July 31, 2021

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Homes in Black neighborhoods are undervalued by $46,000 on average | News

(CNN) – A couple of recent real estate studies shed light on how people with color have been consistently disadvantaged in the U.S. real estate market for years, largely missing out on ongoing developments in the country House buying frenzy.

Homes sold in mostly black neighborhoods have been undervalued by an average of $ 46,000 for nearly a decade, according to a Redfin analysis released Wednesday. Redfin, a national discount real estate agent, examined the ratings of more than 73 million single-family homes listed and sold between January 2013 and February 2021 and found a large gap between homes sold in black and white neighborhoods.

“Our analysis rules out all of the factors normally associated with home value and still finds a significant difference between the values ​​of otherwise nearly identical homes in similar black-and-white neighborhoods,” said Redfin Senior Economist and lead author Reginald Edwards. “We are left with bias and systemic racism to explain the variation in house values.”

Systemic discrimination also prevents potential buyers from participating in the real estate boom, according to recent news from the National Association of Realtors Generational trends for home buyers and sellers Report published in March.

Buyer and seller in one bond

The high demand combined with a scarce supply of available houses has led to bidding wars and cash offers exclude First time buyer of all races.

However, the NAR study underscores how disadvantaged people of color are, who are more likely to rely on FHA loans and other financial resources to buy their first homes. The annual homebuyer survey found that black Americans, who make up more than 13% of the US population, made up only 5% of homebuyers from July 2019 to July 2020. This small percentage of the predominantly middle to upper class Black millennials In the first three quarters of last year, the country’s overall black homeowner rate rose 2%.

Latinos, who represent 18% of the country, were only 7% of homebuyers in the twelve months ended July 2020. Asian Americans who make up about 7% of the population and have a median income per capita higher than most white Americansaccounted for 5% of homebuyers through July.

National Association of Realtors chief economist Lawrence Yun said the largest Asian-American communities are mostly in more expensive parts of the country, including states like California and New Jersey, as well as cities like Seattle and New York, which are more difficult to locate House to buy.

Yun also pointed out that a disproportionately large number of mortgage-ready Asian Americans had their income thrown into the river through pandemic shutdowns.

“This is seen as a risk for lenders,” Yun told CNN Business. “Banks don’t want to lend to people with fluctuating incomes.”

How to counter prejudices in housing

On the home sale and valuation side, Edwards recommended that real estate agents take subconscious bias training to ensure buyers with similar home search criteria see the same listings in the same neighborhoods.

He also said that home appraisers need to be more transparent in the appraisal process in order to eliminate discriminatory treatment.

“Let them put it on paper,” he said. “Is it the condition of the appliances? Quality of the upgrades? Architectural features? Appraisers should justify why two similar houses would have such different ratings.”

For home buyers, Yun said increasing the national supply of homes sold will make it more difficult for home sellers to discriminate against qualified buyers.

The new residential construction rose to a 10 year high in January after Spike late last yearBut builders across the country are struggling to keep up with rising demand.

“We need more living space so that multiple offers are not common,” said Yun. “I definitely hope more people can participate in the American Dream. It’s not just a housing issue, it’s a general economic issue.”

Yun also said that people of color who feel like realtors should limit themselves to looking for discriminatory grounds, file a complaint with the Fair Housing Office, and find another agent.

“If people feel they are being discriminated against, report it,” he said. “Right now there are a lot of brokers out there trying to find the client and close the deal. If it’s a bad apple, there are lots of brokers out there who want to serve the best interests of the clients.”