Equal price for equal place? Demand-driven racial discrimination in the housing market

Abstract

We presented participants to an online study in Luxembourg with fictitious real-estate advertisements, tasking them to appraise the described properties. A random subset was also shown sellers’ surnames, strongly framed to signal their origins. All else equal, sellers with sub-Saharan African surnames were systematically offered lower prices — amounting to an appraisal penalty of EUR 20,000. This figure is highly heterogeneous and can amount up to around EUR 58,000 for older and low-educated participants. We provide evidence that the appraisal bias likely passes through onto final sales prices and that it may be largely due to statistical rather than taste-based discrimination.