You may not need research to convince you that racism exists in the housing market, but those who weren’t sold may now have the proof they’ve been waiting for. The Biden administration recently asked the Federal Housing Finance Agency to release 47 million appraisal reports to the public for the first time. And the researchers who analyzed them found clear evidence of racial disparity in home values.
Junia Howell, Ph.D and Elizabeth Korver-Glenn, Ph.D conducted the study, “Appraised: The Persistent Evaluation of White Neighborhoods as More Valuable Than Communities of Color.” And after looking at millions of appraisals between 2013 and 2021, they found that homes owned by whites appraised at a higher value than those owned by people of color.
Researchers made sure their sample was statistically sound (probably because they knew the haters were gonna hate). They stuck with neighborhoods in areas with a population of at least 500,000 and at least 50,000 people of color. They found houses that looked similar and had comparable conveniences, like shopping and green space. “Set side by side, the only discernible differences in the communities was their racial composition,” they said.
Drs. Howell and Korver-Glenn found that the racial gap in home values has grown 75 percent over the last ten years, where today, “homes in White neighborhoods are appraised as worth $371,000 more than their counterparts in communities of color.”
And the gap is widening fastest in the most desirable markets. In two years, racial inequality in appraised values increased by 43 percent in areas with the greatest inflation in home prices, a rate that is three times that of more stable markets.
One of the biggest factors contributing to this growing disparity could be the lack of representation of people of color in the industry. Data from the Appraisal Institute found that over 85 percent of appraisers identified as white.
According to Dr. Howell, appraisals, which should provide an honest assessment of a home’s value, have been tainted by racism. “We’ve created a system that starts with racism, based on who lives in an area,” Dr. Howell said. “And who lives in what area is always connected to our racial hierarchy. So where white people live, those homes are always valued for more.”