5 ms·

Home appraised with a Black owner: $472K. With a White owner: $750K

29 points by guiambros 4y ago

mensetmanusman 4y ago
Ban subjective appraisers.
- ericmay 4y ago
  How would you appraise a property objectively? I mean yea you can look at comps, bedrooms/bathrooms/sqft and other factors but even if you did that you don’t necessarily account for the total value of the property… just curious on a discussion about that.
  - mensetmanusman 4y ago
    Materials, age, accessories, size, volume, average regional income, supply, demand, speed of sale…
    - ericmay 4y ago
      Is a house in a walkable neighborhood worth more than one in the suburbs? What if the schools aren’t great? What if you don’t plan on having kids? What if you already have kids? Is an American Foursquare more valuable than an Italliante? How much is a view of the water worth? Or proximity to a park? How do you objectively measure those things? It seems like it’s a risk for manipulation.
robocat 4y ago
https://archive.ph/WvYYG https://archive.ph/WvYYG
dontreact 4y ago
This will now be my favorite example of anyone who says people are not affected by racism in the US anymore.
- teakettle42 4y ago
  Home appraisal is arbitrary and subjective — ridiculously so. All this particular stunt shows is that two appraisers can and will appraise a home wildly differently — which anyone who has their home appraised already knew.
  - dontreact 4y ago
    It would be nice if more of the burden of proof were on subjective systems that historically have been full of racial bias, rather than on the communities that have historically suffered from the effects of the discrimination. This is not an isolated incident, there are dozens of lawsuits and the study from the Brookings institute linked elsewhere in this thread.
    - teakettle42 4y ago
      I don’t think it would actually be nice if the burden of proof rested on the accused. This example isn’t a study of systemic bias, and is both individually and statistically meaningless. It would be nice, however, if the paper of record didn’t call out a home appraiser, by name, in front of a national audience, with no evidence, as being a racist.
      - dontreact 4y ago
        I think you’ve totally ignored A) the historical evidence about discrimination at every level in the housing system B) the study from the brookings institute showing bias with housing appraisal I’m also not claiming all of the burden of proof should lie with the accused. What I am saying is given the anecdotes, lawsuits, and retrospective analysis, I think it’s fair to put more pressure on the system to help with investigating the issue more systematically. Getting the type of statistical evidence you are talking about is expensive and I think there are enough indications that 0% of the cost seems like too low of a cost to expect a huge industry to cover.
        4y ago
marris 4y ago
I first heard about black owner appraisal discrimination almost a year ago, and I tried to find studies of this phenomenon. The closest thing I could find was this study by Brookings (https://www.brookings.edu/research/biased-appraisals-and-the-devaluation-of-housing-in-black-neighborhoods/ https://www.brookings.edu/research/biased-appraisals-and-the...) which found that homes in black neighborhoods are appraised at lower values than structurally comparable homes in non-black neighborhoods. I have not seen a study of the situation described in this article, where the owner swaps family photos and asks a non-black friend to meet the appraiser. Does anyone know of a study? I am interested in whether this effect is real and any attempts to quantify its magnitude. There have been numerous articles like this one, but I fear that they suffer from publication bias (no one prints the article where the black owner received the same or higher appraisal), and the presented sample size is always small.
jchonphoenix 4y ago
I've worked in the housing industry. The unfortunate reality here is that it's really hard to tell if discrimination actually happened because appraisals are all fluff anyway and that kind of a difference between two different appraisers isn't at all surprising. It's quite possible they got a conservative appraiser who didn't understand the neighborhood and market and played to caution. You'd be surprised how often this happens. Just removing personal effects from the home tends to up the appraisal rate by itself. The only way to really know if this is discrimination is to have the same appraiser appraise a model match of the house itself on a similar timescale with someone different answering the door. But you almost never get the chance to run the same experiment twice.
macdaknife 4y ago
In Maryland, the amount of taxes you pay each year is directly tied to the valuation. So that means the white owners (in this case) are paying 63% more in property tax each year.
systemvoltage 4y ago
This is far less convincing than a systematic study with statistical significance. Here, no matter how convincing the story is, the sample size is one and standard deviation is infinite. NYTimes comment section echoes this: > One data point hardly proves anything. There could be any number of reasons. Maybe the appraiser was incompetent, maybe he was having a bad day, may he was sloppy with his work that day. But one anecdotal example does not prove anything. So these people did get an inaccurate appraisal. But they've hardly put together enough evidence to support their accusation of racism. If this appraiser showed a pattern of consistently undervaluing black-owned properties, then it might be a different story. You can't make this argument based on one isolated example. That said, I am pretty sure subjectivism in appraisal process has tons of biases, not just for race, but appraiser's favorite architectural style to whether it was a rainy day.
fzfaa 4y ago
- UncleEntity 4y ago
  Do what this couple did and move to a predominantly white neighborhood? In this case that’s not even a consideration because it’s not like African-American families “taint” a house like if, say, a family was murdered there in 1962. If they were selling the house they (everyone, really) should remove all evidence of the current owners so potential buyers can imagine themselves in the home — at least according to the tv shows my mom loves to watch.
- roflyear 4y ago
  The point is that there is an issue not that there is a clear solution.
refurb 4y ago
If true, this sounds like an amazing arbitrage opportunity? Buy a home at a 33% discount from a black owner, then sell it as a white owner for an instant profit. No doubt people are lined up to do this right now.
- UncleEntity 4y ago
  It doesn’t really matter what the house is appraised at, the only way to tell its true value is what someone is willing to buy it for. Not some theoretical number either, what someone gives them actual cash money in exchange for the deed for. Anything other than that is just, like, someone’s opinion, man…
  - refurb 4y ago
    Right, it’s only an appraisal, but mortgages are dependent on appraisals so you’d expect it to push the actual selling price down.
- nexthash 4y ago
  Yes, it is called the gentrification of minority neighborhoods.
- roflyear 4y ago
  Is this a snide way to suggest it is false?
  - refurb 4y ago
    Absolutely not. The NY Times would never run a story that wasn't fully vetted and bullet proof in terms of facts.
    - roflyear 4y ago
      Boring.
      - 4y ago
gwern 4y ago
It's worth noting that the NYT fails to include any kind of the usual background establishing that there is a real effect here; the one link they provide, to their own past reporting on the wild inaccuracy of home appraisals in general, shows that you can trivially manufacture these sorts of differences: https://www.nytimes.com/2012/05/09/realestate/commercial/appraisals-overvalue-real-estate-study-finds.html https://www.nytimes.com/2012/05/09/realestate/commercial/app... > In general, appraisals overvalued the properties, the study found. Of the 2,076 properties it examined, 64 percent were appraised at values that exceeded the sale price, by a total of $1.4 billion, while 35.5 percent were appraised at less than the sale price, by a total of $661 million. At the extremes, in 121 instances, appraised value was >200% sale price, and in 132 examples, the appraisal was <70% of the sale price. It is like “a game of horseshoes and throwing grenades,” the authors wrote of the results. “Close is good enough.”
- rayiner 4y ago
  Many smart, credentialed people are no savvier when it comes to anything involving math than a random yokel in West Virginia. They literally turn their brains off if numbers or statistics comes up. I mean, the people who wrote and edited this article have college degrees! From good schools probably—it’s hard to get jobs at the New York Times! I wouldn’t be surprised if the assertion in the article was correct! Home appraisal seems like an obvious area where bias could creep in. But the article doesn’t change the odds ratio of that conjecture being correct at all.
pyuser583 4y ago
If Americans are racist, then couldn’t we easily have a situation where the actual free market value of a house is lower for a Black owner than a white/Japanese owner? If the demand is lower (due to racism), but supply is similar, doesn’t that produce lower free market values?

29 points by guiambros 4y ago

mensetmanusman 4y ago

Ban subjective appraisers.

ericmay 4y ago
How would you appraise a property objectively? I mean yea you can look at comps, bedrooms/bathrooms/sqft and other factors but even if you did that you don’t necessarily account for the total value of the property… just curious on a discussion about that.
- mensetmanusman 4y ago
  Materials, age, accessories, size, volume, average regional income, supply, demand, speed of sale…
  - ericmay 4y ago
    Is a house in a walkable neighborhood worth more than one in the suburbs? What if the schools aren’t great? What if you don’t plan on having kids? What if you already have kids? Is an American Foursquare more valuable than an Italliante? How much is a view of the water worth? Or proximity to a park? How do you objectively measure those things? It seems like it’s a risk for manipulation.

robocat 4y ago

https://archive.ph/WvYYG https://archive.ph/WvYYG

dontreact 4y ago

This will now be my favorite example of anyone who says people are not affected by racism in the US anymore.

teakettle42 4y ago
Home appraisal is arbitrary and subjective — ridiculously so. All this particular stunt shows is that two appraisers can and will appraise a home wildly differently — which anyone who has their home appraised already knew.
- dontreact 4y ago
  It would be nice if more of the burden of proof were on subjective systems that historically have been full of racial bias, rather than on the communities that have historically suffered from the effects of the discrimination. This is not an isolated incident, there are dozens of lawsuits and the study from the Brookings institute linked elsewhere in this thread.
  - teakettle42 4y ago
    I don’t think it would actually be nice if the burden of proof rested on the accused. This example isn’t a study of systemic bias, and is both individually and statistically meaningless. It would be nice, however, if the paper of record didn’t call out a home appraiser, by name, in front of a national audience, with no evidence, as being a racist.
    - dontreact 4y ago
      I think you’ve totally ignored A) the historical evidence about discrimination at every level in the housing system B) the study from the brookings institute showing bias with housing appraisal I’m also not claiming all of the burden of proof should lie with the accused. What I am saying is given the anecdotes, lawsuits, and retrospective analysis, I think it’s fair to put more pressure on the system to help with investigating the issue more systematically. Getting the type of statistical evidence you are talking about is expensive and I think there are enough indications that 0% of the cost seems like too low of a cost to expect a huge industry to cover.
      - 4y ago

marris 4y ago

I first heard about black owner appraisal discrimination almost a year ago, and I tried to find studies of this phenomenon. The closest thing I could find was this study by Brookings (https://www.brookings.edu/research/biased-appraisals-and-the-devaluation-of-housing-in-black-neighborhoods/ https://www.brookings.edu/research/biased-appraisals-and-the...) which found that homes in black neighborhoods are appraised at lower values than structurally comparable homes in non-black neighborhoods. I have not seen a study of the situation described in this article, where the owner swaps family photos and asks a non-black friend to meet the appraiser. Does anyone know of a study? I am interested in whether this effect is real and any attempts to quantify its magnitude. There have been numerous articles like this one, but I fear that they suffer from publication bias (no one prints the article where the black owner received the same or higher appraisal), and the presented sample size is always small.

jchonphoenix 4y ago

I've worked in the housing industry. The unfortunate reality here is that it's really hard to tell if discrimination actually happened because appraisals are all fluff anyway and that kind of a difference between two different appraisers isn't at all surprising. It's quite possible they got a conservative appraiser who didn't understand the neighborhood and market and played to caution. You'd be surprised how often this happens. Just removing personal effects from the home tends to up the appraisal rate by itself. The only way to really know if this is discrimination is to have the same appraiser appraise a model match of the house itself on a similar timescale with someone different answering the door. But you almost never get the chance to run the same experiment twice.

macdaknife 4y ago

In Maryland, the amount of taxes you pay each year is directly tied to the valuation. So that means the white owners (in this case) are paying 63% more in property tax each year.

systemvoltage 4y ago

This is far less convincing than a systematic study with statistical significance. Here, no matter how convincing the story is, the sample size is one and standard deviation is infinite. NYTimes comment section echoes this: > One data point hardly proves anything. There could be any number of reasons. Maybe the appraiser was incompetent, maybe he was having a bad day, may he was sloppy with his work that day. But one anecdotal example does not prove anything. So these people did get an inaccurate appraisal. But they've hardly put together enough evidence to support their accusation of racism. If this appraiser showed a pattern of consistently undervaluing black-owned properties, then it might be a different story. You can't make this argument based on one isolated example. That said, I am pretty sure subjectivism in appraisal process has tons of biases, not just for race, but appraiser's favorite architectural style to whether it was a rainy day.

fzfaa 4y ago

UncleEntity 4y ago
Do what this couple did and move to a predominantly white neighborhood? In this case that’s not even a consideration because it’s not like African-American families “taint” a house like if, say, a family was murdered there in 1962. If they were selling the house they (everyone, really) should remove all evidence of the current owners so potential buyers can imagine themselves in the home — at least according to the tv shows my mom loves to watch.
roflyear 4y ago
The point is that there is an issue not that there is a clear solution.

refurb 4y ago

If true, this sounds like an amazing arbitrage opportunity? Buy a home at a 33% discount from a black owner, then sell it as a white owner for an instant profit. No doubt people are lined up to do this right now.

UncleEntity 4y ago
It doesn’t really matter what the house is appraised at, the only way to tell its true value is what someone is willing to buy it for. Not some theoretical number either, what someone gives them actual cash money in exchange for the deed for. Anything other than that is just, like, someone’s opinion, man…
- refurb 4y ago
  Right, it’s only an appraisal, but mortgages are dependent on appraisals so you’d expect it to push the actual selling price down.
nexthash 4y ago
Yes, it is called the gentrification of minority neighborhoods.
roflyear 4y ago
Is this a snide way to suggest it is false?
- refurb 4y ago
  Absolutely not. The NY Times would never run a story that wasn't fully vetted and bullet proof in terms of facts.
  - roflyear 4y ago
    Boring.
    - 4y ago

gwern 4y ago

It's worth noting that the NYT fails to include any kind of the usual background establishing that there is a real effect here; the one link they provide, to their own past reporting on the wild inaccuracy of home appraisals in general, shows that you can trivially manufacture these sorts of differences: https://www.nytimes.com/2012/05/09/realestate/commercial/appraisals-overvalue-real-estate-study-finds.html https://www.nytimes.com/2012/05/09/realestate/commercial/app... > In general, appraisals overvalued the properties, the study found. Of the 2,076 properties it examined, 64 percent were appraised at values that exceeded the sale price, by a total of $1.4 billion, while 35.5 percent were appraised at less than the sale price, by a total of $661 million. At the extremes, in 121 instances, appraised value was >200% sale price, and in 132 examples, the appraisal was <70% of the sale price. It is like “a game of horseshoes and throwing grenades,” the authors wrote of the results. “Close is good enough.”

rayiner 4y ago
Many smart, credentialed people are no savvier when it comes to anything involving math than a random yokel in West Virginia. They literally turn their brains off if numbers or statistics comes up. I mean, the people who wrote and edited this article have college degrees! From good schools probably—it’s hard to get jobs at the New York Times! I wouldn’t be surprised if the assertion in the article was correct! Home appraisal seems like an obvious area where bias could creep in. But the article doesn’t change the odds ratio of that conjecture being correct at all.

pyuser583 4y ago

If Americans are racist, then couldn’t we easily have a situation where the actual free market value of a house is lower for a Black owner than a white/Japanese owner? If the demand is lower (due to racism), but supply is similar, doesn’t that produce lower free market values?