Research shows that homes in communities of color are consistently undervalued by, in some cases, over $1 million.
The racial gap in home appraisals is present and growing in every major U.S. city, with homes in predominantly white neighborhoods appraised at almost triple the values of homes in neighborhoods made up of people of color, report Brentin Mock and Marie Patino for Bloomberg CityLab.
According to new research from University of Illinois Chicago sociologist Junia Howell that seeks to isolate racial factors in home appraisals, “These disparities stem from a number of causes, including historic discriminatory practices and the modern appraisal approaches that perpetuate them. But they can also reflect prejudices on the part of appraisers.”
In expensive cities like San Francisco and New York, the difference in average appraisals topped $1 million, signaling a huge loss of potential wealth-building opportunities for Black and brown families. “In other less-expensive metro areas like Charleston, South Carolina, the dollar differences were lower, but the disparity was even worse.”
The industry is starting to acknowledge the problem. “In 2021, the Federal Home Loan Mortgage Corporation released a study that found that housing appraisal discrimination is ‘pervasive’ throughout the industry. The conversation now among federal authorities and appraisal professionals is how to craft reforms to root it out.”
FULL STORY: Racial Disparities in Home Appraisals Exist in Every Major US City
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