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A new lawsuit sheds light on racist real estate appraisals

December 7, 2021, 8:36 PM UTC

Paul and Tenisha Tate-Austin now have a chance that very few individual Black or people of color have: To prove it. 

And by it, I mean, systemic racism.

Last January, the Bay Area-based couple was shocked when their real estate appraiser valued their home at nearly $500,000 less than a previous appraisal, despite significant improvements in the interim. They decided to pressure test the system. They “whitewashed” their home, removing family photos and certain African American-themed art pieces, and enlisted a white friend to pose as the homeowner. A second appraisal came in closer to the mark at $1,482,500. 

The couple brought their story to California’s reparation task force.

“We did our homework,” Austin said during the task force’s Oct. 13 meeting, and as reported by the San Francisco Chronicle, who broke the story. “We believe the white lady wanted to devalue our property because we are in a Black neighborhood, and the home belonged to a Black family.”

“Now ask yourself how many moments of valuation like this—in job interviews, at their job, in raising money for a business, in conversations with their doctors, in interactions with police—exist in every Black life and what the aggregated consequences are across generations,” said Black List creator and film producer Franklin Leonard, in a comment on Twitter. While this particular example is stark, the reality is often much murkier.

But the math adds up quickly. The Brookings Institute has been working to quantify the cost of racial bias in homeownership and wealth, and their research never fails to shock: Owner-occupied homes in Black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses. Digging more deeply into why, they cite data scientists at Freddie Mac, who analyzed more than 12 million appraisals submitted to the agency from 2015 to 2020. “The research team’s main finding is that homes located in majority Black neighborhoods and majority Latino or Hispanic neighborhoods are significantly more likely to have appraisals submitted to Freddie Mac that are below the contract price when compared to homes in majority white (not Latino or Hispanic) neighborhoods,” they report, specifically some 12.5% in majority Black neighborhoods, and 15.5% in majority Latino or Hispanic neighborhoods.

And, Black homeowners are also exiting the pandemic having faced more economic emergencies with fewer resources with which to weather them.

But now, Austin and Tate-Austin have a chance to make their case, quite literally.

The couple filed a fair housing lawsuit in federal district court last week against the appraiser, Janette Miller, her appraisal firm Miller and Perotti Real Estate Appraisers, Inc., and national appraisal company AMC Links, LLC.

And they’ve gotten national attention, thanks to a chance to share their story with a reparations-focused agency and an eagle-eyed reporter. California’s reparations task force would have a monumental job at any time, but with the ongoing critical race theory hysteria, the headwinds feel extreme. 

Still, know hope. While state legislatures are barring teachers from using words like “diversity,” “cultural appropriation,” “anti-bias training” and “equity,” at least they’ve not erased the term “home equity.”

At least, not yet.

Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com

This edition of raceAhead was edited by Wandy Felicita Ortiz.

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Mood board

Aerial photograph of Pearl Harbor, Honolulu, Hawaii, on December 7, 1941.
Corbis/Getty Images

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