Racial disparities in home selling

38 Pages Posted: 25 Mar 2024

See all articles by Leonel Diego Drukker

Leonel Diego Drukker

University of California, Berkeley - Haas School of Business

Lei Ma

Boston University - Department of Economics

Date Written: February 23, 2024

Abstract

In this study, we investigate the financial disparities faced by Black sellers in the US housing market. Using repeat-sale transactions from 2003 to 2020, we document that Black sellers earn, on average, 0.36% lower annualized unlevered returns on their property sales compared to non-Black sellers, when selling comparable properties at the same time in the same neighborhood. We find that the racial disparities in housing returns are not explained by seller characteristics, property renovations, the race of the buyer, seller agent fixed effects, and appraisal measures. However, controlling for listing prices and time on market reduces the racial gap to effectively zero. This suggests that Black sellers face higher search frictions, which leads to worse selling outcomes.

Keywords: race, housing, wealth, housing market, search-and-matching

JEL Classification: G5, H0, R3

Suggested Citation

Drukker, Leonel Diego and Ma, Lei, Racial disparities in home selling (February 23, 2024). Available at SSRN: https://ssrn.com/abstract=4736956 or http://dx.doi.org/10.2139/ssrn.4736956

Leonel Diego Drukker (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Lei Ma

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

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