Racism and the lack of diversity in the appraisal business
Claims about racial bias in appraisals are not new but there are now reports the pandemic has made the situation worse. Recently, researchers digging through millions of appraisals from the Federal Housing Finance Agency found, yet again, evidence of systematic racial bias from appraisers. Higher property values were given to people when they were white, and lower property values were given when the owners were people of color.
In a conversation with Jonathan Miller, president and CEO of appraisal firm Miller Samuel, he says this type of discrimination is probably as prevalent in New York City as it is in rest of the country and blames the lack of diversity in the appraisal business is a key driver of this bias.
There is plenty of historical evidence of racism in NYC with redlining practices from the 1930s still impacting neighborhoods today. Redlining refers to the way neighborhoods with predominantly Black residents were mapped and marked as hazardous for lenders. It meant people in these areas couldn't qualify for loans and missed out on the generational wealth that can be accumulated through ownership. Parts of Brooklyn, Queens, and the Lower East Side, and Harlem lost opportunities for investments as a result of redlining.
Miller blames The Appraisal Foundation, the country's authority on the valuation profession, for not doing more to encourage diversity in the business, and not making it easier for candidates from diverse backgrounds to enter the profession. The Appraisal Foundation say they are committed to rooting out bias and discrimination and now have online training and grants to make a career in appraisals more accessible. Miller argues the change isn't happening fast enough.
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