My December 27, 2022 article for the New York Law Journal discusses the widespread racial bias found in residential appraisals. Racial bias in home valuation operates as an institutionalized theft of value from the Black community. Most Americans measure their wealth by calculating their net worth. The largest component of personal wealth is the ownership of one’s home. If a racial component is not given a fair valuation of their property, they lose the opportunity to increase their personal wealth, or at least have a fair accounting of same.
The answer to appraisal bias on racial grounds is to expand opportunities for Black real estate professionals. In a statement issued on September 20, 2020, the Appraisal Institute, the largest professional association of real estate appraisers reiterated its efforts to expand opportunities for aspiring appraisers to help combat bias in valuation.
Less than 2 percent of appraisers identify as Black. The appraisal industry has kept a very guarded gate for entrants. This is largely based on an apprenticeship model that requires anywhere from 1,000 to 3,000 hours of work under a supervising appraiser to become certified.
The appraisal industry is one of the last remaining fields that relies on the apprenticeship model. Racially based appraisal bias is a well-documented and pervasive issue that has long contributed to the widening wealth gap for Black families, and much of it has been driven by “historical racialized appraisals that influence contemporary values and appraisers’ racialized assumptions about neighborhoods to drive appraisal method,” according to a study published in the journal Social Problems.
While the Appraisal Institute has several existing programs to expand opportunities for aspiring appraisers and to help combat bias in valuation, it needs to do more. The Appraisal Institute and the Appraisal Foundation need to sponsor appraisal education programs at Black schools and universities with minority scholarships. There should be active recruitment of qualified Black real estate professionals.
As the Urban Institute stated, “appraiser bias has likely played a role in homeownership and housing wealth outcomes, and increasing diversity in the field can diminish this bias in the long-term.”
No comments yet.