Black and Latino homeowners in Philly face discrimination when appraisers assess their properties
Home appraisal bias is a pressing issue that exacerbates racial wealth disparities in the United States, particularly affecting Black and Hispanic communities. Research has shown that homes in these neighborhoods are often appraised below their market value compared to homes in predominantly white areas, a phenomenon that can significantly hinder access to mortgages and equity for families of color. This bias not only perpetuates existing inequalities but also violates the Fair Housing Act of 1968, which was designed to eliminate discrimination in housing based on race and other factors. Despite the Act’s passage, home appraisal discrimination persists, fueled by a lack of transparency in the appraisal process and a predominantly white appraisal workforce—94% of appraisers in the U.S. are white.
In Philadelphia, recent studies reveal that appraisal bias is a significant barrier for homeowners of color. Utilizing data from the Home Mortgage Disclosure Act, researchers found that collateral issues—often determined by appraisals—were a more common reason for denied cash-out refinance applications for nonwhite homeowners. This trend underscores a systemic issue where racial disparities in home valuation can prevent families from accessing the financial benefits of homeownership. Local initiatives, such as Philadelphia’s Home Appraisal Bias Program, aim to address these disparities by increasing the diversity of appraisers, enhancing appraisal transparency, and educating consumers about their rights. However, the burden of combating this bias increasingly falls on local governments and advocacy groups, especially as federal efforts to address housing discrimination have diminished in recent years.
To combat home appraisal bias effectively, experts suggest several potential solutions. Establishing a national database for appraisals, similar to the Home Mortgage Disclosure Act for loan applications, could enhance transparency and accountability in the appraisal process. Homeowners should also be informed about how appraisals are conducted and their rights to contest appraised values they believe are inaccurate. Raising public awareness about the implications of appraisal bias and the steps to take when it occurs is crucial. Although the federal government has scaled back its role in enforcing fair housing laws, individuals who believe they have experienced appraisal bias can still file complaints with the Department of Housing and Urban Development (HUD) or local fair housing agencies. As communities strive for equity in housing, it is essential to address these disparities to ensure fair access to homeownership and the wealth-building opportunities it provides.
Home appraisal bias contributes to racial wealth disparities and violates the Fair Housing Act.
Jeff Fusco/The Conversation U.S.
,
CC BY-SA
For most families, owning a home is the primary way
to accumulate wealth
and transfer that wealth to future generations.
But in Philadelphia and
other U.S. cities
, studies have shown that if you live in a Black or Hispanic neighborhood, your home is more likely to be
appraised below its market value
when compared to homes in non-Hispanic white neighborhoods. This is called home appraisal bias.
An appraisal represents an expert opinion
of the value of a home
. It is determined by a licensed professional who applies industry standard rules and practices.
The appraisal is critical to securing a mortgage to purchase a home or to refinancing an existing mortgage. It can determine whether an applicant gets a mortgage and influence how much the mortgage costs. For example, if a borrower must take out a mortgage for more than 80% of a property’s value, they may be required to pay for private mortgage insurance in some cases. Getting the appraisal value right is key to ensuring that homebuyers and those seeking to refinance a mortgage can do so under fair and equal conditions.
We are two academics who study
urban places
and
the people who live in them
. Together, we have more than 80 years of experience working at federal civil rights agencies, teaching at research universities and consulting for the housing industry, city and state agencies, and nonprofits.
Most recently we have been working with Philadelphia Mayor Cherelle Parker on a plan to
reduce racial bias in home appraisals in Philly
.
Fair Housing Act of 1968
In 1968, President Lyndon Johnson signed the
Fair Housing Act
, which made it unlawful to deny housing based on race, color, religion or national origin. Congress added sex in 1974 and handicap and familial status in 1988.
The Fair Housing Act was passed just seven days
after the assassination of the Rev. Martin Luther King Jr.
and two months after the release of the
Kerner Commission report
. This federal report examined the causes of racial violence in the U.S. in the 1960s and concluded, “Our nation is moving toward two societies, one black, one white, separate and unequal.”
Passage of the Fair Housing Act did not end housing discrimination. But over the years,
residential segregation has declined slowly
, and the most egregious and overt discriminatory acts, such as
cross burnings and blockbusting
, rarely happen anymore.
In recent years, attention has focused on racial disparities in home valuation established by appraisals. This reflects, in part, some high-profile, public allegations of racial bias in appraising revealed through homeowners’ “
whitewashing” of their homes
.
Whitewashing describes how a Black homeowner who receives a low appraisal removes all signs that a Black person lives in a home, replaces family photos with photos of white people, and has a white friend at home when a second appraiser arrives, giving the impression that it is the home of a white family. Bias is revealed when the second appraisal produces a higher value than the first.
The fact that
94% of appraisers and assessors in the U.S. are white
may be a contributing factor.
Appraisal discrimination is unfair, contributes to racial wealth disparities and violates the Fair Housing Act.
Home appraisal bias is a national issue
Multiple studies establish that homes in Black and brown neighborhoods across the U.S., all else equal, are
valued less than comparable homes in white neighborhoods
. Appraisal bias is just one factor in this, as are historical and contemporary
redlining
and real estate practices, individual choices and other factors.
One way to identify appraisal discrimination would be to compare how often appraisals are below agreed-upon sale prices in nonwhite neighborhoods compared to white neighborhoods. Our research has documented that
appraisals themselves
are sometimes
biased representations of home values
.
Nationally, the percentage of appraisals below the sale price is
substantially greater in nonwhite neighborhoods
than in white neighborhoods. There is no apparent reason that appraisals should be systematically higher or lower than sale prices in nonwhite or white neighborhoods.
It’s a Philly issue too
Appraisal bias also persists in Philadelphia, as we’ve demonstrated in our own analyses using the
Federal Housing Finance Agency’s uniform appraisal dataset
, or UAD.
The UAD is the only neighborhood-level source of information on home appraisal activity. However, the dataset reports less than half of census tracts in Philadelphia because the FHFA often suppresses data due to privacy concerns. In tracts with few transactions, reporting the data could identify individual homeowners.
Earlier this year, we employed a different approach
using 2021-24 lending data
from the
Home Mortgage Disclosure Act
. HMDA is an annually released federal database containing detailed information on most mortgage applications in the U.S. The data includes race, mortgage characteristics, property value, location and other details.
We wanted to understand whether there was a pattern of denied applications for cash-out refinance mortgages where the lender’s single reason for denial was collateral, which is generally established by the appraisal. Cash-out refinance mortgages are loans that pay off the homeowner’s existing loan and allow that homeowner to additionally borrow some of the equity they have in their home.
Our study shows that it was substantially more frequent that collateral was the single reason for that denial in nonwhite neighborhoods and for nonwhite homeowners.
This was the case whether the homeowner was seeking a conventional mortgage or a mortgage insured by the Federal Housing Administration. FHA borrowers frequently have lower credit or a lower down payment than a conventional borrower and pay an insurance fee that compensates for the higher risk they represent.
These two Philadelphia-based studies used different methodologies to arrive at the same conclusion, which we shared in a September 2025 report for the nonprofit Reinvestment Fund, where one of us is a senior adviser. That conclusion is this: Whether you want to buy a home or access the stored wealth in the home you already own in Philadelphia,
you are disadvantaged in the valuing of the real estate
if you are a person of color or if the home is located in a mostly Black or Hispanic neighborhood.
Possible solutions
Remedies are available, but in the current political climate the burden is increasingly on local governments, nonprofit advocacy groups and industry actors rather than the federal government.
More transparency:
The home appraisal industry is opaque. While the uniform appraisal dataset provides some insight into appraisal bias, much of its data
is not public
. Further, the U.S. Department of Housing and Urban Development has not included neighborhood-level appraisal data for Federal Housing Administration transactions.
A national database of appraisals, similar to the HMDA database for loan applications, would improve transparency and accountability. While the HMDA did not eliminate lending discrimination, it is a
valuable tool to uncover and address discrimination
.
Get informed:
A fair appraisal ensures that homeowners have an independent, accurate, expert opinion of the value of their home. But homeowners must understand how that opinion was derived and how they can contest that opinion of value when appropriate. Some lenders now allow an owner to get a second opinion if the owner feels the appraised value is inaccurate.
Raise public awareness:
Local officials can inform the public about the nuts and bolts of appraisals and outline what can be done when bias occurs. Philadelphia is taking steps. The city’s
Home Appraisal Bias Program
is working to
increase diversity of local appraisers
, enhance appraisal transparency and educate consumers.
File a complaint:
HUD has substantially pulled back from combating appraisal bias, including
disbanding the Biden-era PAVE Task Force
, which was making progress on the issue. The Trump administration has further impaired enforcement of the Fair Housing Act through layoffs and the
withdrawal of critical policies
long found to be effective in fighting housing discrimination.
Nevertheless, those who believe they have been subjected to appraisal bias can file complaints with HUD or their state or local fair housing agencies. This will at least create a record of the frequency of the issue.
Given the
reduced role of the federal government
today, there is an extra burden on state and local civil rights agencies and nonprofits to ensure alleged violations are investigated and, when appropriate, prosecuted.
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.
The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
