Racial and ethnic differences in the financial returns to home purchases

Abstract

The racial and ethnic composition of home buyers varies across geographic locations. Since home prices grow at different rates across counties and within counties, these place‐based bets yield different average rates of return for different demographic groups. I estimate these differential returns by combining micro data from Home Mortgage Disclosure Act (HMDA) with zip‐code‐level data from Zillow. Based on this index of housing returns from 2010 to 2022, I find that at the national level that Asian buyers earn higher returns than other groups. For California buyers and for Los Angeles buyers, Black people earn roughly the same average rate of return but face a higher standard deviation in returns than other groups.