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Racial and ethnic price differentials in the housing market

Author

Listed:
  • Bayer, Patrick
  • Casey, Marcus
  • Ferreira, Fernando
  • McMillan, Robert

Abstract

Do minorities pay more than whites for similar housing? We revisit this important question using a rich new dataset that covers two million repeat-sales housing transactions drawn from four major metropolitan areas. Our analysis applies a repeat-sales framework, including house and neighborhood-by-time fixed effects to control for unobserved differences in the quality of homes and their associated neighborhoods. In contrast to most of the recent literature, we find that black and Hispanic homebuyers pay premia of around 2% on average across the four cities – differences not explained by variation in buyer income or access to credit. We also show black and Hispanic buyers pay more for housing regardless of the race or ethnicity of the seller, suggesting that the estimated premia are unlikely to be driven by a very direct form of racial prejudice. Our estimates have implications for the levels and persistence of racial differences in home ownership, the segregation of neighborhoods, and the dynamics of wealth accumulation.

Suggested Citation

  • Bayer, Patrick & Casey, Marcus & Ferreira, Fernando & McMillan, Robert, 2017. "Racial and ethnic price differentials in the housing market," Journal of Urban Economics, Elsevier, vol. 102(C), pages 91-105.
    • Handle: RePEc:eee:juecon:v:102:y:2017:i:c:p:91-105
    DOI: 10.1016/j.jue.2017.07.004
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    More about this item

    Keywords

    Price differentials; Housing market; Racial differences; Racial prejudice; Repeat-sales approach;
    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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