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Price Discrimination in the Housing Market

Author

Listed:
  • Patrick Bayer
  • Marcus D. Casey
  • Fernando Ferreira
  • Robert McMillan

Abstract

This paper sets out a new research design to test for price discrimination by sellers in the housing market. The design controls carefully for unobserved differences in the quality of neighborhoods and homes purchased by buyers of each race, using novel panel data from over two million repeat-sales housing transactions in four metropolitan areas. The results indicate that black and Hispanic homebuyers pay premiums of around 3 percent on average across the four cities – differences that are not explained by variation in buyer income, wealth or access to credit. The estimated premiums do not vary significantly with the racial composition of the neighborhood or, most strikingly, the race of the seller. This latter result rules out racial prejudice or animosity on the part of sellers as the primary explanation for the estimated premiums.

Suggested Citation

  • Patrick Bayer & Marcus D. Casey & Fernando Ferreira & Robert McMillan, 2012. "Price Discrimination in the Housing Market," Working Papers 12-10, Duke University, Department of Economics.
    • Handle: RePEc:duk:dukeec:12-10
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    Cited by:

    1. Huailu Li & Kevin Lang & Kaiwen Leong, 2018. "Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore," Economic Journal, Royal Economic Society, vol. 128(611), pages 1570-1608, June.
    2. Ali Coşkun Tuncer & Gürer Karagedikli, 2016. "‘The people next door’: housing and neighbourhood in eighteenth-century Ottoman Edirne," Working Papers 16010, Economic History Society.
    3. Steven Berry & Alon Eizenberg & Joel Waldfogel, 2016. "Fixed Costs and the Product Market Treatment of Preference Minorities," Journal of Industrial Economics, Wiley Blackwell, vol. 64(3), pages 466-493, September.
    4. H. Spencer Banzhaf, 2020. "Panel Data Hedonics: Rosen'S First Stage As A “Sufficient Statistic”," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 973-1000, May.
    5. Lawrence, Edward R. & Raithatha, Mehul, 2023. "Gender bias, board diversity, and firm value: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 78(C).

    More about this item

    Keywords

    Price Discrimination; Housing Market; Home Sales; Discrimination; Racial Differences; Racial Animosity; Prejudice;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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