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Estimating Racial Price Differentials in the Housing Market

Author

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

Abstract

This paper uses unique panel data covering over two million repeat-sales housing transactions from four metropolitan areas to test for the presence of racial price differentials in the housing market. Drawing on the strengths of these data, our research design controls carefully for unobserved differences in the quality of neighborhoods and the homes purchased by buyers of each race. We find that black and Hispanic homebuyers pay premiums of about three percent on average across the four cities, differences that are not explained by variation in buyer income, wealth or access to credit. Further, the estimated premiums do not vary significantly with the racial composition of the neighborhood; nor, strikingly, do they vary with the race of the seller. This latter finding suggests that racial prejudice on the part of sellers is not the primary explanation for the robust premiums we uncover. The results have implications for the evolution of racial differences in wealth and home ownership and the persistence of residential segregation.

Suggested Citation

  • Patrick Bayer & Marcus D. Casey & Fernando Ferreira & Robert McMillan, 2012. "Estimating Racial Price Differentials in the Housing Market," NBER Working Papers 18069, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18069
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    References listed on IDEAS

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    7. Kerwin Kofi Charles & Erik Hurst, 2002. "The Transition To Home Ownership And The Black-White Wealth Gap," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 281-297, May.
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    Cited by:

    1. Kwan Ok Lee, 2014. "Why Do Renters Stay In Or Leave Certain Neighborhoods? The Role Of Neighborhood Characteristics, Housing Tenure Transitions, And Race," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 755-787, November.
    2. Kakar, Venoo & Franco, Julisa & Voelz, Joel & Wu, Julia, 2016. "Effects of Host Race Information on Airbnb Listing Prices in San Francisco," MPRA Paper 69974, University Library of Munich, Germany.
    3. Nikoloz Kudashvili, 2018. "Sources of Statistical Discrimination: Experimental Evidence from Georgia," CERGE-EI Working Papers wp612, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    More about this item

    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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