The racial imbalance in home values has shown little sign of progress over the past eight years.
Homes in black neighborhoods – made up of 50% or more black residents – are worth an average of $ 45,382 less than comparable properties in white neighborhoods, according to Redfin. While the average disparity decreased from $ 45,573 in 2013 to $ 40,652 in 2020, the data did not follow a steady improvement path over this period. Additionally, the small sample average of 2021 with an undervaluation of $ 55,126 through February isn't an encouraging start to the year.
The real estate agent and data provider based its study on over 7.3 million home sales from 2013 to 2021 in the 10% most populous cities in the United States.
At the subway level, Buffalo, NY had the worst undervaluation at 86%, followed by 72% in Memphis, Tennessee, and Indianapolis, and 67% in Rochester, NY. Conversely, Nashville, Tennessee and Oklahoma City had 1% undervaluation, with Tallahassee, Florida and Durham, NC, 3% and 4% respectively.
"In many cases, in today's marketplace, policies are discriminatory and designed to anchor racial wealth and justice, thereby excluding color communities and other underserved communities from access to credit and home ownership," said Morgan Williams, general counsel at National Fair Housing Alliance said in an interview. "These practices abuse the market in so many ways that solving the problem requires breaking down the discrimination and bias in these various facets."
These undervaluations, passed on by the now illegal redlining practices, build up over time, perpetuating the racial wealth gap that is expected to widen as the pandemic rebounds. As judgment biases continue to emerge, software developers have developed automation tools that promise to combat racial discrimination in such analyzes. Beyond the individual homeowner, falsely low property values lead to lower taxes and a lack of community funding and investment for these black neighborhoods.
Across the board, black borrowers face the lowest access rates to home finance, lose the most money over the life of a mortgage, and bear the greatest risk of damage from natural disasters.
Recently the Biden government resumed the various effects and positively promoted the rules for fair living. The unequal impact rule allows borrowers to charge discrimination fees if lenders fail to comply with industry regulations and credit guidelines. AFFH legislation enforced accountability at the local level to resolve segregated housing patterns and overcome previous redlining practices. The Trump administration had previously cleared both rules.
"There are no policies that make people less biased. We need to see a major cultural shift in the way homebuyers view predominantly black neighborhoods," Redfin chief economist Daryl Fairweather said in the report. "It appears still stigma against mostly black neighborhoods, and the longer black Americans have lower home values than their white counterparts, the longer they lack wealth that could be used for other investments and passed on to their children. "