It’s well-documented that homes in Black neighborhoods generally appraise for less value than similar properties in predominantly white areas.
There’s no single explanation for this disparity, which is the result of hundreds of years of history and policy ? as well as social biases ? but it’s clear that the appraisal gap has a tangible impact on Black homeowners.
Black communities tend to be poorer than white communities, due in part to the lower values assigned to properties. Understanding the appraisal gap takes grappling with the history of real estate in America, and addressing it will ultimately mean dealing with its root causes.
The appraisal gap comes from two major sources: structural inequities Black people face in the real estate industry and the internal bias of appraisers.
‘Starting with slaves being released in 1865, 12 years of Reconstruction and then the start of Jim Crow laws,’ said Mark Alston, president of Alston and Associates Mortgage Company in Los Angeles. ‘Because of the bias, racism, the economic deserts in Black neighborhoods, fewer stores, fewer resources, then those properties became worth less.’
For much of the 20th century, it was also more difficult to secure financing for homes in predominantly Black neighborhoods, because the federally endorsed practice of redlining discouraged lenders from extending loans in those communities.
The legacy of redlining continues to affect housing because segregated communities received fewer municipal resources, which meant property values in those areas rose more slowly over time compared to neighborhoods that started off better served.
The low property value foundation in Black communities is exacerbated by current-day appraisal practices, which rely heavily on individual appraiser observations and comparisons to past sales of similar properties in the neighborhood. Appraisers can be influenced by unconscious bias, and the longstanding trend of homes in Black neighborhoods being worth less is reinforced by comparable sale comparisons.
A 2018 study by the Brookings Institute found that Black homes are undervalued by $48,000 on average. Shanta Patton-Golar, the vice president for the National Association of Real Estate Brokers region 15, said that other studies have shown even larger gaps.
Lower property values mean less home equity, which makes it harder for Black families to build wealth even when they own property.
‘It takes billions of dollars out of the Black community,’ Patton-Golar said. ‘It hurts everything, it hurts our ability to pay for college for our kids, it hurts our ability to put more money away for our retirement, it hurts our ability to move to other areas that may have better schools.’
Black homeowners also face higher homeownership costs because consistently low appraisals can mean they’re stuck with higher-interest mortgages.
‘If you can’t get an appraisal for the value you should be, you don’t have the opportunity to refinance,’ Alston said.
There’s not much homeowners can do to combat the appraisal gap, and the few tools available to them could at best be described as demoralizing.
‘I owned a house that I listed and could not sell in Hollywood Hills, in an upper-class neighborhood. I had to move out, take my art off the walls and hire a white agent to sell it. That’s not an unusual story,’ Alston said.
Patton-Golar said that removing signs of who owns the property is a common tactic among Black homeowners and sellers getting ready for an appraisal.
‘You have to remove the Black from the home to have it valued as a white household,’ she said.
The appraisal gap comes from two major sources: structural inequities Black people face in the real estate industry and internal bias on the part of appraisers. TNS
By Elliott Johnson | The Palm Beach Post | March 31, 2021
Florida’s population continues to grow. According to a recent report by the Demographic Estimating Conference, Florida will be home to more than 300,000 additional residents per year, every year, for the next five years.
The Florida Chamber of Commerce calculates that we could be home to nearly 26 million residents by 2030— only nine years away. That’s larger than the current population of Australia.
This increase in population will further tax our capacity to increase an already strained supply of housing in all of our communities, pushing prices to stratospheric levels now seen in states like California, high-density metro areas like New York and Boston, or other areas in the United States that many Floridians used to call home. We’ll see more congestion and challenges to residents’ quality of life.
It is imperative that we implement good policy now to ensure some control over this future inevitability. Some of the tools we need already exist. Almost 30 years ago, the Florida Home Builders Association, Florida Realtors and Florida Legislature, seeing the need for locally focused housing solutions to address persistent and systemic problems for which funding would be difficult to obtain, crafted and passed the Sadowski Act.
Included was the establishment of the Florida State and Local Housing Trust Fund, which structured a levy on residential real estate sales. The money was intended to be mostly returned to donor counties and municipalities for targeted, maximally leveraged efforts to help address some of the persistent challenges identified by local community and business leaders.
Since then, Sadowski, and the Florida State and Local Housing Trust Fund have enjoyed broad and enthusiastic, support across all party lines. Although the fund, unfortunately, has been swept regularly to support the Florida General Revenue Fund, criticism of the housing fund’s intent and need is rare.
If you want to buy a home in Palm Beach County, be prepared to shell out some serious cash.
Home prices hit record highs in February, according to a report issued Monday by the Broward, Palm Beaches & St. Lucie Realtors.
The median price in February for a single family residence in Palm Beach County was $450,000, representing a 24% increase over Feb. 2020. For condos and townhomes, the median price was $236,000, representing a 24.9% increase over last year.
The average sale price of a single family residence was $845,677, and while the number sold decreased by 1.8%, the sales price represents a 38.9% increase over the same time last year.
Condominium and townhome average sale prices increased by 31.1% to $435,929, the report showed, and the volume increased by 9.1%.
“The market is hot, it’s on fire,” said Linda Gary, owner of Linda A. Gary Real Estate and resident of Palm Beach for more than 40 years. “We’ve never seen it like this.”