Duke-led study finds minorities pay more for housing

Apr. 22, 2013 @ 04:26 PM

A Duke University-led analysis of home sales in four major U.S. metropolitan areas found that black and Hispanic homebuyers paid about 3.5 percent more for comparable homes than white buyers.
The study compared prices for houses of comparable quality purchased by black, Hispanic and white buyers within the same neighborhood in Chicago, Baltimore/Washington, D.C., San Francisco and Los Angeles, according to a news release about the study from the Duke Office of News & Communications.
The analysis looked at more than 2 million home sales from 1990 to 2008. According to the release, the disparities in purchase price were not explained by variation in buyers’ income, wealth or access to credit.
Also, the findings did not reveal clear evidence of racial prejudice or animosity on the part of home sellers, the release states.
It said the study found that the premium paid by black and Hispanic buyers did not vary much with the composition of neighborhoods or the race of seller.
The researchers could not ultimately determine exactly why minority buyers paid more when buying a comparable house.
Senior author Pat Bayer, chairman and professor in the economics department at Duke, said in the release that one possible explanation is that black and Hispanic buyers were more likely to be first-time homebuyers and, as a result, may not be as experienced at negotiating the asking price.
“But we also know from other research that minority buyers are shown a more limited set of properties by real estate agents and may, therefore, feel like they have to pay more when they see a house that really suits their needs and tastes,” Bayer also said in a statement in the release.
The paper, titled “Estimating Racial Price Differentials In The Housing Market,” appears on the website of the National Bureau of Economic Research, at http://www.nber.org/papers/w18069.
Funding for the study came from the National Science Foundation, the Research Sponsor Program of the Zell/Lurie Real Estate Center at the Wharton School, and the Social Sciences and Humanities Research Council of Canada, according to the release.