Home Values Stagnate While Homeownership Remains A Barrier For Black People

Part of the issue with homeownership values lies with the values assigned by appraisers, who are mostly white, and the difficulty in reporting appraisal discrimination.

According to data provided to Axios by the real estate database Zillow, homes owned by Black people in the Detroit Metro area are worth approximately 45% less than those owned by white people. This dovetails with and illustrates the data surrounding homeownership in America; the typical value of homes owned by Black people is 18% less than those owned by white people.

Part of the issue with homeownership values lies with the values assigned by appraisers, who are mostly white. It is also incredibly difficult to report appraisal discrimination. In February 2023, the Department of Justice, the CFPB, and other federal leaders submitted a letter to The Appraisal Foundation calling for them to include a detailed statement of federal prohibitions against discrimination.

According to the letter, “We are concerned that the Fourth Exposure Draft eliminated the Third Exposure Draft’s summary of the FHAct’s and ECOA’s nondiscrimination standards and, instead, substituted a distinction between unethical discrimination and unlawful discrimination. Specifically, we are concerned that the term ‘unethical discrimination’ is not well established in either current law or practice.”

The letter continued, “Accordingly, we believe the introduction of the term in USPAP, and the resulting need to distinguish between unethical discrimination and unlawful discrimination, would create confusion in the appraisal industry. In addition, federal and state regulators responsible for examining compliance with USPAP would face difficult challenges in determining when appraisers have engaged in unethical discrimination given that it is not defined in existing legal norms and standards and is inherently vague and subjective.”

The Appraisal Foundation agreed in July 2024 to settle a complaint by The Department of Housing and Urban Development regarding the discrimination involved in the hiring practices of appraisers across the country. According to Acting HUD Secretary Adrianne Todman, “To help eliminate racial and ethnic bias from home appraisals, we must ensure that the industry looks like America,” Todman said in a press release. “Today’s historic agreement will help build a class of appraisers based on what they know instead of who they know. This settlement will help bring us one step closer to rooting out discrimination in housing and opening doors to opportunity for all.”

In addition to the issue of home valuation, Black Americans often face difficulties in getting their mortgage applications approved due in large part to either poor or non-existent credit histories and high debt-to-income ratios.

According to the Urban Institute, the Black-white homeownership gap is an American design. In February, authors Jung Hyun Choi, Amalie Zinn, and Aniket Mehrota wrote a report detailing that increased interest rates on homes were positioned to add another impediment for Black people seeking to become homeowners.

According to the authors, “The racial homeownership gap remains wide, and policymakers, government agencies, financial institutions, and other changemakers in the mortgage market must all work together to significantly increase Black homeownership. The U.S. government afforded low-interest, amortized home loans to millions of white households for decades. Similarly, programs intentionally targeted to Black families and other historically excluded groups, who still face the effects of past discriminatory housing policies and practices, could help more such families access homeownership’s benefits.”