Homes in Black neighborhoods undervalued $46K: report

A new study finds that homes in Black neighborhoods are undervalued by an average of $46,000 compared to similar homes in white neighborhoods nationwide.

The report, by real estate broker, Redfin, found the disparity when comparing homes similiar in size, condition, neighborhood amenities, and schools in nearby white and Black neighborhoods. 

"Disappointed, sad, because it has been going on for such a very long time," reacted Kim Barnes-Henson with the National Association of Real Estate Brokers and past President of the Houston Black Real Estate Association. 

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Redfin researchers say the problem is often racial bias in homebuyers, realtors, lenders, and appraisors. 

"They may look around at the people that live in that neighborhood and determine based on that conscientiously or subconscientiously the home is not worth as much," explained Daryl Fairweather, Chief Economist at Redfin.    

"Systemic racism, redlining, all the policies of the past and, sure, we pass laws but we never went back and corrected the mistakes," said Barnes-Henson.  

Marla Lewis, President of the Houston Black Real Estate Association, says appraisers are often working in unfamiliar areas. 

"When you have an appraiser that's come in from say the Beaumont area to appraise in the Seabrook area, how accurate could that information really be?" she asks.

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The result, according to Redfin's report, is that Black homeowners lose out an average of $46,000 in assets, a blow to building family wealth. 

"If you ever do decide to sell your home, you may not be able to cash out as much equity," said Fairweather.

"You can't refinance if you're in an area that way. It causes a problem with loan-to-value if you are purchasing in one of those areas. It's a big deal for us," said Lewis. 

So what are possible solutions? Redfin suggests what's needed are investments in communities and in Black homebuyers, confronting racial bias in the home buying process, and diversifying the real estate industry. 

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"As attitudes change, and culture changes, we may see more integration, more people seeking out more diverse neighborhoods," said Fairweather. 

"We have to hire more appraisers familiar with those areas and we have to get more African American appraisers," said Barnes-Henson.

Last month, more than 30 Democratic Senators and Congressmembers asked the Federal Financial Institutions Examination Council to consider structural reforms to reduce racial bias in home appraisals.