A new lawsuit sheds light on racist real estate appraisals

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

This edition of raceAhead was edited by Wandy Felicita Ortiz.

On Point

Texas under fire for new voting map The Justice Department sued Texas yesterday, saying that the redistricting plan that the state’s Republican-led legislature approved in October violates Section 2 of the Voting Rights Act, and “denies Black and Latino voters the equal opportunity to participate in the election process.” Further, that some parts of the plan were created “with discriminatory intent.” It is the second suit in about thirty days, and a signal to other states as they revisit their voting districts.
New York Times

A more equitable way to teach math? Nadine Ebri, a math teacher and tech specialist for Duval County Schools in Florida, is part of a growing number of teachers who are finding more engaging—and some would say more equitable—ways of getting low-income kids of color excited about math. She saw an immediate jump in math scores when she switched to emphasizing real-world problems and collaboration, she reports. But schools are also making bigger changes like collapsing math tracks and adding data science courses. One big question: Should math education include real-world problems, like addressing racial and social inequities? Of course, there’s a fight brewing.
USA Today

Can democracy thrive without a local paper? This has become a fundamental question in a complex age, as the media business falters and local issues become more crucial to understand. Margaret Sullivan raises the alarm in this opinion piece. “Between 2005 and the start of the pandemic, about 2,100 newspapers closed their doors. Since Covid struck, at least 80 more papers have gone out of business, as have an undetermined number of other local publications,” she writes. She cites Youngstown, Ohio, which lost its 150-year-old daily newspaper in 2019. Youngstown “is absolutely the kind of place that needs watchdog reporting,” says Bertram de Souza, the paper’s editorial page editor, “and this newspaper was committed to exposing corruption.” But not if nobody is watching. More in her 2020 book, Ghosting the News: Local Journalism and the Crisis of American Democracy."
Washington Post

On Background: The neighborhood watch

Segregation was a design victory Mark Lopez, an award-winning director of motion design films, has created an outstanding animated short based on The Color of Law: A Forgotten History of How our Government Segregated America, an award-winning book by Richard Rothstein. Rothstein is not new to this conversation; he is a distinguished fellow of the Economic Policy Institute, a senior fellow, emeritus, at the Thurgood Marshall Institute of the NAACP Legal Defense Fund and a senior fellow of the Haas Institute at the University of California at Berkeley. The film explores in an easy-to-understand way how explicit federal, state, and local policies intentionally segregated metropolitan communities across the country throughout the 20th century. His argument, that these provisions were unconstitutional and must be remedied, makes sense but so does the moral argument that hangs in the air: The conditions that made Ferguson’s Michael Brown’s short life so tragic were preventable.
Segregated By Design film

Low-income housing programs are keeping cities segregated This analysis from The New York Times has found that in the country’s largest urban areas, low-income housing projects that rely on federal credits are disproportionately being used to build in majority non-white communities. “What this means, fair-housing advocates say, is that the government is essentially helping to maintain entrenched racial divides, even though federal law requires government agencies to promote integration.” People from more affluent communities, with better schools, services, and amenities, tend to turn out in droves to turn away low-income projects proposed in their zip codes. In one protest letter aiming to stop an affordable home initiative in a more upscale section of Houston, one resident wrote to the Department of Housing and Urban Development, that the approval affordable units would draw an “unwelcome resident who, due to poverty and lack of education, will bring the threat of crime, drugs and prostitution to the neighborhood.”
New York Times

Yes, redlining still needs to be addressed Redlining, the practice of lenders to deny certain communities access to affordable capital based on race, is still very much a thing. This story explores the 2015 HUD settlement with Wisconsin’s largest bank for discrimination against black and Hispanic mortgage borrowers in Wisconsin, Illinois and Minnesota from 2008 to 2010, people who were exactly as credit-worthy as white borrowers on the other side of the red line. But the story is a reminder that historic redlining, which began in the 1930s, is an integral part of the American experience for many people. “If your family was denied a mortgage in the 1930s, or the 1950s, or the 1970s, then you may not have the family wealth or down payment help to become a homeowner today.”
Washington Post

Mood board

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

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet