longer than expected, the blow to buyers’ budgets could eventually cause home prices to drop.”
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Enviable weather, ocean views and a lengthy list of landmark tourist destinations have made Florida a treasure chest for short-term rental investors.
A Clever Real Estate market analysis published on Tuesday revealed strong property values, robust population growth, and year-round tourist demand have made Tampa, Orlando, Jacksonville and Miami top-tier cities for short-term rentals on Airbnb and other platforms.
“For 2024, Tampa, Florida, earned the distinction of the nation’s best short-term rental market, followed by nearby Orlando and Jacksonville,” the report read. “All three enjoy strong demand and an above-average number of properties suitable for Airbnbs.”
Tampa, Orlando, Jacksonville and Miami have above-median total active inventory and inventory suitable for short-term rentals. For example, Tampa has three times the active inventory of the 50 largest metros in the U.S., and a share of short-term suitable listings that’s 160 percent above the median.
“Tampa’s affordable property value may be tied to how many properties are on the market — 16,020, according to Zillow. That’s more than 3x the median city (5,297),” the report read. “About 2.06 percent of them are suitable to be Airbnbs, the seventh-highest among cities studied and a whopping 160 percent above the median.”
Each city also had high occupancy rates and solid annual revenues.
Orlando had the highest occupancy rate (46 percent) of Florida cities, thanks to a high number of theme parks, including Walt Disney World, Universal Orlando, SeaWorld Orlando and LEGOLAND Florida. Meanwhile, Miami ($62,957) led Tampa ($52,705), Orlando ($42,338) and Jacksonville ($56,878) in average annual Airbnb revenues.
“The greater Miami area is the most populated in Florida, providing a combination of warm weather and metropolitan living for recent transplants from other major cities,” the report said of Miami’s hearty average annual revenue. “These new arrivals to the region have helped propel home prices up 66.1 percent over the past five years, second-best behind only Tampa.”
“Add in a steady flow of tourists, as well as domestic and international business travelers, and investors have all the makings of a top short-term rental market,” it added.
Although Florida had an outsized presence on the list, it’s not the only place short-term rental investors can find their golden goose. Boston; Buffalo, New York; Columbus, Ohio; Chicago; Providence, Rhode Island; Kansas City, Missouri; San Diego; Hartford, Connecticut; Nashville, Tennessee; Phoenix; and Cleveland rounded out the top 15, thanks to high occupancy rates, average annual revenues and property value growth.
On the other end of the spectrum, San Jose, California; Birmingham, Alabama; San Antonio, Texas; Houston; Sacramento, California; Raleigh, North Carolina; Riverside, California; San Francisco; Oklahoma City; and Pittsburgh were ranked as the worst markets for short-term rental investors.
“Not every city is well suited for Airbnb investors, whether that’s because of high costs, low demand, a lack of appropriate housing, or strict local laws and regulations,” the report read. “Those familiar with California’s sky-high real estate prices likely aren’t surprised to see the Golden State take four of the bottom 10 spots.”
“What’s worse, there are relatively few properties, even for investors who can afford them,” the report continued. “San Jose has 1,296 listed properties, according to Zillow, the second-fewest among cities in our study and 76 percent fewer than the median city.”
“Of the property listings evaluated, San Jose (0.41 percent) has about half as many as the average city (0.79 percent) that are suitable for Airbnbs.”
Beyond market performance indicators, Clever said investors must keep an eye on overall consumer sentiment about Airbnb and other short-term rental sites.
Seventy-six percent of travelers Clever surveyed said they have a positive evaluation of short-term rentals; however, higher rental costs and associated fees have pushed a growing majority of travelers to choose hotels when traveling solo (58 percent), traveling to a new country (48 percent) or traveling to places they’re unfamiliar with (47 percent).
Respondents said greater listing description accuracy, better safety and security protocols and quicker host responsiveness would make them more keen to begin choosing short-term rentals over hotels again, meaning there’s still room for success on Airbnb, VRBO and other platforms when customer service is prioritized.
“Overall, only 57 percent of respondents say they look at Airbnb listings before booking a trip,” the report said. “This is true even as they say they’re over 2x more likely to report a bad experience at a hotel (54 percent) than at a short-term rental (25 percent).”
“Some might see this as a sign of continued difficulty in overcoming the old habits of travelers who only consider hotels,” it added. “However, it’s also evidence of how much untapped demand for short-term rentals could potentially be out there, ready for diligent investors to turn into cash.”
The Asian Real Estate Association of America (AREAA) has escalated its fight against the State of Florida’s foreign buyer ban through a federal fair housing discrimination lawsuit filed Monday. This is the third lawsuit, and first federal suit, against the bill.
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The Asian Real Estate Association of America (AREAA) has escalated its fight against the State of Florida’s foreign buyer ban through a federal fair housing discrimination lawsuit filed Monday. This is the third lawsuit, and first federal suit, against the bill.
The suit, filed with the National Fair Housing Alliance (NFHA), Housing Opportunities Project for Excellence, Inc., and the Fair Housing Center of the Greater Palm Beaches as co-plaintiffs in the Miami Division of the Southern District of Florida, aims to stop the enforcement of Senate Bill 264, a controversial bill that curbs foreign buyers’ ability to own properties near military installments or critical infrastructure facilities.
AREAA President Jaime Tian
“This is a momentous day for AREAA and our 19,000 members as it is the first time we have filed suit to protect the rights of the AANHPI community,” AREAA President Jamie Tian said in a written statement. “SB 264 must be defeated. Florida legislators and Governor DeSantis have wrongly targeted Chinese and other select groups of immigrants.”
“They have opened the door for greater discrimination while creating increased barriers of homeownership entry for prospective [Asian American, Native Hawaiian and Pacific Islander] homebuyers and sellers,” she added. “My parents came to the U.S. from China as PhD candidates, and they eventually bought a home in Irvine, California.”
“I shudder to think about what my parents would have gone through today if they had settled in Florida. It’s infuriating to realize we now live in a reality where government leaders are putting homeownership out of reach for AANHPI people in Florida.”
Senate Bill 264 became law in May 2023 and targets homebuyers from China, Russia, Iran, North Korea, Cuba, Venezuela and Syria. The law prohibits buyers from directly or indirectly owning residential or agricultural property near military installations or critical infrastructure facilities. The law also limits buyers with a valid non-tourist visa or approved asylum purchasing ability to one residential property of two acres or less.
Although SB264’s sponsors said the bill wasn’t influenced by anti-Asian sentiments, Florida Governor Ron DeSantis and other leaders have championed the bill as a vital tool in stopping the Chinese Communist Party’s alleged hold on the U.S. as they “worm” their way into American society.
The plaintiff’s attorneys argue the bill violates the Fair Housing Act of 1968, which prohibits housing discrimination based on race, color, national origin, religion, sex (including gender identity and sexual orientation), familial status and disability.
The Act covers most housing, and rarely allows exemptions, except for “owner-occupied buildings with no more than four units, single-family houses sold or rented by the owner without the use of an agent, and housing operated by religious organizations and private clubs that limit occupancy to members.”
Noah Baron | Credit: AAJC
“Xenophobia has no place in our country — and let there be no mistake, that’s precisely what SB 264 is,” Asian American Justice Center Assistant Director of Litigation at Advancing Justice Noah Baron said in a prepared statement. “This legislation echoes last century’s ‘alien land laws,’ which also restricted the property rights of Asian Americans on the basis of stereotypes and prejudice.”
“The United States must not continue down this dangerous road; we know where it leads because we have traveled it before: during World War II when unfounded suspicions of Japanese Americans led to the forced imprisonment of over 120,000 Japanese Americans by the U.S. government and going as far back as the 1882 Chinese Exclusion Act,” he added.
In a phone call with Inman, Tian said although this is the first lawsuit AREAA has filed in its 21-year history, the group has always been politically active.
“Making sure that underserved communities and all AANHPI’s have access to fair housing is something that has always been part of AREAA’s mission,” she said. “I think that over the last 20 years of our history, we feel like we’ve been making a lot of progress. There’s been a number of wins that we felt like we had for our community.”
Those wins include successfully pushing the U.S. Census Bureau to track and include Asian housing data as a standalone category in its quarterly homeownership reports and fighting to have crucial lending documents translated into a wider range of Asian languages. AREAA also led the #StopAsianHate movement in real estate in 2020, as Asian communities experienced a rise in xenophobic attacks due to misinformation about the origins of the COVID-19 outbreak.
Tian said the rise in xenophobia has set the stage for SB264 and nearly 30 more copycat bills to be proposed and passed. Those bills, she said, threaten the progress Asian Americans and Asian immigrants have made since the 1850s, the decade that brought the first major wave of Asian immigrants to the U.S.
“Unfortunately, seeing these kinds of laws pop up not only in Florida but in almost 30 states, it’s something that really strikes a chord personally, not only for myself but for all of our members,” she said while recounting the story of her family’s journey from China to the U.S. in the 1990s. “We felt that it was important for us to make a stand now. We don’t want it to continue spreading further and getting worse.”
Tian said AREAA is in this for the long haul, as the legal timeline is currently unclear and depends on how quickly the suit moves through the legal system.
“We’re just getting everything kicked off,” she said. “Our industry allies can help us by spreading awareness. Number two is when our local legislators sometimes hold sessions, go and rally. Speak on behalf of our community. We can stop these bills from moving forward.”
Rising population rates and a shrinking racial wealth gap have led to a rise in new mortgage applications among homebuyers of color, according to Redfin’s latest report.
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Census data isn’t the only way to track America’s diversifying population. Mortgage origination data also provides keen insight into how the U.S. is changing and how housing and income trends are impacting the nation’s various racial and ethnic groups.
Seattle-based brokerage Redfin’s latest report, based on Home Mortgage Disclosure Act (HMDA) data, revealed the share of new mortgages going to white homebuyers slid from 70.4 percent in 2018 to 62.2 percent in 2023, while the share of new mortgages going to homebuyers of color climbed from 29.6 percent to 37.8 percent during the same period.
Elijah de la Campa | Credit: LinkedIn
“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,” Redfin Senior Economist Elijah de la Campa said in a written statement.
“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.”
From 2018 to 2023, Hispanic homebuyers led the charge on the share of new mortgages taken out by homebuyers of color. This group’s share of new mortgages grew from 11 percent in 2018 to 14 percent in 2023 — a 27 percent increase.
Black homebuyers experienced a 22 percent increase in new mortgages, growing from 7.1 percent to 8.7 percent by 2023. Meanwhile, Asian homebuyers experienced a 28 percent increase in new mortgages, going from 6.4 percent to 8.2 percent during the same period.
De la Campa said the boost in new mortgage rates is attributed to population and income gains, which simultaneously have created a bigger pool of homebuyers with greater incomes.
The U.S.’s white population shrank from 84.1 percent in 1970 to 59.5 percent in 2022; meanwhile, the Hispanic population (4.1 percent to 18.8 percent) and Black population (11 percent to 12.2 percent) have grown. Redfin didn’t highlight historical population data about the Asian population because the Census lagged in properly accounting for the various ethnic groups.
The median incomes for Hispanic households (+40.2 percent), Black households (+34.7 percent) and Asian households (+36.4 percent) have grown at a faster rate than the median income of white households (+31 percent) since 2018. The median income for Black ($54,000) and Hispanic ($69,000) households is still considerably less than their white ($86,000) and Asian ($114,000) counterparts; however, the percentage gains in median incomes show a slimming racial wage gap.
“The racial wage gap remains large, but has shrunk in recent years, in part due to a tight labor market,” the report read. “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.”
Another factor in new mortgage application growth is current homeownership rates. Seventy-four percent of white people are homeowners — compared with 62.2 percent of Asian, 49.9 percent of Hispanic and 45.7 percent of Black people.
“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,” the report said of the overall drop in mortgage applications this year. “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.”
Nearly two months after beta testing, Seattle-based brokerage Redfin has launched its artificial intelligence-powered home search assistant, Ask Redfin, nationwide. Homebuyers using Redfin’s Apple iOS app will automatically see Ask Redfin on a home’s listing page after completing a quick update.
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Nearly two months after beta testing, Seattle-based brokerage Redfin has launched its artificial intelligence-powered home search assistant, Ask Redfin, nationwide. Homebuyers using Redfin’s Apple iOS app will automatically see Ask Redfin on a home’s listing page after completing a quick update.
Homebuyers can question Ask Redfin about listing details, zoning limitations, homeowners association or condo fees, upcoming open houses, one-on-one touring availability, local market conditions and trends, nearby amenities, and a host of other questions related to homebuying. If the question requires a more nuanced answer than what Ask Redfin can provide, the assistant can immediately connect buyers with a licensed real estate agent.
Redfin said it has trained Ask Redfin to reject questions that violate fair housing guidelines.
“In developing Ask Redfin, we created a detailed set of instructions so it would answer questions in line with fair housing guidelines,” the company said. “We’ve been closely monitoring Ask Redfin on this front, and it’s performing well. When asked a question that touches on a potential fair housing issue, Ask Redfin appropriately says that it can’t answer the question.”
The press release said beta testing, which covered Redfin app users in Atlanta, Boston, Charlotte, Chicago, Dallas, Las Vegas, Philadelphia, Portland (Oregon), Phoenix, Sacramento, Tampa and Washington, D.C., was successful.
More than 90 percent of homebuyers who used Ask Redfin came back to the Redfin iOS app within a week, using it almost daily. The majority of homebuyers used Ask Redfin to get additional listing details, such as the square footage, renovation history, amenities and potential HOA fees (59 percent). Ten percent of Ask Redfin users got further help from a licensed real estate agent, and 8 percent went on to request a home tour.
“We include an enormous amount of data on every listing you find on Redfin because homebuyers deserve as much insight into a home as possible,” Redfin SVP of Product and Design Ariel Dos Santos said of the tool in a previous Inman article. “Ask Redfin makes it easy and effortless for customers to find the information they want to know.”
The nationwide release of Ask Redfin comes a week before Redfin’s first-quarter earnings call.
The company shared its Q4 and FY 2023 earnings results in February, which saw slowing revenue losses and slimming net losses as the company focused on cost-cutting amid market headwinds. Redfin’s stock (NASDAQ: RDFN) has been on the uptick over the past six months, rising 0.32 percent to the $6 range.
With CoStar’s acquisition of 3D scanning company Matterport and Zillow’s investment in Listing Showcase and Real-Time Showings, analysts have a keen eye on what Redfin has up its sleeves and whether it’s enough to break the company out of its earnings and stock market slump.
