While home values increased across the country since the onset of the pandemic, communities of color and majority-Black neighborhoods experienced the highest home price increases—but also experienced the most price drops. Typical home values increased 8% annually in December 2020 for 92% of the zip codes Zillow tracks, with one-third of the zip codes seeing a much faster home price growth of 8% or more. Half of those zip codes are communities of color, which experienced a 9.3% price increase on average and 10.3% in Black-majority areas, according to the Joint Center for Housing Studies of Harvard University. On the other end, prices increased 6.6% in neighborhoods where at last 90% of the population is White.
The rapid pace of price growth in communities of color was not geographically confined. In 47 of the 50 largest markets in the country last December, average price growth in communities of color exceeded metro-wide price growth by 2.0 percentage points. In the Philadelphia metro, for example, the 51 zip codes where people of color represented at least half the population averaged 14.3 percent price growth in December, 3.5 percentage points higher than the price growth in all 353 Philadelphia metro zip codes. In Atlanta, prices in communities of color rose 10.6 percent, 1.4 percentage point higher than price growth overall.
Communities of color tend to have other distinguishing characteristics relative to majority-white communities. In the nation’s larger markets, for example, communities of color tend to have higher-than-average population densities, lower median incomes, lower home values, and a lower rate of homeownership than the metro area as a whole. Some of these characteristics—namely lower incomes and home values—have also been associated with higher home price growth since March 2020. For instance, home prices also rose faster than average in lower-income neighborhoods.
However, communities of color also experienced a much wider range of 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. Indeed, between 6 and 13 percent 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 percent of all zip codes and 7 percent of communities of color, including 12 percent of majority-Black neighborhoods.