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People of color shouldn’t have to obliterate their presence to receive fair home values

A house for sale in Richmond, VA (Sarah Vogelsong / Virginia Mercury)

Another case of likely racial discrimination in housing appraisals has cropped up, this time in Baltimore.

The New York Times recently reported a Black husband and wife first received an appraisal of $472,000. After they “whitewashed” their home – removing family photos and having a White colleague stand in for them as the “owner” – a second appraisal came in at $750,000. That’s nearly $300,000 more.

The process is infuriating for Black and brown families. It’s also exhausting.

Why does such bias persist? Why can’t people get what’s due?

The account of Nathan Connolly and Shani Mott is one of dozens that have gained media attention in recent years. Similar allegations have occurred in California’s Bay Area, central Indiana and Cincinnati.

“It’s very humiliating to strip yourself of your own home,” Connolly told The Times.

Appraisals often are subjective. Still, these stories suggest something more than chance is afoot.

Federal statistics show nearly 98% of property appraisers are White. The percentage, and the comments from Black homeowners, raise questions about bias. The Fair Housing Act of 1968 says it’s illegal to discriminate in appraising residences.

Homeownership is a key way to pass down wealth to future generations. When the housing industry shortchanges property value, it harms families depending on an unbiased review.

A 2018 Brookings Institution study noted that “owner-occupied homes in Black neighborhoods are undervalued by $48,000 per home on average.” It studied 113 metro areas with at least one majority-Black neighborhood. In Virginia, the areas were Virginia Beach-Norfolk-Newport News, Lynchburg, Richmond and Roanoke.

Not that African Americans have been able to rely on equity when it comes to housing policies.

The nation’s history is littered with racism in the market. This includes redlining, restrictive covenants and a GI Bill that in practice denied mortgages and home loans to Black veterans. Urban Renewal projects, including highways, often destroyed Black communities.

Vestiges of those decades-old policies remain today.

Isabel McLain, a research and policy analyst for Housing Opportunities Made Equal of Virginia, said Monday she didn’t have exact statistics on how often under-appraisals occurred in the state.

However, “we understand that racially biased appraisals are a systemic problem in Virginia, based on national studies that have included or reported on Virginia communities,” she noted by email.

McLain cited, for example, a Freddie Mac report released in 2021 that underscored biased devaluations. Researchers found a large portion of appraisers valued homes in majority-Black and majority-Latino neighborhoods below the contract price at rates much higher than they did for homes in majority-White neighborhoods.

“These disparities were not driven by a few appraisers but reflect widespread trends across the profession, including appraisers in Virginia,” she noted.

Blacks, Latinos – heck, everybody – just want to be treated fairly when it comes to housing. Numerous anecdotes and data indicate race in housing remains a fault line, one that hinders wealth and progress for people of color.

Veteran journalist Roger Chesley is a commentator for the Virginia Mercury, which first published this essay.

Home ownership and the “American Dream” are crushed by Real Estate Investment Trusts

Image: AdobeStock

A big economic division between renters and homeowners is apparent when looking at net worth: For homeowners, the median net worth of $231,400 is about 44 times the median net worth of renters, which is $5,200.

Dr. Ken Chilton of Tennessee State University has studied the impact of Real Estate Investment Trusts on the housing market and how they are likely to rob families of the generational wealth created by home ownership. He coined the phrase “equity mining.”

For every family that rents from a REIT, $226,200 of family wealth is shifted to investors away from families. This creates a permanent underclass of poor who can become dependent upon the state to help them survive.

Across the United States, the decline of affordable housing has transformed the lives of the poor. Many poor families who are renting today receive no housing assistance and reside in the private rental market, where over half spend at least 50% of their income on housing costs and a quarter spend over 70% on them.

Increasing rent burden among low-income families directly contributes to their economic hardship and is a source of residential insecurity and homelessness.  But sociologists have yet to identify the basic sources of the affordable housing crisis or to fully articulate the inner workings of rental markets. Conspicuously absent from most accounts of neighborhood dynamics or inequality are landlords and increasingly corporate interests via REITs, who play a vitally important role in the lives of low-income families.

In Rutherford County in central Tennessee, nearly 10% of all residential units are owned by REITs.

Tenant exploitation (overcharging renters relative to the market value of their home) and landlord profit margins vary. However, their impact on the housing market is very real. Because the acquisition of property by REITs in low-income neighborhoods is relatively affordable, the renters in those neighborhoods easily become “exploited consumers.”

Landlords operating in those neighborhoods also enjoy higher profits, owing to significantly lower mortgage and tax burdens but not significantly lower rents. This demonstrates how the market strategies and profit motivation of REITs contribute to high rent burdens in low-income neighborhoods.

The drive to maximize profits also contributes to a lack of inventory for families who may wish to own their home rather than rent. The lack of inventory causes a scarcity which drives up prices making it problematic to enter the home buying market.

We are witnessing a type of “social engineering.” Many politicians may view this as an opportunity to continue to remain in power. Regardless of their words and how much they lament the situations we must judge our elected leaders by their deeds or lack thereof to address this growing issue. Homeownership leads to prosperity and creates the generational wealth necessary for future generations to realize the American dream.

Rob Mitchell serves as property assessor for Rutherford County, Tennessee and is an occasional contributor to the Tennessee Lookout, which first published this commentary.