Racial Segregation in Housing Markets and the Erosion of Black Wealth

Abstract

Abstract This paper studies how the expansion of segregated neighborhoods eroded black wealth in prewar American cities. Using a novel sample of matched addresses, we find that over a single decade rental prices soared by roughly 50 percent on city blocks that transitioned from all white to majority black. Meanwhile, pioneering black families paid a 28 percent premium to buy a home on a majority white block, after which their homes lost 10 percent of their value. These findings strongly suggest that segregated housing markets cost black families much of the gains associated with moving north during the Great Migration.