The Truth Behind Devaluation of Black Homeownership

Presumptions are raised about property appraisers that exhibit racial bias

Photo courtesy of Blackenterprise.com

In a stark divide between Black and White homeowners, one can ensure that the history of appraisals is no different than the persistent racism that occurs in the United States.

The unconscious effort to determine the value of one’s home and the underappreciation of one’s assets holds a strong presence of racial bias. Banks and loan officers are bound by law not to discriminate based on an applicant’s gender, race, or religion, but property appraisers still do so to black homeowners. Racist housing policies have left many black homeowners to fend for themselves when settling in one place.

For many people, understanding how the property assessment process works are unknown. An appraisal is one’s expert opinion of one’s home value. Often appraisals are required by mortgage lenders to ensure that the home’s value is equal to that of the mortgage. Many factors can influence how valuable one’s home is, including the location of your home, age, walkability, number of bedrooms and bathrooms, renovations, and the current real estate market value.

But why are black homeowners more likely to be undervalued during the appraisal process? According to a 2018 study performed by the Metropolitan Policy Program, “50 percent Black homes are valued at roughly half the price as homes in neighborhoods with no Black residents. The devaluation of black homeownership is widespread across the United States. Indianapolis resident Carlette Duffy planned to buy her grandmother’s house and refinance her home. To refinance her home, she had to undergo a property inspection to ensure that the value of her home was equal to that of the mortgage. Once the appraiser gave her the home value, it was set at $125,000, which was less than her expectations.

But the appraiser stood by the value. Duffy applied again with a new lender, and this time borrowed one of her friend’s husbands, who is white. This appraiser inspected the house, and Duffy’s friend, a white husband, posed as her brother. When the results came back, the value of Duffy’s home jumped 235% to $259,000, considering that the impact of the second appraisal value was set at $110,000, $15,000 less than her first appraisal.

The value of her home jumped because all traces of black culture were removed from the house. For black homeowners, some feel like the only thing devaluing their home is their blackness. But Duffy’s incident is not isolated. Black homeowners are disproportionately valued based on many factors that shouldn’t be assessed during the appraisal process. Reinforcing patterns of racial segregation has led many black homeowners to devalue themselves and the property they live on. Historical disadvantages lead many black homeowners to settle for less than they deserve when searching for a home.

Many appraisers, lenders, and banks are unwilling to acknowledge this issue that poses bias among black homeowners. In 2019, Congressman Al Green of Texas once asked several real estate companies leaders.

“Do you believe that invidious discrimination plays a role in the devaluation of property in neighborhoods that are predominated by minorities, but more specifically black people?”

In a majority White audience, one Black and White person raised their hands. Congressman Al Green didn’t expect the lack of responses from the audience and asked a follow-up question for those who didn’t understand.

“If you think black people are being discriminated against when their property is being appraised, would you kindly raise your hand?”

The same Black and White hand raised.

The real estate industry holds negative biases against Black homeowners and the majority of Black neighborhoods and, in the process, has killed generational wealth. Underreporting issues such as housing discrimination can discourage Black homeowners from the whole process.

Bias in the appraisal process is rooted in a long history of racism: redlining, gerrymandering, and other racist implications. Keeping Black and White homeowners separate directly reflects how value is determined in one’s home. Ensuring that this doesn’t continue happening to Black homeowners, addressing the national history of racism, and how Black people are denied access to housing, low-interest rates, and high property values is the first step to closing this long, never-ending novel of racism in this country.