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Now You See it, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?

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Author Info

  • Jan Ondrich

    (Syracuse University)

  • Stephen Ross

    (University of Connecticut)

  • John Yinger

    (Syracuse University)

Abstract

Potential home buyers may initiate contact with a real estate agent by asking to see a particular advertised house. This paper asks whether an agent's response to such a request depends on the race of the potential buyer or on whether the house is located in an integrated neighborhood. We build on previous research about the causes of discrimination in housing by using data from fair housing audits, a matched-pair technique for comparing the treatment of equllay qualified black and white home buyers. However, we shift the focus from differences in the treatment of paired buyers to agent decisions concerning an individual housing unit using a sample of all houses seen during he 1989 Housing Discrimination study. We estimate a random effect, multinomial logit model to explain a real estate agent's joint decisions concerning whether to show each unit to a black auditor and to a white auditor. We find evidence that agents withhold houses in suburban, integrated neighborhoods from all customers (redlining), that agents' decisions to show houses in integrated neighborhoods are not the same for black and white customers (steering), and that the houses agents show are more likely to deviate from the initial request when the customeris black than when the customer is white. These deviations are consistent with the possibility that agents act upon the belief that some types of transactions are relatively unlikely for black customers (statistical discrimination).

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File URL: http://www.econ.uconn.edu/working/2001-01.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2001-01.

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Length: 60 pages
Date of creation: Aug 2001
Date of revision: Aug 2002
Handle: RePEc:uct:uconnp:2001-01

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  1. Ondrich, Jan & Ross, Stephen L. & Yinger, John, 2000. "How Common is Housing Discrimination? Improving on Traditional Measures," Journal of Urban Economics, Elsevier, vol. 47(3), pages 470-500, May.
  2. George Galster, 1990. "Racial steering by real estate agents: Mechanisms and motives," The Review of Black Political Economy, Springer, vol. 19(1), pages 39-63, June.
  3. George Galster, 1990. "Racial steering in urban housing markets: A review of the audit evidence," The Review of Black Political Economy, Springer, vol. 18(3), pages 105-129, December.
  4. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  5. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  6. Roychoudhury, Canopy & Goodman, Allen C., 1992. "An ordered probit model for estimating racial discrimination through fair housing audits," Journal of Housing Economics, Elsevier, vol. 2(4), pages 358-373, December.
  7. Page Marianne, 1995. "Racial and Ethnic Discrimination in Urban Housing Markets: Evidence from a Recent Audit Study," Journal of Urban Economics, Elsevier, vol. 38(2), pages 183-206, September.
  8. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
  9. Yinger, John, 1997. "Cash in Your Face: The Cost of Racial and Ethnic Discrimination in Housing," Journal of Urban Economics, Elsevier, vol. 42(3), pages 339-365, November.
  10. Courant, Paul N., 1978. "Racial prejudice in a search model of the urban housing market," Journal of Urban Economics, Elsevier, vol. 5(3), pages 329-345, July.
  11. Helen F. Ladd, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 41-62, Spring.
  12. Canopy Roychoudhury & Allen C. Goodman, 1996. "Evidence of Racial Discrimination in Different Dimensions of Owner-Occupied Housing Search," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(2), pages 161-178.
  13. Turner, Margery Austin & Mikelsons, Maris, 1992. "Patterns of racial steering in four metropolitan areas," Journal of Housing Economics, Elsevier, vol. 2(3), pages 199-234, September.
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