The Journal of Real Estate Finance and Economics
Volume 12, Issue 3, Article 4 (Abstract)
Title:	Racial and Ethnic Differences in Housing Demand: An Econometric Investigation
Author:	Isaac F. Megbolugbe and Man Cho
Abstract:	This paper empirically investigates the sources of housing demand differences between racial (black and white) and ethnic (Hispanic and non-Hispanic groups. We estimate the tenure-adjusted housing demand equations from the 1989 America Housing Survey (AHS) national sample data and measure the effects of different sources for demand disparities. Our results show that endowment effects are highly important in explaining ethnic disparities in housing demand but much less so in explaining racial differences in housing demand. Specifically, 98 percent (96 percent) of the housing demand differences between Hispanic and non-Hispanic owners (renters) is due to differences in group endowments. For the racial groups, 29 percent (51 percent) of the housing demand differences between black and white owners (renters) is attributable to differences in group endowments. The residual differences explain 71 percent and 49 percent of the black-white differentials for owners and renters, respectively. The residual components in our model capture the effect of institutional and structural factors intrinsic to the housing market (such as racial discrimination or residential segregation) and/or the influence of important omitted or harder-to-measure variables correlated with race of ethnicity (such as wealth, employment history, credit history, and cultural differences in housing consumption).
Keywords:	Racial Discrimination, Housing Demand, Tenure Choice