Overview
  • Overview
  • Increasing Housing Supply
  • Dedicated Funding Sources
  • Land Use Regulation and Approval Reforms
  • Inclusionary Zoning
  • Regional Housing Target Enforcement
  • Ending and Preventing Homelessness
  • Systems-Level Racial Equity Analysis
  • Emergency Response Resources
  • Housing First
  • Master Leasing
  • Household and Community Protections
  • “Just Cause” Eviction Laws
  • Anti-Gouging Rent Regulations
  • Strategic Code Enforcement
  • Community Benefit Agreements
  • Community Power-Building
  • Community Ownership
  • Alliance and Coalition Building
  • Community Organizing
  • Tenant Organizing
  • Opportunity and Wealth
  • Mobility Assistance Programs
  • Rent Reporting
  • Reparations
  • Fair and Equitable Appraisals
  • Acknowledgments
    • Fair and Equitable Appraisals

    Overview

    State-led discrimination and devaluation of Black neighborhoods was pervasive in the early 20th century. On top of locally enforced racially restrictive covenants, the Federal Housing Authority refused to underwrite loans for majority-Black areas, which they labeled “high-risk” (a practice known as redlining).

    While overtly discriminatory policies like redlining have been overturned, Black-owned homes continue to be appraised at lower values than white-owned homes as a result of highly discretionary and underregulated standards in property valuation. A recent report found that homes in white neighborhoods are typically appraised at twice the value of homes in Black neighborhoods, and that gap has only widened during the pandemic. This has major implications for equity accrual and wealth-building for households of color across generations.

    While it is illegal to explicitly use the racial composition of an area as a factor in home valuation, appraisers are encouraged to be holistic in their reviews, taking into account neighborhood indicators that correlate highly with race. As a result, racial bias can easily affect appraisal standards and influence deeply consequential financial decisions, like home refinancing and sales.

    In June 2021, President Biden introduced the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), a new multi-agency initiative to combat racial bias in home appraisals. PAVE launched an action plan in 2022 that charted out long-term, federally led efforts to end appraisal bias, including fair housing trainings and campaigns, stronger enforcement strategies, and automated valuation tools.

    Leveraging technology to automate appraisal processes and improving appraiser workforce diversity can help mitigate discrimination and promote fair and equitable access to homeownership.

    Examples of This Strategy in Action

    • The real estate sector can continue to explore the use of automated valuation models (AVMs) in home appraisals. Automated tools help navigate the influence of racial bias on valuation outcomes by standardizing the evaluation criteria and making appraisals contact-free. They may also lower the cost of the appraisal process. There is room for improvement around AVMs as agencies continue to refine and expand their application. Still, such tools could help to move the dial on housing justice by removing prejudice from what has often been misjudged as a race-neutral practice—even while evidence shows how structural racism can continue to have a discriminatory effect.
    • Industry leaders can also work to combat biased appraisals by diversifying the workforce tasked with conducting them. Nearly 90 percent of the home appraiser and assessor workforce is white, while just 2 percent identifies as Black or Hispanic. This lack of diversity can amplify the impact of racial bias on home values. Lengthy and expensive training requirements present major barriers to certification. Lowering those barriers to entry and conducting targeted recruitment to applicants of color can help ensure appraisers are more reflective of the communities they serve.