A Freddie Mac study of 12 million appraisals showed a gap between valuations of homes in mostly Black and Latino areas and those in white ones, the latest evidence of racial disparity in the housing industry.
The mortgage giant analyzed home purchase appraisals from 2015 to 2020 and compared them to contract prices. The research showed gaps in the work of “a large portion” of appraisers, according to Inman. Potential factors include whether appraisers are more willing to seek comparative prices in white neighborhoods.
Using census tracts, the research found that 15.4 percent of homes in mostly Latino areas and 12.5 percent of those in largely Black areas were appraised at below the contract price. That compares with 7.4 percent for homes in predominantly white neighborhoods.
The study, and another last month that found lenders were more likely to deny home loans to borrowers of color due to a bias hidden in mortgage algorithms, may add weight to the Biden administration to tackle housing discrimination and appraisal bias. The Interagency Task Force on Property Value and Valuation Equity launched in July and is set to deliver a final report in the next six months.
Freddie Mac’s research showed that the gap was even more pronounced in neighborhoods where the Latino or Black population was at least 80 percent. That increased the gap between Latino and white appraisals to 9.4 percent from 8 percent, and to 5.9 percent from 5.2 percent for Black ones.
Freddie Mac plans to keep researching the difference in appraisal values. One factor could be the lack of racial diversity among appraisers: A 2018 study by the Appraisal Institute showed that 85 percent of appraisers were white and 78 percent were men.
[Inman] — Holden Walter-Warner
The post Freddie Mac study of 12 million appraisals shows racial disparity appeared first on The Real Deal Los Angeles.
Powered by WPeMatico