New Research Underscores Disparities of Choice in Housing

Capital One recently launched the Capital One Insights Center, and its first release, Capital One Marketplace Index: The Road to Recovery. Since spring 2020, the Capital One Insights Center has conducted studies every four to eight weeks with a nationally representative group of U.S. respondents (based on income level, race, gender and geographic region), covering a range of topics from job loss, to how they used government stimulus, to their outlook on economic recovery. The study release divides respondents into three income groups to better understand the impacts: low-income earners making less than $25,000 in household income annually; low-to-high middle income earners (hereinafter referred to as “middle-income earners”); and high-income earners making $100,000 or more. The analysis also includes a selection of data points related to race and gender. To account for potential correlation between demographics and income, those data points all focus on consumers with household income less than $50,000. This story in particular reflects data around the disparity of choice in housing that low-income earners currently face. 

Low earners face a disparity of choice in housing

Findings from the first release from Capital One’s newly launched Insights Center show that while roughly 15 percent households across the board are spending more on housing since the onset of the COVID-19 pandemic, there is great disparity in the autonomy of those housing cost increases. 

The median asking price for both rental and for-sale housing units hit record highs in 2021 in many markets across the U.S. 

According to Capital One’s Marketplace Index: The Road to Recovery, more than 40 percent of the respondents with an annual income at or above $100,000 said they increased their spending on housing because of a personal choice, such as choosing to move to a bigger house during the pandemic. On the other hand, just seven percent of those earning less than $25,000 a year report spending more for the same reason.

Growing Concerns Among Housing Crisis

In the same study, more than 75 percent of those earning less than $25,000 a year say they are spending more because of external forces as opposed to personal choice, such as rent increases, catching up on payments or having to move for reasons such as a new job location.

In addition to rising rent costs, missed payments and the looming threat of eviction is compounding housing-related stress and concern among lower earners as a consequence of the affordable housing crisis. Findings from the Capital One Marketplace Index show that more than a quarter of those earnings less than $25,000 a year had missed their prior month’s rent payment or paid it late in August 2021.

Additionally, 13 percent of those people reported fearing eviction—regardless of government moratoriums. 

That concern is especially high among Hispanic/Latinx (13%), and Black (8%) Americans earning $50,000 or less compared to 6 percent of white people in the United States. 

With the limited national eviction moratorium set to expire on October 3, concerns around housing stability may continue to rise for millions of Americans. As of July 2021, roughly 3.6 million people in the U.S. said they faced eviction in the next two months, according to the U.S. Census Bureau’s Household Pulse Survey. 

Those findings further underscore the need to build more affordable housing—particularly for renters, who are typically in a more precarious financial situation than homeowners.

“By providing timely and relevant data around consumer behavior and sentiment related to housing, the Capital One Insights Center strives to create a dialogue and help close equity and opportunity gaps,” says Desiree Francis, Head of Community Finance at Capital One.

Creating Thriving Communities

Through the Capital One Insights Center and the marketplace index, we hope to build upon our ongoing commitments to help advance the collective effort to drive change and create a solution to affordable housing costs.

In partnership with nonprofit organizations, for-profit real estate developers and local governments, Capital One’s Community Finance team finances the development of affordable housing for low- to moderate-income households, with a focus on supporting people from diverse backgrounds including those that have faced systemic barriers to securing housing. Since 2007, that team has originated $1.6 billion annually toward developing affordable housing, benefitting over 150,000 households and creating more than 170,000 jobs along the way. 

Capital One’s work in affordable housing is just one of many areas in which we seek to advance socio-economic mobility. As part of the Capital One Impact Initiative, a $200 million, multi-year commitment to close gaps in equity, we are striving to make communities a great place to live by also focusing on key areas such as racial equity, small business support, workforce development and financial well-being. 

As more households continue to become cost-burdened or face housing instability, we’re committed to creating more affordable housing and supporting housing stabilization. We also seek to help underserved individuals improve their financial well-being, which includes helping them establish and maintain credit necessary for renting or purchasing homes. 

Read the Capital One Insight Center’s inaugural whitepaper: Capital One Marketplace Index: The Road to Recovery.

CLAIM: The Capital One Marketplace Index: Road to Recovery is one of the longest running surveys on the social and economic effects of COVID-19 by a private enterprise to date (beginning April 2020 to present; running continuously every six weeks).