Racial Differences in the Total Rate of Return on Owner-Occupied Housing

Rebecca Diamond and William Diamond

No 32916, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We quantify racial differences in the total rate of return on housing in a nationally representative sample of homeowners from 1974-2021. We develop a new method to estimate the rental value of each owner-occupied house, using a house's resale value to proxy for unobservable quality. Black and Hispanic homeowners earn higher but more volatile rates of return than White homeowners, due in part to higher rental yields. These differences are largely explained by household income and education differences. Including returns on properties that do not transact in sample is crucial to accurately measure racial differences in total rates of return.

JEL-codes: G50 R30 (search for similar items in EconPapers)
Date: 2024-09
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