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

Author

Listed:
  • 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).

Suggested Citation

  • Jan Ondrich & Stephen Ross & John Yinger, 2001. "Now You See it, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?," Working papers 2001-01, University of Connecticut, Department of Economics, revised Aug 2002.
  • Handle: RePEc:uct:uconnp:2001-01
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    References listed on IDEAS

    as
    1. George Galster, 1990. "Racial steering in urban housing markets: A review of the audit evidence," The Review of Black Political Economy, Springer;National Economic Association, vol. 18(3), pages 105-129, December.
    2. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
    3. 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.
    4. Helen F. Ladd, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 41-62, Spring.
    5. 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.
    6. George Galster, 1990. "Racial steering by real estate agents: Mechanisms and motives," The Review of Black Political Economy, Springer;National Economic Association, vol. 19(1), pages 39-63, June.
    7. Yinger, John, 1986. "Measuring Racial Discrimination with Fair Housing Audits: Caught in the Act," American Economic Review, American Economic Association, vol. 76(5), pages 881-893, December.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
    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.
    14. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    15. 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.
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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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