How Racial Differences in Housing Returns Shape Retirement Security

Abstract

Housing is a key resource for US retirees, comprising two-fifths of the net wealth of retirement-age Americans, and those who experience higher housing returns improves retirement security. Following a home sale, a one percentage point increase in annual returns raises subsequent homeownership rates by about one percentage point (about 2.5%). While migrating homeowners who had higher returns move to neighborhoods with more favorable health care, longevity impacts, and crime rates, these benefits are substantially larger for White homeowners relative to Black and Hispanic homeowners. We emphasize the importance of policies that target disparities that occur prior to retirement.

Keywords: Housing, segregation, discrimination, wealth, inequality

JEL Classification: R23, R31, J15