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

Syracuse University Center for Policy Research Working Paper No. 24

48 Pages Posted: 13 Apr 2011

See all articles by Jan Ondrich

Jan Ondrich

Syracuse University - Center for Policy Research

Stephen L. Ross

University of Connecticut - Department of Economics

John Yinger

Syracuse University, Maxwell School of Citizenship and Public Affairs

Date Written: May 1, 2000

Abstract

This paper develops a new approach to testing hypotheses about the causes of discrimination in housing sales. We follow previous research by using data from fair housing audits, a matched-pair technique for comparing the treatment of equally qualified black and white home buyers. Our contribution is to shift the focus from differences in the treatment of teammates during an audit to agent decisions concerning an individual housing unit. Our sample consists of all units seen by either a black or a white auditor in the 1989 national Housing Discrimination Study. We estimate a multinomial logit model to explain a real estate agent's joint decisions concerning whether to show each unit to a white auditor and to a black auditor. We find evidence that real estate agents make and act upon inferences about a customer's preferences on the basis of the customer's initial inquiry and that agents practice redlining, defined as the withholding of units in integrated neighborhoods. We find little evidence to support the conclusion that agents discriminate because of their own prejudice, but some evidence that they discriminate because of the prejudice of their white customers. More importantly, we find strong evidence of statistical discrimination; agents withhold houses from blacks when the probability of a successful transaction is perceived to be low.

JEL Classification: J15, J18

Suggested Citation

Ondrich, Jan and Ross, Stephen L. and Yinger, John, Now You See it, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers? (May 1, 2000). Syracuse University Center for Policy Research Working Paper No. 24, Available at SSRN: https://ssrn.com/abstract=1808064 or http://dx.doi.org/10.2139/ssrn.1808064

Jan Ondrich (Contact Author)

Syracuse University - Center for Policy Research ( email )

Maxwell School of Citizenship 426 Eggers Hall
Syracuse, NY 13244
United States

Stephen L. Ross

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-3533 (Phone)
860-486-4463 (Fax)

John Yinger

Syracuse University, Maxwell School of Citizenship and Public Affairs ( email )

Center for Policy Research
426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-9062 (Phone)

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