Vice President Kamala Harris on Thursday announced a series of new actions designed to root out racial bias from the home appraisal industry, including ensuring the data used in appraisal software doesn’t perpetuate discrimination and making information about home valuations and the race and ethnicity of homeowners available to the broader public.
“For generations, many people of color have been prevented from taking full advantage of the benefits of homeownership,” Ms. Harris said in her announcement. “Today that legacy of inequity persists in part in the home appraisal system.”
Ninety-seven percent of appraisers are white, according to the Bureau of Labor Statistics. Allegations of lowballed values from Black homeowners have created a firestorm of criticism over the past three years, and the actions announced on Thursday build upon two years of work from the Biden administration to tackle the issue.
They include rules that would ensure Automated Valuation Models, the popular software-based tools that determine property values, are not using biased data and thus spitting out biased values; a clearer, industry-consistent pathway for homeowners to challenge what they believe is an unfair appraisal; and increased transparency of federal appraisal statistics. The administration would also publish a dashboard showing which states impose overly stringent requirements for becoming an appraiser, a move Ms. Harris said would reduce unnecessary barriers that deter Black would-be appraisers from entering the industry.
“The appraisal industry is one of the least diverse fields in the country,” said Neera Tanden, domestic policy adviser to President Biden, who joined Ms. Harris on the call. “There is no evidence that heightened requirements produce more accurate, ethical or credible appraisals.”
On average, homes in neighborhoods where residents are majority Black are appraised at half the value of homes in neighborhoods were residents are primarily white. But even in mixed-race neighborhoods, Black homeowners routinely say their homes are valued for less than those of their neighbors. A number of high-profile “whitewashing” experiments, in which Black homeowners have scrubbed their homes of all evidence that a Black family lives there before receiving an appraisal, have drawn attention to the persistent phenomenon of appraisal bias.
In March, Paul Austin and Tenisha Tate-Austin, a Black couple whose home in Marin City, Calif., was valued at nearly $500,000 more on a second appraisal when a white friend posed as the owner, reached a settlement for an undisclosed sum of money with the first appraiser who is white, in a federal housing discrimination lawsuit.
In another high-profile case, the Baltimore-area home of Dr. Nathan Connolly and Dr. Shani Mott, who are Black, was valued at nearly $300,000 more when the couple performed a “whitewashing experiment” in 2021, removing family photos and asking a white colleague to stand in for them.
“Stories like Tenisha and Paul’s are far too common, and they are evidence that systemic change is needed,” Ms. Harris said in her announcement, which was made in a call with reporters on Thursday.
Late last year, after the Federal Housing Finance Agency released a flurry of home appraisal reports for the first time, academic researchers analyzed the data and confirmed what hundreds of Black homeowners have publicly insisted: There is widespread bias across home appraisals in the United States, and homes are routinely assigned a higher value when the occupants are white, and devalued when the occupants are people of color.
Ms. Harris’s announcement comes two years after the Biden administration created PAVE, a 13-agency task force on property appraisal and valuation equity, and one year after that organization laid out a multipronged action plan to tackle the issue of racially biased home appraisals.
There are more actions afoot, as well: Representative Maxine Waters of California has called for both regulators and the real estate industry to hold appraisers who show racial bias to account, and is currently preparing to introduce a bill to Congress that would strengthen penalties against those who violate the law.
“Everyone should be able to take full advantage of their aspiration and their dream of owning a home,” Ms. Harris said Thursday. “Taken together, these are important steps toward a more just and equitable home valuation system.”