Report: Racial Gap in Home Appraisals Increasing

A new report highlights the racial gap in home appraisals, using recent government data to show that homes in predominantly white neighborhoods are assessed at, on average, twice as much as comparable homes in communities of color. 

Writing in the Kinder Institute for Urban Research’s Urban Edge, Nancy Sarnoff outlines the results. “The report’s findings show that rather than improving over time, racial inequality in residential appraisals has worsened over the past decade,” with the discrepancy growing even faster during the pandemic. “By comparing similar homes in neighborhoods with the same socioeconomic status and comparable amenities, homes in white neighborhoods were valued $371,000 more than their counterparts in communities of color.” Sarnoff adds that “The neighborhood racial gap in appraised values increased by 75% — or $157,000 — from 2013 to 2021.”

This discrepancy makes a major impact on the ability of families to build equity and generational wealth. “A low appraisal can reduce a home’s market value and affect how much money a bank will lend on the purchase of that home.”

The report recommends two actions for addressing the gap: “reparations through targeted tax credits or stimulus programs and a new appraisal approach that does not rely on past sales.”