Rising Housing Costs and the Racial Wealth Gap
Joe LaBriola1
1University of California, Berkeley

There are large gaps in the amount of wealth held by White and Black households, and these gaps widened further over the past twenty years. However, the determinants of this recent increase are not well understood. I examine how rising housing costs since 1999 have affected the White-Black wealth gap. I combine geocoded data from the Panel Study of Income Dynamics with county-level house price index data to estimate how White-Black wealth gap would have changed since 1999 under a counterfactual scenario where house prices did not appreciate. I find that housing market changes account for most of the changes in the White-Black wealth gap since 1999, with racial disparities in homeownership rates and house values each explaining substantial portions of this relationship. These findings point towards housing as an important dimension of social stratification, and show that White households have benefited most from processes contributing to rising housing prices.