Post-Racial Update: Blacks and Hispanics Pay 3 Percent More for Homes

I really don’t feel like saying much on this one. No need for me to go back into the old news about banks taking advantage of minorities — you know, people of color? — which subsequently lead to the ugliest economic meltdown in modern history. Yeah, no need to bring that up when the common meme says that colored folks purchased more than they could afford, like they always do — never mind the racism when it comes to filing bankruptcies. What’s important is to recognize that none of this is real, because, well, we all currently live in a post-racial society here in America these days.

A paper for the National Bureau of Economic Research finds that black and Hispanic homebuyers pay more for their homes, irregardless of their income, wealth, and credit profiles.

Researchers examined 2 million housing sales in four different cities and found that black and Hispanic home buyers pay about 3 percent more than white homebuyers.

The price differences aren’t linked to household income, wealth, or access to credit, and they don’t depend the racial makeup of the neighborhood or the race of the seller, the researchers note. So what explains the premium that minority homebuyers end up paying? The paper explains that discrimination could be a factor, as well as relative inexperience with homebuying within black and Hispanic communities.

Finally, they point out that black and Hispanic homebuyers may be less willing to spend as much time searching for homes, in part “because of the expectation of discriminatory treatment in the market.” Knowing this, “sellers might statistically discriminate by holding out for a higher price (i.e., use a higher reservation price) in negotiations,” the paper concludes. (source)

Maybe it was a good idea for my wife and I to have a white couple pretend to be us when we purchased our new home last year. Sometimes you gotta do what you gotta do — just ask a black person. That said, hopefully the little girl pictured above doesn’t have to do like her parents did.

Between 2004–2006 and 2010, however, homeownership rates dropped sharply, and more so for Hispanic and black households than for white non-Hispanics. The overall homeownership rate of 65.1 percent in April 2010 was 1.1 percentage points lower than 10 years earlier. Blacks ended the 2010s with a lower homeownership rate, 44.3 percent, than their 1990 rate of 45.2 percent and two percentage points lower than just 10 years earlier… The homeownership rate for black non-Hispanics now lags the white non-Hispanic rate by nearly 28 percentage points, compared with 26 points in 2000 and just less than 25 points in 1990…..

…While the housing crisis has hurt people of all races and ethnicities, it has been devastating for many Hispanic and black families, reducing their median wealth by one half to two-thirds and significantly increasing the number of households with negative net worth.

Too bad few of us will be getting our hands on that Wells Fargo money.