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Tuesday, April 30, 2013

Study: Blacks, Hispanics Pay More For Homes

A "Sold" sign is posted outside a home in Indianapolis, Tuesday, April 9, 2013. (Michael Conroy/AP)

A “Sold” sign is posted outside a home in Indianapolis, Tuesday, April 9, 2013. (Michael Conroy/AP)

A new study out of Duke University finds that black and Hispanic home buyers are paying up to 3.5 percent more than white home buyers for comparable homes.

Researchers looked at two million home sales from 1990 to 2008.

The study’s senior author, Patrick Bayer, says it’s not clear why minority home buyers are paying more.

One possible explanation could be that a larger percentage of black and Hispanic home buyers are new to the market, and as a result may not be experienced in negotiating the price.

Guest:

  • Patrick Bayer, department chair and professor of economics at Duke University. He’s also a research associate at the National Bureau of Economic Research.

Please follow our community rules when engaging in comment discussion on this site.
  • MAMatarese

    As a realtor, I found the interpretation of this report highly offensive.  It is illegal and unethical to discriminate as this report suggests.

    Perhaps the difference in price did not take into account that some of these buyers needed seller assist — which would have raised the price of a property a few percentage points as compared to a buyer that did not need this financial support.

    Realtors should not show favoritism when it comes to negotiation; we do not negotiate any differently for one set of clients than another.  We negotiate based on the parameters the client gives us. 

    In addition, buyers and sellers usually do not meet each other until later in the transaction.  Most of my buyers and sellers never meet or communicate until they’re at the settlement table together.  I’ve never had a seller or a buyer ask me the race of the other party.  

    I suspect there is much more information that can be reaped from this study that could explain the differences.  Suggesting discrimination is highly offensive to those of us in the industry and I’m sure does not reflect the real reason(s) for the discrepancy.

    • BostonDad

       Whilst I applaud your disgust at racism, not all of your colleagues may be so high minded.  Depending on the individuals and on where in the country, this may still be a big part of the difference.  The same may be true of car buying and other big ticket items where negotiation is a combination of obtaining empathy as well as knowing the real going market values.  The selling realtors incentive is clearly to get the most possible from the buyer and buyers assist adds to the cost while reducing the chance of major overpay.

  • Commenter

    The inference that minority home buyers pay more simply because of their race is ludicrous.  Housing pricing is market driven.  Home buyers engage in the process by making an offer of their own free volition, unless I missed something and minorities are somehow coerced into such deals.

    Now if the disparity is related to financing (which wasn’t apparent from the report I heard), then perhaps you should consult with Dr. Walter Williams, a prominent, black economist who has studied the issue in some depth, and has determined that there are legitimate business reasons for this result, even when the analysis “blinds” the lender to the potential borrower’s skin color.

    This is offensive and perpetuates the racial divide.  Thanks.

    • http://www.facebook.com/futo.buddy Futo Buddy

      i wonder if they took credit scores into account.

      • Paula Copeland

        HUD has found that there have been cases where Whites with lower credit scores have received lower interest rates than minorities whose credit scores were higher. 

        • http://www.facebook.com/futo.buddy Futo Buddy

          if they are just being racist and all other factors are the same in the candidates then they need to stop being racist

  • http://www.facebook.com/futo.buddy Futo Buddy

    there could be lots of reasons for this.

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