TY - JOUR AU - Bayer,Patrick AU - Casey,Marcus D. AU - Ferreira,Fernando AU - McMillan,Robert TI - Estimating Racial Price Differentials in the Housing Market JF - National Bureau of Economic Research Working Paper Series VL - No. 18069 PY - 2012 Y2 - May 2012 UR - http://www.nber.org/papers/w18069 L1 - http://www.nber.org/papers/w18069.pdf N1 - Author contact info: Patrick Bayer Department of Economics Duke University 213 Social Sciences Durham, NC 27708 Tel: 919/660-1832 E-Mail: patrick.bayer@duke.edu Marcus D. Casey Department of Economics University of Illinois at Chicago 601 South Morgan UH725 M/C144 Chicago, IL 60607 E-Mail: mcasey@uic.edu Fernando Ferreira The Wharton School University of Pennsylvania 1461 Steinberg - Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6302 Tel: 215/898-7181 Fax: 215/573-2220 E-Mail: fferreir@wharton.upenn.edu Robert McMillan University of Toronto Department of Economics 150 St. George Street Toronto, ON M5S 3G7 CANADA Tel: 416/978-4190 Fax: 416/978-6713 E-Mail: mcmillan@chass.utoronto.ca AB - This paper uses unique panel data covering over two million repeat-sales housing transactions from four metropolitan areas to test for the presence of racial price differentials in the housing market. Drawing on the strengths of these data, our research design controls carefully for unobserved differences in the quality of neighborhoods and the homes purchased by buyers of each race. We find that black and Hispanic homebuyers pay premiums of about three percent on average across the four cities, differences that are not explained by variation in buyer income, wealth or access to credit. Further, the estimated premiums do not vary significantly with the racial composition of the neighborhood; nor, strikingly, do they vary with the race of the seller. This latter finding suggests that racial prejudice on the part of sellers is not the primary explanation for the robust premiums we uncover. The results have implications for the evolution of racial differences in wealth and home ownership and the persistence of residential segregation. ER -