American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Racial Disparities in Housing Returns
American Economic Review
(pp. 287–331)
Abstract
We show that higher rates of distressed home sales (i.e., foreclosures and short sales) among Black and Hispanic homeowners severely reduce realized housing returns for these groups—in particular, to a level below that realized by White homeowners. Yet absent financial distress, houses owned by minorities do not appreciate at substantially slower rates than houses owned by nonminorities. Racial differences in liquidity and income stability, which are imperfectly observed by lenders, are important determinants of differences in distress. Policies that prevent foreclosure among distressed minorities can mitigate the racial gap in returns.Citation
Kermani, Amir, and Francis Wong. 2026. "Racial Disparities in Housing Returns." American Economic Review 116 (1): 287–331. DOI: 10.1257/aer.20240327Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- R31 Housing Supply and Markets