Abstract

https://ssrn.com/abstract=2254107
 
 

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Estimating Racial Price Differentials in the Housing Market


Patrick J. Bayer


Duke University - Department of Economics; National Bureau of Economic Research (NBER)

Marcus D. Casey


University of Illinois at Urbana-Champaign - Department of Economics

Fernando V. Ferreira


University of Pennsylvania - The Wharton School

Robert McMillan


University of Toronto - Department of Economics

March 1, 2013

Economic Research Initiatives at Duke (ERID) Working Paper No. 142

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.

Number of Pages in PDF File: 30

Keywords: Price Differentials, Housing Market, Home Sales, Racial Differences, Racial Prejudice, Repeat Sales

JEL Classification: H0, J15, K4, R2, R3


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Date posted: April 20, 2013  

Suggested Citation

Bayer, Patrick J. and Casey, Marcus D. and Ferreira, Fernando V. and McMillan, Robert, Estimating Racial Price Differentials in the Housing Market (March 1, 2013). Economic Research Initiatives at Duke (ERID) Working Paper No. 142. Available at SSRN: https://ssrn.com/abstract=2254107

Contact Information

Patrick J. Bayer (Contact Author)
Duke University - Department of Economics ( email )
213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Marcus D. Casey
University of Illinois at Urbana-Champaign - Department of Economics ( email )
Champaign, IL 61820
United States
Fernando V. Ferreira
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-7181 (Phone)
215-573-2220 (Fax)
HOME PAGE: http://real.wharton.upenn.edu/~fferreir/

Robert McMillan
University of Toronto - Department of Economics ( email )
150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)
Feedback to SSRN


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