Why do real estate brokers continue to discriminate? Evidence from the 2000 Housing Discrimination Study

Abstract

This paper studies racial and ethnic discrimination in discrete choices by real estate brokers using national audit data from the 2000 Housing Discrimination Study. It uses a fixedeffects logit model to estimate the probability that discrimination occurs and to study the causes of discrimination. The data set makes it possible to control for auditors' actual demographic and socioeconomic characteristics, along with the characteristics assigned for the purposes of the audit. The study finds that discrimination continues to be strong but also documents a downward trend in both the scope and incidence of discrimination since 1989. The estimations also identify both brokers' prejudice and white customers' prejudice as causes of discrimination.(JEL J71, R31)

Perceived Discrimination: Multiple Measures and the Intersections of Race and Gender

“…For instance, in the criminal justice system, blacks are disproportionately the victims of police shootings (44% to 82% of total police shootings) (Free 1996), and when controlling for the severity of the crime and the risk of the defendant fleeing, bail is set 35% higher for blacks than whites, and 19% higher for Hispanics than whites (Jones 1997). In studying housing discrimination, Zhao et al (2006) find that in 2000, blacks attempting to purchase a home faced unfair treatment; whites were 15% to 40% more likely to receive positive treatment by real estate agents compared to equally qualified blacks. In the same study, Hispanics were 11% to 33% less likely than whites to receive assistance with financing from real estate agents (Zhao et al 2006).…”

“…In studying housing discrimination, Zhao et al (2006) find that in 2000, blacks attempting to purchase a home faced unfair treatment; whites were 15% to 40% more likely to receive positive treatment by real estate agents compared to equally qualified blacks. In the same study, Hispanics were 11% to 33% less likely than whites to receive assistance with financing from real estate agents (Zhao et al 2006).…”

Does the number of houses a broker shows depend on a homeseeker's race?

“…8 Using the 1989 HDS data, Ondrich et al [6][7][8][9] examine brokers' discrete choices, such as whether to tell an auditor the advertised unit is available. [20] examine the number of units shown in an indirect way by transforming it into qualitative variables. The former employs an ordered probit model to study teammate difference in the treatment.…”

“…9 Page [10] regards the GLS model in Yinger [17] as inappropriate. She points out: first, data are not likely to be generated from a linear process like GLS; second, treating the num- 9 Using the 2000 HDS data, Zhao et al [20] find that compared with white auditors, black auditors encounter a 30.5 percentage-point lower probability of inspecting more units than their teammates, whereas there is no evidence of this type of discrimination against Hispanics. ber of units shown-a discrete, non-negative, integral variable-as a continuous variable could result in inconsistent estimates of standard errors.…”

“…The estimated coefficients on these interaction variables are insignificant at the two-tailed 5 percent level. 17 Extending the logic of Ondrich et al [9], Zhao et al [20] propose that discrimination may increase with the median house value and the per capita income of the neighborhood. These variations in discrimination could arise because neighborhoods with higher average house values and incomes may be more threatened by the entry of minorities than neighborhoods with lower average house values and incomes.…”