Dominion of New York


July 18, 2012

Home Sellers Charge Blacks, Latinos More Than Whites

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Written by: Kelly Virella

Photo courtesy of Flickr/Neubie


n Chicago, a house that costs an African-American $100,000 will cost a Latino $97,300 and cost a white person $95,300, according to a new paper published by the National Bureau of Economic Research. And if you complain about it, you’re just playing the race card, and it’ll cost you more.

Chicago is one of four U.S. metro areas where the paper’s authors found evidence that black and Latino homebuyers pay on average 3 percent more for comparable housing than whites. It also happens in Baltimore/Washington, D.C., in the San Francisco Bay Area, and, to a lesser extent, Los Angeles.

  • In the San Francisco Bay Area, West Bay, blacks pay 1 percent more and Latinos pay 3 percent more. In the East Bay, blacks pay 1.2 percent more and Latinos play 2.6 percent more.
  • In the Baltimore area, blacks pay 2.9 percent more and Latinos pay 2.0. In the Washington, D.C.-area, blacks pay 1.1 percent more and Latinos pay 2.8 percent more.
  • In Los Angeles County, blacks pay 1.5 percent more and Latinos pay 1.2 percent more.

Researchers discovered this price discrimination by examining 2 million housing sales transactions that occurred in the four metro areas between 1990 and 2008. They examined the sale and re-sale of the houses and projected what a house should cost each buyer, given an estimated rate of appreciation of properties in the neighborhood.

Blacks and Latinos pay more even when they earn the same income as whites, have as much wealth as they do and have the same creditworthiness. And get this: they pay more even when the seller is of their race. Can a brother catch a break? Apparently, the answer is no.

Researchers conclude that it’s not necessarily racial hostility that’s driving this, although they concede that it could be a factor. “We cannot rule out that animosity or prejudice may lead to the exclusion of minority buyers from purchasing certain properties in the first place,” the paper says.

They say it’s possible that blacks and Latinos just don’t know how to get a good deal, because they tend to have less experience with real estate transactions: “The relative inexperience of black and Hispanic buyers, due to the historically lower rates of home ownership among the black and Hispanic households, may contribute to the higher prices that they initially pay upon entering the market. With the experience gained from having participated in the real estate bargaining process at least once, black and Hispanic sellers do altogether better. “

Personally, I don’t want to buy two houses before I can get a good deal. My advice: if you plan to buy in either of these cities, get a white friend to be your front man.


About the Author

Kelly Virella
Kelly Virella lives in an East Harlem walk-up with her husband, her bicycle and her books. She's worked as a journalist for 11 years and started this website during the summer of 2011. She fell in love with New York City during her first visit here as a 16-year-old and finally made good on her promise to move here in April 2010.


New York City Mayor Michael Bloomberg and NYPD Commissioner Ray Kelly, left to right. Photo courtesy of Flickr/Azipaybarah