Price Discrimination in the Housing Market

Patrick Bayer, Marcus Casey, Fernando Ferreira and Robert McMillan

No 12-10, Working Papers from Duke University, Department of Economics

Abstract: This paper sets out a new research design to test for price discrimination by sellers in the housing market. The design controls carefully for unobserved differences in the quality of neighborhoods and homes purchased by buyers of each race, using novel panel data from over two million repeat-sales housing transactions in four metropolitan areas. The results indicate that black and Hispanic homebuyers pay premiums of around 3 percent on average across the four cities – differences that are not explained by variation in buyer income, wealth or access to credit. The estimated premiums do not vary significantly with the racial composition of the neighborhood or, most strikingly, the race of the seller. This latter result rules out racial prejudice or animosity on the part of sellers as the primary explanation for the estimated premiums.

Keywords: Price Discrimination; Housing Market; Home Sales; Discrimination; Racial Differences; Racial Animosity; Prejudice (search for similar items in EconPapers)
JEL-codes: H0 J15 K4 R2 R3 (search for similar items in EconPapers)
Pages: 29
Date: 2012
New Economics Papers: this item is included in nep-ind and nep-ure
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Citations: View citations in EconPapers (6)

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