Racial Rent Differences in U.S. Housing Markets June 18, 2018 By Edgar O. OlsenPaul E. CarrilloDirk W. Early Racial Rent Differences in U.S. Housing Markets This paper exploits an unusually rich data set to estimate racial differences in the rents paid for identical housing in the same neighborhood in U.S. housing markets and how they vary with neighborhood racial composition. It overcomes the shortcomings of the data used in previous studies. It is large (over 400,000 observations), covers all parts of the country, and contains detailed information about the housing units and their immediate neighborhoods and the census block group of each unit. Importantly, due to the sample size, there are many blacks living in predominantly white neighborhoods and many whites in predominantly black neighborhoods. Results suggest that households led by blacks pay more for identical housing in identical neighborhoods than their white counterparts and that this rent gap increases with the fraction of the neighborhood white. In neighborhoods with the smallest fraction white, the premium is about 0.6 percent. In neighborhoods with the largest fraction white, it is about 2.4 percent. This pattern holds across different types of areas, namely the 50 largest metro areas, all other metro areas, non-metro areas, and areas with the highest and lowest levels of racial segregation in housing. ECO-DISCRIMINATION-TEXT-TABLES-6-18-18.pdf (474.66 KB) Edgar O. Olsen Ed Olsen is a professor emeritus of economics at the University of Virginia, where he has served as chairman of the economics department and was heavily involved in the creation and development of the Frank Batten School of Leadership and Public Policy. Olsen's teaching and research has focused on public policy issues, especially concerning the welfare system. Within this broad area, his research specialty is low-income housing policy. Read full bio Paul E. Carrillo George Washington University Dirk W. Early Southwestern University Related Content Edgar O. Olsen Does HUD Overpay for Voucher Units, and Will SAFMRs Reduce the Overpayment? Research One argument for Small Area Fair Market Rents (SAFMRs) is that they would reduce overpayment for voucher units in low-rent neighborhoods. This article provides a more comprehensive theoretical analysis that leads to the conclusion that the worst voucher units and those in the worst neighborhoods will usually rent for more than the mean market rent of identical units, and the best units in the best neighborhoods will rent for less than this amount. Alleviating Poverty through Housing Policy Reform Research The purpose of this paper is to describe proposals for reform of low-income housing assistance that will alleviate poverty without increasing public spending. Low-income housing assistance is fertile ground for such reforms.