Bloomberg, September 21, 2020, A Neighborhood’s Race Affects Home Values More Now Than in 1980
Since the Fair housing Laws passed in the 1960’s into the 1970’s, the housing market’s disparity in the appraised values between the majority white communities and predominantly non-white communities have drastically increased. The modern system of appraisal practices utilized since the passage of the 1977 Community Reinvestment Act further perpetrates the discrimination in how homes are valued in neighborhoods of color compared to white Communities.
This disparity can’t be fully explained by past racially discriminatory practices in the real estate industry, such as redlining, conclude University of Pittsburgh sociologist Junia Howell and University of New Mexico sociologist Elizabeth Korver-Glenn. Instead, standard modern appraisal practices used since the passage of the Community Reinvestment Act of 1977 continue to perpetuate and exacerbate differences in how homes are valued in neighborhoods of color compared to white neighborhoods.
For decades, research has shown that houses in predominantly Black neighborhoods have been generally appraised at lower values than houses in majority-white neighborhoods. This is true even when comparing housing stocks that have the same characteristics (age, square footage, number of rooms, etc.) and neighborhoods of equal socioeconomic status. The new study finds that the racial composition of a neighborhood was an even “stronger determinant” of a home’s appraised value in 2015 than it was in 1980, to Black homeowners’ increasing disadvantage. Analyzing reported home values, Howell and Korver-Glenn found that the race appraisal gap has doubled since 1980: The difference in average home appraisals between neighborhoods that are majority-white and those that are predominantly Black and Latina was $164,000 in 2015, up from about $86,000 in 1980.