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Study Says Race Plays a Role in Value of Homes

January 13, 2002

African American homeowners receive less value for their homes than white homeowners in areas with a high degree of racial segregation, according to a recent study by the Washington, D.C.-based Brookings Institution.

"The great majority of white home buyers don't buy homes in black neighborhoods," said study author David Rusk, former mayor of Albuquerque, N.M., and a consultant on urban and suburban policy. "If there is less competition for a home that comes on the market, that is likely to keep the price down."

Rusk analyzed the nation's 100 largest metropolitan areas and compared the wealth-creating potential of homeownership for different ethnic and racial groups. He found black homeowners received 18% less value for their homes than white homeowners did. For every dollar of income, white homeowners owned $2.64 worth of house while black homeowners owned only $2.16 worth of house.

The study, "The Segregation Tax, the Cost of Racial Segregation to Black Homeowners," is based on 1990 U.S. Census data and other research.

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