Association for Public Policy Analysis & Management

This paper uses transactions data matched with buyer demographics to examine price and entry - exit dynamics in racially transitioning Chicago neighborhoods. It presents evidence on price dynamics in neighborhoods beginning white - to - black transitions. In the short-run, demographically changing neighborhoods see falls in appreciation initially but this decays quickly and the neighborhood price trajectories converge back to their prior path. These dynamics are shown to be largely driven by potential white entrants sorting away from these transitioning neighborhoods. Exit from these neighborhoods, by contrast, does not rise sharply with black entry. It suggests racially averse sorting rather than flight among existing neighborhood residents a key factor in neighborhood instability and persistent segregation.