Impacts of neighborhood labels on housing demand

Abstract We examine the salience of neighborhood labels on housing demand using the unanticipated removal of a field that defines geographic area boundaries in the Multiple Listing Service (MLS) property search platform as a natural experiment. These labels plausibly reflect historical boundaries associated with past redlining practices. Applied to the rental market, we show that removing the ability to filter property listings using these MLS labels increased rents in predominantly Black and Hispanic neighborhoods more than in predominantly White neighborhoods. The label removal effect is more pronounced at the peripheries of neighborhoods, where the boundaries between neighborhoods are not clearly defined. Furthermore, we show that minority neighborhoods were able to attract and retain more households after label removal, suggesting that decoupling property locations from their historical labels shifted housing demand to areas previously constrained by these labels.