Getting Pushed Out Of The Housing Market? You’re Not Alone


Low-income and minority buyers will continue to be crowded out of the housing market in 2022, according to the director of research at the AEI Housing Center.

The American Enterprise Institute is located in Washington, D.C., and during a webinar on Monday, Director of Research Tobias Peter said entry-level homebuyers are being replaced by borrowers with higher incomes in many markets.

“When we tally up the entry-level share of all home sales, we’re finding that the entry-level, as of December of 2021, accounted for 52.7%, which is, of course, much down from before the pandemic. In December of 2019, it was at 59.9%, and when we started tracking this back in 2012, it was at 71%,” Peter said.

Rapid home price appreciation is being blamed for this trend.

Home prices are booming everywhere, but especially in Florida, Peter said.

“Cape Coral is setting the pace at 32% year-to-year home price appreciation. If you go back two years, so before the pandemic, you had Cape Coral at 2.8%, so this is a gangbusters home price appreciation,” Peter said.

According to their home price appreciation chart of the 50 largest U.S. metros, North Port, Florida, had 29.5% home price appreciation in 2021. Tampa was at 23.6%.

Other areas that are doing well include Phoenix, Arizona, at 26.2% home price appreciation. Raleigh, North Carolina, saw 24.4% home price appreciation in 2021.

AEI Housing Center data shows that the top one-third of large metros with the highest home price appreciation have seen a 13% point reduction in FHA purchase loan share compared to a 6% point reduction for the two-thirds of metros with lower levels of appreciation.

A low supply of available homes is likely fueling rapid home price appreciation.

Peter predicts that for the foreseeable future, it will be difficult to replenish or increase supply since more Baby Boomers are staying put.

There are also the typical difficulties, such as local approval for construction, that will plague the market nationwide.

Data for 2021 is still preliminary, but Peter said there were a total of 709,430 new construction sales. There were 6,539,808 sales.

New construction sales were down from 2020, which came in at 736,647. That year, there were 6,029,922 total sales.

But these numbers were up from 2019, when there were 663,912 new construction sales and all sales were at 5,698,048.

Some studies suggest race is a driving factor in disparities when it comes to lending, home valuation, and appraisals, but AEI Housing Center data shows that is not the case.

Director Edward Pinto reviewed studies on discrimination in housing with those in attendance of the webinar and said their research suggests there is no evidence of systematic racism as some organizations have reported.

“We’ve done our study which finds that whatever is going on is a much, much smaller percentage, we believe, than what these other studies have found, and we believe that these differences aren’t due substantially to race and are largely due to socioeconomic status, which cuts across races and ethnic origin,” Pinto said.

The AEI Housing Center looked at bias and how it affects outcomes, refuting claims about racial bias and the valuation of Black neighborhoods, claims about bias in the appraisal process, and claims that there is systematic bias in lending.

According to their website, the AEI Housing Center has the mission of providing transparent and objective mortgage and housing market trends, fostering a stable system of mortgage finance that promotes sustainable homeownership, and developing market-based solutions to the nation’s shortage of economical housing.

Email story ideas to Editor Kimberley Haas: [email protected]