Racial Disparities in Housing Returns / Amir Kermani, Francis Wong.

Format:

Book

Author/Creator:

Kermani, Amir.

Contributor:

National Bureau of Economic Research.

Wong, Francis.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29306.

NBER working paper series no. w29306

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We document the existence of a racial gap in realized housing returns that is an order of magnitude larger than disparities arising from housing costs alone, and is driven almost entirely by differences in distressed home sales (i.e. foreclosures and short sales). Black and Hispanic homeowners are both more likely to experience a distressed sale and to live in neighborhoods where distressed sales erase more house value. Importantly, absent financial distress, houses owned by minorities do not appreciate at slower rates than houses owned by non-minorities. Racial differences in income stability and liquid wealth explain a large share of the differences in distress. We use quasi-experimental variation in loan modifications to show that policies that restructure mortgages for distressed minorities can increase housing returns and reduce the racial wealth gap.

Notes:

Print version record

September 2021.