Three weeks ago, The Optimist Daily wrote a piece about Congress’ aims to fix bias and inequality in the home appraisal industry. This is a much-needed change to a systemic problem that has furthered the wealth gap over years and kept families from building intergenerational wealth.
On Wednesday, Vice President Kamala Harris announced a comprehensive action plan to change harmful appraisal practices and improve accountability and oversight in the industry.
Changing the bias
There is a consistent problem in the home appraisal industry where the value of homes of people of color is appraised far lower than that of white homeowners. Some unfair appraisals, such as in Washington DC, can put the value of white homes, that are in the same neighborhood, as twice that of homeowners of color.
Last June, the Property Appraisal and Valuation (PAVE) task force was assembled to address this problem. Since its formation, PAVE has collected many reports from homeowners of color about unfair appraisals. Some reports have confirmed that after removing all indicators of the home being owned by a person of color the homeowner received a higher appraisal. The problem stems from many issues, particularly that the appraisal industry mostly-regulates itself and is very monochromatic.
PAVE used the growing body of research and the advice from a panel of civil rights and home appraisal experts to put together the plan unveiled last Wednesday.
The PAVE plan’s goals:
- Make the appraisal industry more accountable.
- Empower consumers with information and assistance.
- Prevent algorithmic bias in automated home valuations.
- Cultivate an appraiser profession that is well-trained and looks like the communities it serves.
- Leverage federal data and expertise to inform policy, practice, and research on appraisal bias.
This could be the first meaningful step in fixing a problem that has been worsening for generations. With these changes made to the home appraisal industry, homeowners of color will be given a fair chance at building intergenerational wealth and getting what they’re owed in selling their homes.