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Racial Disparities in Housing Returns

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  • Amir Kermani
  • Francis Wong

Abstract

We document the existence of a racial gap in realized housing returns that is an order of magnitude larger than disparities arising from housing costs alone, and is driven by differences in distressed home sales (i.e., foreclosures and short sales). Black and Hispanic homeowners are both more likely to experience a distressed sale and to live in neighborhoods where distressed sales erase more house value. However, absent financial distress, houses owned by minorities do not appreciate at substantially slower rates than houses owned by non-minorities. Racial differences in liquid wealth and income stability are important determinants of differences in distress.

Suggested Citation

  • Amir Kermani & Francis Wong, 2021. "Racial Disparities in Housing Returns," NBER Working Papers 29306, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:29306
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    Cited by:

    1. Ellora Derenoncourt & Chi Hyun & Moritz Kuhn & Moritz Schularick, 2022. "Wealth of two nations: The U.S. racial wealth gap,1860-2020," Working Papers hal-03880971, HAL.
    2. Job Boerma & Loukas Karabarbounis, 2023. "Reparations and Persistent Racial Wealth Gaps," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 171-221.
    3. Daniel Albuquerque & Tomer Ifergane, 2023. "The Racial Wealth Gap: the Role of Entrepreneurship," Discussion Papers 2310, Centre for Macroeconomics (CFM).
    4. Sean Chanwook Lee & Omeed Maghzian, 2023. "Household Liquidity and Macroeconomic Stabilization: Evidence from Mortgage Forbearance," Working Papers 23-12, Federal Reserve Bank of Boston.
    5. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2022. "Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020," Working Papers 296, Princeton University, Department of Economics, Center for Economic Policy Studies..
    6. Jonathan A. Parker, 2022. "Comment on "Reparations and Persistent Racial Wealth Gaps" 2," NBER Chapters, in: NBER Macroeconomics Annual 2022, volume 37, pages 227-234, National Bureau of Economic Research, Inc.
    7. Katya Kartashova & Xiaoqing Zhou, 2021. "Wealth Inequality and Return Heterogeneity During the COVID-19 Pandemic," Working Papers 2114, Federal Reserve Bank of Dallas.
    8. Francis Wong & Kate Pennington & Amir Kermani, 2023. "The Impacts of Racial Differences in Economic Challenges on Housing, Wealth, and Economic Security Among OASI Beneficiaries," CES Technical Notes Series 23-17, Center for Economic Studies, U.S. Census Bureau.
    9. Tran, My & Gannon, Brenda & Rose, Christiern, 2023. "The effect of housing wealth on older adults’ health care utilization: Evidence from fluctuations in the U.S. housing market," Journal of Health Economics, Elsevier, vol. 88(C).
    10. Francis Wong, 2024. "Taxing Homeowners Who Won’t Borrow," CESifo Working Paper Series 11185, CESifo.
    11. James Conklin & Kristopher Gerardi & Lauren Lambie-Hanson, 2022. "Can Everyone Tap Into the Housing Piggy Bank? Racial Disparities in Access to Home Equity," FRB Atlanta Working Paper 2022-17, Federal Reserve Bank of Atlanta.
    12. Dossche, Maarten & Kolndrekaj, Aleksandra & Propst, Maximilian & Ramos Perez, Javier & Slacalek, Jiri, 2022. "Immigrants and the distribution of income and wealth in the euro area: first facts and implications for monetary policy," Working Paper Series 2719, European Central Bank.

    More about this item

    JEL classification:

    • G5 - Financial Economics - - Household Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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