ABSTRACT
This chapter reviews theories of racial discrimination, summarizes the evidence on black/white price differentials, and examines the access of minorities and certain neighborhoods to residential mortgage funds. Although discrimination plays a large role in residential segregation, controversy exists over its nature and especially over the relationship between housing prices and race. National attention has also focused on discrimination in mortgage lending. Prices of identical housing units may differ for whites and blacks for at least three, not necessarily mutually exclusive, reasons: pure racial price discrimination, different preferences for the social composition of neighborhoods, and collusive behavior of housing market actors. First, racial price differentials occur when white landlords and other real estate actors charge blacks more than whites for the same dwelling unit. A second reason for different prices for virtually identical housing units is the differences in the preferences of blacks and whites for neighborhoods of differing racial composition.
