The idea that minorities face disproportionate challenges in the American housing system is hardly new. However, Freddie Mac has provided fresh data that confirms this bias in appraisals for homes in minority neighborhoods. This cannot be minimized. The study’s results are harrowing and demand changes.
Freddie Mac analyzed a robust data set of 12 million appraisals submitted to it from 2015 through 2020. The primary takeaway is that appraisals conducted in Black and Latino neighborhoods are more likely to fall short of the contracted sale price than appraisals done in white neighborhoods.
In neighborhoods where at least half the population is white, a mere 7 percent of appraisals were less than the contracted sale price. Compare that to the share of appraisals that undercut the sale price in Black census tracts (13 percent) and Latino census tracts (15 percent).