Black homeowner has white friend stand in for third appraisal. Value doubles.
indystar.com
indystar.com
Instead it was the same behavior happening to a different homeowner.
https://www.nytimes.com/2020/08/25/realestate/blacks-minorit...
Sorry but this N=1 is barely interesting and is nothing more than fodder for confirmation bias. At best it's an indication of a research direction.
I get that there's lots of evidence that Black people get discriminated against but putting anecdotes on a pedestal to drive clicks and outrage should be stopped.
So you understand that it happens, you just wish people would stop talking about it?
This is your classic N=1 sample size. But what can explain why one had a tour, and the other was lied to? You can invent a lot of things if you insist on giving them the benefit of the doubt, but the easiest explanation is discrimination.
In the case of the OP, there's no reason provided to suspect racism. Merely the correlation created by two or three data points. That's grossly insufficient for drawing such a link and it's also where the article crosses over into outrage stoking and irresponsible borderline misinfo more than anything.
Now doing the above is quite a bit of work, so it's believable that appraisers simply use their experience and 'gut instinct' to determine the value of the neighborhood without actually going out and doing research. If their past experience tells them that houses in black neighborhoods sell for less, then they'll appraise a house with a black owner as valuable.
This isn't racism per se by the appraiser, but it is however discrimination based on race.
It's quite possible that a less lazy appraiser would have realized the neighborhood still rated X price instead of 2X price.
It is discrimination in your hypothetical where you've presupposed that discrimination played a causal role in the appraisal price.
There's no reason to suspect that discrimination played a role in this actual particular case, absent additional information.
Incompetence of the final appraiser or any number of explanations could fit.
You have to realize the layers of selection filters that are at work here:
- Someone is on the lookout for evidence of discrimination
- Someone reports a suspect case to a journalist
- Journalist decides to write an article
- HN user decides to post the article
- HN article gets upvoted and gets to front page
It's like a sales funnel. At each step, even if there isn't any discrimination, it's only the cases that are the most egregious (due to any number of causes, chance being a large one) that do not get pruned by the filters and therefore make it to the final step. Statistical variance can push through a large number of such articles.
That's why this isn't evidence, not even suggestive evidence. We're ignorant of all the filters that led to this last step. The only way to address cases like this where there isn't explicit evidence of discrimination (e.g. chat logs, recording, whatever), is to precommit to a methodology and then go from there. This is what's been done to good effect with things like policing.
This is all fine by me, as we're in a casual setting but if you do demand rigor in general.
I see that you're not convinced, but isn't this annectodate enough to prompt an actual study of discrimination in house appraisals carried out by government agents with a strict methodology like you'd prefer?
Last year I saw the following story, this seemed a second data point:
https://www.nytimes.com/2020/08/25/realestate/blacks-minorit...
To me the salient point is that property appraisals are clearly bullshit in the U.S. if they vary this widely in such a short timespan.
And thus ripe for disruption with tech that provides a mere ounce of accountability on the appraiser / appraisal process.
If you have decided that discrimination is the most likely explanation and don't bother collecting information or looking at other possibilities, of course it will end up being the best fitting explanation.
This is circular logic.
The wife spoke with another buyer who tricked her.
The agent was busy or lazy around 3PM
The agent didn't like something about the wife other than race, e.g. attitude, attire, cheap car ect.
I remember when this same approach was employed until police bodycam footage taught us some cops do just go into a black neighborhoods and plant drugs on poor black people that are innocent, etc...
I guess some people find it unbelievable that one of the most racist countries in human history is the same country they live in, must be nice. Whitewashing history helps in this process.
It's merely variance that gets attributed to racism post hoc. That's why in an example like this you need large N to establish what's actually going on.
If you have a large N and the price goes up 150/200 times and down 50/200 times, then you have some evidence.
Unless of course there's some extra information pertaining to the N=1 case that can help you make that determination with a small N. But such info wasn't provided in the article.
I've found no kind of federal regulation, no industry/trade/lobbying groups, only state-based certification bodies perfectly positioned for corruption and lack of checks on their work.
This would seem to have implications for every U.S. property owner.
Imagine an article about a recent mugging in the park. The point is to inform residents so they know to be wary, not necessarily to present study data on crime rates.
Appraisal is very difficult to do well, and different appraisers have different ideas about market trends (part of the reason for my wildly differing appraisals were different expectations for property appreciation in the neighborhood).
They gloss over this part. What did they remove exactly? 90% of real estate agents would tell you stage the house before attempting to sell it so you can expand your potential buyer pool and get the most value out of it.
Ninja edit: Anyone else find it crazy the value went from $100k in 2017 to $259k in 3 years? Absolute insanity to go up $160k in three years.
You should take a look at the Austin Texas housing market between 2008-2012
No Canadian will find this crazy!
We're looking to rent a house. More space for us and our pets. This means dealing with people more directly (through a broker). People have biases. More specifically, people can be racist.
My wife (white) apply for a home rental on my (black, Latino) behalf precisely for the same reason. I applied for one myself.
She got a call back next day. I still haven't gotten a call back. Racism? Busy realtor? Who knows?
"Urban’s latest study, published in 2012, found that while instances of overt “door-slamming” discrimination had continued to drop, real estate agents and rental housing providers recommend and show fewer available homes and apartments to minorities than equally qualified whites."
On one hand, yes, having the last appraisal that was apparently conducted for a white family come in higher is a huge red flag.
On the other hand, I’ve had drastically different appraisals come back on my own home (~30% delta) and note that the lower appraisals were in early 2020 while the higher appraisal was almost a year later. A lot can happen in even a “normal” real estate market in a year, and 2020 was in no way normal.
I wouldn't be surprised at all if Duffy's suspicions are confirmed by further data. However, I would still like to see the data. A Brookings study is referenced, but not much is said about it.
Boston made some good points in his defense as well. Who was the third appraiser and what was his methodology?
"To get that one, Duffy, who is African American, communicated with the appraiser strictly via email, stripped her home of all signs of her racial and cultural identity and had the white husband of a friend stand in for her during the appraiser's visit."
She's saying she stripped it of all signs of her racial and cultural identity--but note that this means she stripped it of all signs of her identity, period. It's known in real estate that one should strip signs of one's identity when selling a house as this makes it easier for a prospective buyer to picture themselves in the house.
Lacking a control renders this completely useless information.
(And it's also possible that something she stripped out was making the home seem unattractive.)
I would expect that to have an impact on the listing price and the time it was on the market - but not on appraisal.
Can somebody racist fill me in on which features of this person's appearance are allegedly responsible for this situation?
Without accusing the appraisers of racism, I doubt that the majority of petty racists are aware of their racism. If you take exception with a specific behavior (again without accusing or condemning) it isn't uncommon for someone to reflexively reply, "I'm not a racist!". Very few people are consciously racist, yet discrimination happens.
If race did play a role in the appraisal value, it could have been subconscious.
Discrimination Type Ia: Judging people as individuals regardless of what group a person is in based on empirical evidence. (Ideal. Can be cost-prohibitive to gather the information.)
Discrimination Type Ib: Judging individuals based on empirical evidence on the group they are part of. (Less than ideal, but often less costly than Type Ia.)
Discrimination Type II: Judging individuals with no basis in empirical evidence but solely based on personal bias or aversion to members of certain groups. (Racism and prejudice.)
Each of these behaviors has different qualities, different causes, and in the case of the difference between Ib and II different responses needed from society.
If it is Ib, the problem is one of information. If it is II, the problem lies with the individual.
I have to say, this feels an awful lot like Type II in this particular case. The article doesn't make a good case for "systemic racism," though. The overall practice may be poor economic incentives leading to Type Ib discrimination. That can be fixed with easier to digest data.
This is because the costs, in the case of getting appraisals wrong across the board, actually can and do hit the lenders' bottom lines. But if they don't know that, they won't correct.
Classifications are not mine, they are Thomas Sowell's from Discrimination and Dispariites.
Who appraises the appraisers?
They are required for loans and insurance. Even if you only need a $25K loan for a new kitchen, loan-to-value ratio may be the difference between getting one or not, or a big difference in interest rate you pay.
In my state/county, the appraisal you get for selling/buying and the appraisal that is done for taxation purposes are not the same thing.
The county does taxation assessments separately, without any input from the homeowner, and only at certain intervals (5 years I think). They also tend to be lower than the market value, at least in the post-2008 market.
I think it tends to be lower in part to give homeowners a break and in part because they can't assess the quality of the structure, only the land area. So if you've done interior improvements, it obviously won't be captured in the value.
Also some states like Oregon have laws that keep the tax rates low even in the face of higher appraisals. I only pay tax on about half my house's appraised value when I bought it. Not sure about Indiana.