Mind the Gap: Home Price Differences by Race and Student Debt

The wealth gap among African-American and Hispanic households compared to White Non-Hispanic households has been tracked for three decades. This paper examines the purchase price differences among home buyers from January 2014 to December 2017 who purchased a primary residence property. In addition, the paper examines how the purchase price can lead to further wealth gaps through equity in homeownership.

The quantitative approach used is Two-Stage Least Squares (2SLS) using the outcome variable of log of price of home purchased to examine if the price of successful home buyers differs among those with student loan debt, those who are Hispanic/Latino, and those who are Black/African American.

The model controls for household income of the buyer, financial help from friends and family, home characteristics, region, and economic environment of the local area of purchase. The instrumental variable used is total search (before a buyer finds a real estate agent and after the buyer works with an agent). The data used is from a survey sample from the National Association of Realtors Profile of Home Buyers and Sellers and is representative of home buyers on a state level over that period.

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