We show that high-income buyers earn higher capital gains on housing using detailed transaction data from Denmark. Geographic location statistically accounts for nearly all this difference, with little role for aggregate market timing, property type, or buyer characteristics. Higher-income households can afford a larger share of available properties than lower-income buyers, with wider gaps in high-return areas. However, major credit expansions and contractions produced no detectable change in buyer composition across locations, suggesting inelastic supply limits access regardless of credit availability. Residential sorting thus generates persistent capital gains differences through differential exposure to local price appreciation.
SAFE Working Paper No. 467
