When Prejudice Hits Home: Hate Crime and the Market for Mortgage Credit

Abstract

Racial-hate-motivated crimes have risen to unprecedented levels, yet their far-reaching economic consequences remain understudied. Using detailed U.S. mortgage market data paired with county-level racial hate crime incidents, we reveal strong neighborhood effects arising from racial hate crimes. Aggregate mortgage demand drops significantly in hate crime-affected counties. Communities impacted by racial hate crimes exhibit heightened safety concerns and a marked erosion of social cohesion. We find that residents migrate away from hate crime–affected counties, as opposed to the alternative housing choice of staying and delaying home purchases. We also observe a fall in labor productivity and an overall drop in macroeconomic conditions. Our findings illuminate the far-reaching consequences of hate crimes for neighborhoods.

Keywords: Hate Crime, Racial Animus, Mortgage Demand, Housing Choice

JEL Classification: G21, J15, R21, R23