Housing Market Appreciation and the White-Black Wealth Gap

Abstract

White-Black wealth gaps have widened in the wake of the Great Recession, suggesting that White households have disproportionately benefited from the post-Recession economic recovery. In this paper, I explore the role of rising house prices over this period in explaining widening White-Black wealth gaps. I combine geocoded longitudinal data on household wealth from the nationally-representative Panel Study of Income Dynamics with Census tract house price index data to estimate how the distributions of White and Black household wealth would have changed under a counterfactual scenario where house prices did not appreciate from 2013 to 2019. I find that rising house prices account for most of the increase in the White-Black wealth gap over this period. While Black homeowners did benefit from greater Census tract-level house price appreciation than White homeowners, White households benefited more from rising house prices overall due to having greater rates of homeownership and higher house values than Black households. Given the important role of institutional racism through the 20th century in explaining White-Black gaps in homeownership and house values, these findings demonstrate a pathway through which the legacies of institutional racism contribute to present-day racial inequalities.