The Appraisal Subcommittee (ASC) held its first public hearing on January 24th, 2023. It was made clear that this would be the first of many public hearings, a commendable step forward in addressing residential appraisal bias.
Communities Unlimited, a PRT Partner, tells the story of a community affected by appraisal bias within their footprint: Pine Bluff, Arkansas. The population of Pine Bluff is 76% black/ African American and 18% white. The current median appraised value for owner occupied homes is $78,500. We can compare this to the nearby city of White Hall, with a population that is 70% white and 19% black, and an appraised median value of $170,300. Homes in Pine Bluff appraise significantly lower than homes in White Hall, with appraisers refusing to use comparables from the nearby city of White Hall to adjust to current market rates in the area.
Homeownership is valued in the United States because of its potential to build generational wealth. The effect of appraisal bias is that it devalues the homes of people of color, decrease the equity potential, and takes away from the homeowners’ ability to build generational wealth. Lower appraisal values resulting from appraisal bias can also impact the homeowner’s future purchasing power and the homebuyer’s ability to obtain a mortgage due to discrepancies between appraisal value and asking price. Appraisal bias is magnified in rural and underserved communities where there is a shortage of appraisers. Housing bias is one of many contributing factors for racial disparities in homeownership and wealth and financial well-being between white and communities of color, specifically black communities and must be addressed if we wish to correct the decades of systemic racism within housing policy and the housing industry. Read more here: ASC Appraisal Bias Letter_PRT_Final