Wed April 24, 2013
Home Sweet Home Costs More For Blacks And Latinos
Black and Latino homebuyers pay more for housing than whites and Asians, according to a study released this week by Duke University. The price difference is about 3.5 percent.
That may not sound like a lot. But Patrick Bayer, a Duke economics professor who led the study, says when you do the math, that percentage can translate to about $5,000 or $10,000 per housing sale.
"If you buy several houses over the course of your lifetime, those are real major differences in home equity or housing wealth," Bayer explains.
The study, which is currently a working paper at the National Bureau of Economic Research, looked at home sales from 1990 to 2008 in Baltimore, Washington, D.C., Chicago, San Francisco and Los Angeles.
Bayer's research concluded that racial prejudice by home sellers did not influence the price difference overall. In fact, according to the working paper, "the average price premium paid by black and Hispanic buyers is about the same regardless of the race of the seller."
But one factor may be inexperience among black and Latino homebuyers, who are more likely to be purchasing their first homes. Bayer also notes that real estate agents often offer a more limited menu of housing options to minority homebuyers, who may feel pressure to pay more when they do find the right fit.