Home appraised with a Black owner: $472K. With a White owner: $750K
nytimes.com
nytimes.com
The unfortunate reality here is that it's really hard to tell if discrimination actually happened because appraisals are all fluff anyway and that kind of a difference between two different appraisers isn't at all surprising. It's quite possible they got a conservative appraiser who didn't understand the neighborhood and market and played to caution. You'd be surprised how often this happens. Just removing personal effects from the home tends to up the appraisal rate by itself. The only way to really know if this is discrimination is to have the same appraiser appraise a model match of the house itself on a similar timescale with someone different answering the door. But you almost never get the chance to run the same experiment twice.
> In general, appraisals overvalued the properties, the study found. Of the 2,076 properties it examined, 64 percent were appraised at values that exceeded the sale price, by a total of $1.4 billion, while 35.5 percent were appraised at less than the sale price, by a total of $661 million. At the extremes, in 121 instances, appraised value was >200% sale price, and in 132 examples, the appraisal was <70% of the sale price. It is like “a game of horseshoes and throwing grenades,” the authors wrote of the results. “Close is good enough.”
I mean, the people who wrote and edited this article have college degrees! From good schools probably—it’s hard to get jobs at the New York Times!
I wouldn’t be surprised if the assertion in the article was correct! Home appraisal seems like an obvious area where bias could creep in. But the article doesn’t change the odds ratio of that conjecture being correct at all.
NYTimes comment section echoes this:
> One data point hardly proves anything. There could be any number of reasons. Maybe the appraiser was incompetent, maybe he was having a bad day, may he was sloppy with his work that day. But one anecdotal example does not prove anything. So these people did get an inaccurate appraisal. But they've hardly put together enough evidence to support their accusation of racism. If this appraiser showed a pattern of consistently undervaluing black-owned properties, then it might be a different story. You can't make this argument based on one isolated example.
That said, I am pretty sure subjectivism in appraisal process has tons of biases, not just for race, but appraiser's favorite architectural style to whether it was a rainy day.
Does anyone know of a study? I am interested in whether this effect is real and any attempts to quantify its magnitude.
There have been numerous articles like this one, but I fear that they suffer from publication bias (no one prints the article where the black owner received the same or higher appraisal), and the presented sample size is always small.
All this particular stunt shows is that two appraisers can and will appraise a home wildly differently — which anyone who has their home appraised already knew.
This is not an isolated incident, there are dozens of lawsuits and the study from the Brookings institute linked elsewhere in this thread.
It would be nice, however, if the paper of record didn’t call out a home appraiser, by name, in front of a national audience, with no evidence, as being a racist.
A) the historical evidence about discrimination at every level in the housing system
B) the study from the brookings institute showing bias with housing appraisal
I’m also not claiming all of the burden of proof should lie with the accused.
What I am saying is given the anecdotes, lawsuits, and retrospective analysis, I think it’s fair to put more pressure on the system to help with investigating the issue more systematically.
Getting the type of statistical evidence you are talking about is expensive and I think there are enough indications that 0% of the cost seems like too low of a cost to expect a huge industry to cover.
If you want the state to fund systematic investigation of systemic crimes, then fine.
> I’m also not claiming all of the burden of proof should lie with the accused.
None of the burden of proof should lie with the accused.
So I think we are probably aligned that Government Sponsored Enterprises should be spending some time looking into this given the (weaker) evidence that's already there.
If systemic issues with appraisal are found there, it seems fair to me that there should be some regulation and/or state-sponsored investigation of whether the same systemic issues are happening with purely private appraisal.
People do a bad job all the time, and people are assholes all the time. This is what makes the entire thing so tricky: if we could clearly identify what is or isn't racism then we could simply investigate allegations, fine people, and the problem would be solved in a year. But we can't; all we can do is do some sort of broad study and say that in general there may be some racism at play, and even doing that well is hard because there's loads of factors to control for.
If he had done ten of these appraisals and the "black family" ones consistently came out lower than the "white family" ones then yeah, that's pretty clear-cut. But two? It doesn't prove anything.
Buy a home at a 33% discount from a black owner, then sell it as a white owner for an instant profit.
No doubt people are lined up to do this right now.
Anything other than that is just, like, someone’s opinion, man…
If the demand is lower (due to racism), but supply is similar, doesn’t that produce lower free market values?
Is an American Foursquare more valuable than an Italliante?
How much is a view of the water worth? Or proximity to a park?
How do you objectively measure those things? It seems like it’s a risk for manipulation.