GUEST COLUMN.

A significant body of research shows that contemporary home values are strongly correlated with neighborhood racial composition, and inequalities are influenced by historical segregation, socioeconomic inequality, real estate demand, and appraising practices. In fact, across many US cities, homes in communities where the majority of the population is Black, or Hispanic/Latina are consistently valued at prices lower than homes in predominately White communities.

From a local government perspective, the low valuations decrease the amount of money cities are able to collect from property taxes and then reallocate to deliver essential services. The lack of money available to effectively deliver services has a direct impact on service quality. Ultimately, lower home valuations decrease the number of people who are likely to move to those communities because of the poor quality of services available there.

An article for Freddie Mac found that when appraisals were conducted by the same appraiser, and where the homes had similar structural characteristics and neighborhood amenities, the valuation of White homes were higher than those of Black homes 85% of the time. Similarly, the valuations of White homes were also found to be 74% higher than those of Latina homes.

According to Andre Perry, Jonathan Rothwell and Perry, Rothwell and David Harshbarger in The devaluation of assets in Black neighborhoods – The case of residential property”   parallel disturbing results were also found. The chart below shows eight US cities where the Black share of metropolitan population is, at least, 10 percent or higher. The median value of homes, the median estimate absent of devaluation and the average percentage of devaluation, by city, is also shown.

What do lower valuations of homes in Black and Hispanic/Latina communities mean? From a financial standpoint it is estimated that this amounts to a deficit of $48,000 per home and $156 billion cumulatively in Black and Hispanic/Latina neighborhoods.

Inequities in home appraisals not only affect the current value of the home and potential resale, and refinancing opportunities, but they impede home wealth accumulation. Junia Howell and Elizabeth Korver-Glenn wrote “The increasing effect of neighborhood racial composition on housing values, 1980 – 2015”. They found that a home located in a 100% Black or Hispanic/Latina community in 1980 would be valued at $94,000 (real dollars), but the same house in a community with no Black or Hispanic/Latina population would be worth $145,000. By 2015, the same homes would be valued at $125,000 in a 100% Black or Hispanic/Latina community and valued at $370,000 in a community absent of Black and Hispanic/Latina residents.

 In another words, homes in White communities were worth $245,000 more than comparable homes in communities of color, thus demonstrating the widening of housing inequities between the years 1980 and 2015.

Mean Home Appraisals for White Neighborhoods and Communities of Color: 1980 - 2015

 While the effects of inequitable valuations continue to persist today, they have been imbedded in the fabric of our society and economy for nearly 100 years. One of President Franklin Delano Roosevelt’s New Deal programs was the creation of the Home Ownership Loan Corporation (HOLC) in 1933. To assist appraisers in determining the approximate value of homes, the HOLC classified neighborhoods in different colors based upon four criteria. “The Best,” or the top-ranking neighborhoods, were color-coded green and consisted primarily of wealthy White neighborhoods.

Second in ranking were neighborhoods that were considered “Still desirable” and were colored blue. Blue neighborhoods primarily consisted of middle-class White families.

The third category, colored yellow, were referred to as “Definitely Declining,” and consisted of racially mixed neighborhoods with lower class residents. And the final, fourth category were termed “Hazardous” and were colored red. This process formed the origin of the term “redlining, which is commonly used today to describe the inequitable home valuations that continue to be prevalent.

On January 21, 2025, President Trump issued an executive order “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences,” which additionally instructs all federal agencies to “take all appropriate action with respect to the operations of their agencies to advance in the private sector the policy of individual initiative, excellence, and hard work.” It would be foolish, therefore, for anyone to expect President Trump, or those in his administration, to work on the behalf of minorities’ rights, especially in housing where he was sued by the Department of Justice for housing discrimination.

Contemporary and historical evidence are the great equalizers that lead to truth and ultimately change. Evidence clearly shows that racist policies have placed areas of many US cities in the poor economic position they find themselves now. It is up to those who are interested in equity and social justice to continue working towards dismantling inequities along with social and economic barriers to success for all people.

The contents of this Guest Column are those of the authors, and not necessarily Barrett and Greene, Inc. 

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