Chicago has second-largest racial gap for home appraisals in U.S.

Chicago housing appraisals are the most tilted against neighborhoods of color out of all large U.S. cities except Los Angeles.

Among the nation’s 20 largest metro areas, only L.A. has a larger gap between the median appraised value in neighborhoods where the majority of homeowners are people of color and those with a majority of white homeowners, Crain’s reported, citing a study from University of Illinois Chicago sociologist Junia Howell.

The study found that in 2022, majority-white neighborhoods in the Chicago area had a median home value of $608,160, while majority-minority neighborhoods had a median value of $218,801. That amounts to a median value that’s 2.77 times higher among white neighborhoods, compared to 3.18 in Los Angeles, and 1.1 in Seattle, which has the smallest gap among the cities.

As the root of her study, Howell aimed to isolate the effect of race and compare similar homes in different neighborhoods. She stressed that historical factors such as segregation, redlining, and disinvestment contribute to the disparities. But present-day appraising practices account for the majority of the inequality, according to Howell.

Appraisers often compare properties to others nearby, which continues and often worsens the differences in values that those historical factors imposed. “This is where history and contemporary time get very intertwined,” she told the outlet.

Howell added that the racial composition of a neighborhood plays a significant role in determining home values, overshadowing factors such as stores, infrastructure and school quality. For instance, an appraiser might compare a home in a Black neighborhood to another home in a nearby Black neighborhood that has lower amenities and appraised values, even if the houses aren’t necessarily comparable.

Majority-white neighborhoods, however, “are persistently appraised as more valuable,” compounding racial inequality, Howell told the outlet.

Some measures are being taken to curb inequality in appraisals. The Appraisal Institute, a Chicago-based organization, has focused on eliminating the role of unconscious bias in appraisals and seeking broader solutions to diversity, equity and inclusion in housing, according to the organization’s president Craig Steinley. 

— Quinn Donoghue

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