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Racial Discrimination in the U.S. Housing and Mortgage Lending Markets: A Quantitative Review of Trends, 1976–2016

Abstract

We examine trends in racial and ethnic discrimination in U.S. housing and mortgage lending markets through a quantitative review of studies. We code and analyze as a time series results from 16 field experiments of housing discrimination and 19 observational studies of mortgage lending discrimination. Consistent with prior research, we find evidence of a decline in housing discrimination from the late 1970s to the present. Our results show that this trend holds in both the national audits sponsored by the U.S. Department of Housing and Urban Development (HUD) and in non-HUD studies. The decline in discrimination is strongest for discrimination that involves direct denial of housing availability, for which discrimination has declined to low levels. The downward trend in discrimination is weaker for measures reflecting the number of units recommended and inspected, and significant discrimination remains for these outcomes. In the mortgage market, we find that racial gaps in loan denial have declined only slightly, and racial gaps in mortgage cost have not declined at all, suggesting persistent racial discrimination. We discuss the implications of these trends for housing inequality, racial segregation, and racial disparities in household wealth.

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Data Availability

The data and code used in this paper are available online at: http://sites.northwestern.edu/dmap.

Notes

  1. There were 1152 black–white rental tests and 1112 black–white sales tests (Turner et al. 2002, Exhibit 2–3).

  2. We include two studies that were published separately from Galster’s summaries. We were not able to include other audits he summarizes either because the outcomes reported are not comparable to other studies we consider or because critical information like sample sizes are not reported.

  3. A bibliographic list of these studies is included in the Online Appendix.

  4. Another option would be the ratio of white success rates to minority success rates, a number described as the “discrimination ratio” in Quillian et al. (2019). There are two reasons we use the difference measure in this manuscript rather than the discrimination ratio. First, several studies in the housing literature do not differentiate between “neither received a positive response” and “both received a positive response” in reporting results of paired studies, and without this information the ratio measure cannot be calculated. Second, because the rate of positive responses (to both groups) in housing studies tends to be much higher than in employment studies, the ratio runs into upper bound issues when the overall response rate is high. This is less of a problem for difference measures.

  5. Often when correlations are outcomes in meta-analyses they are transformed by taking Fischer’s z-transformation to give them a more symmetric distribution. However, Stanley and Doucouliagos (2012) argue this is only necessary when some of the correlations are large, getting close to − 1 or 1. None of our correlations in absolute value are above .2, and so we perform the meta-analysis using the more interpretable raw correlations.

  6. We do not include steering toward own-race neighborhoods as an outcome because this outcome is available in too few of the discrimination audits outside of the HUD studies.

  7. We also performed standard publication bias tests using the trim- and-fill procedure (see Borenstein et al. 2009, chapter 30). The results showed evidence of publication bias only for a couple of outcomes for Hispanics. The procedure is limited by the small sample of studies.

  8. Scatterplots showing the regression lines are shown in the Online Appendix.

  9. We also performed a standard publication bias test using the trim- and-fill procedure (see Borenstein et al. 2009, chapter 30). The results showed evidence of publication bias for the mortgage cost outcome but not the loan denial outcome. Breaking down the results before and after 2005 did not produce evidence of publication bias in mortgage cost for either sub-period.

  10. The number of studies is sometimes larger for the pooled analysis than the sum of blacks and Hispanics separately because this includes both studies focused on blacks or Hispanics and some studies using a combined black-Hispanic group.

  11. This is due to the small number of studies with credit information and the fact that studies including borrower credit are all concentrated in a short period of time. The studies with borrower credit characteristics that examine loan denial are from 1990 or earlier, while those that examine mortgage cost use data from 2000 to 2008.

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Quillian, L., Lee, J.J. & Honoré, B. Racial Discrimination in the U.S. Housing and Mortgage Lending Markets: A Quantitative Review of Trends, 1976–2016. Race Soc Probl 12, 13–28 (2020). https://doi.org/10.1007/s12552-019-09276-x

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Keywords

  • Discrimination
  • Housing
  • Mortgage
  • Race
  • Trends