Appraisal bias is real. Here's how HUD and NAREB plan to solve it.
How much money do racial disparities in home appraisals cost homeowners — and the industry? In 2022, research conducted by Junia Howell, a sociologist at the University of Chicago, found that the appraisal disparities in some of the most expensive markets in the country could be more than $1 million; even in areas where homes don't cost millions of dollars, appraisal disparities have almost doubled since 2013. That's a significant amount of money that agents (and their brokers) are forfeiting as a result of biased appraisals. Now, a new partnership between the U.S. Department of Housing and Urban Development (HUD) and the National Association of Real Estate Brokers (NAREB) is hoping to tackle the problem. Read the announcement below. The U.S. Department of Housing and Urban Development (HUD) and the National Association of Real Estate Brokers (NAREB) unveiled a partnership aimed at tackling appraisal bias and discrimination in the housing market. This historic collaboration, set to launch in the coming months, will increase education, outreach, and efforts to combat racial appraisal bias in home property valuation. "Owning a home provides a path to the American dream. Yet, Black and Brown people have consistently had their homes under-valued because of racial appraisal bias, locking them out of opportunities to build generational wealth," said HUD Secretary Marcia L. Fudge. "This partnership is a bold step toward remedying appraisal discrimination, closing the wealth gap, and achieving racial equity." The partnership will be officially launched in October 2023 and will include online training for counselors, roundtable discussions on bias and discrimination, educational material distribution, and appraisal-related training. The aim is to promote fairness in the housing market. Specifically, training sessions will include discussion of strategies to combat appraisal bias; best practices for housing counselors to help clients impacted; and available resources that can support housing counselors and their clients. In addition, HUD's Office of Housing Counseling and National Fair Housing Training Academy will work with NAREB on holding regional roundtables across the country to gain greater understanding of appraisal bias in specific geographic areas; build public-private partnerships and collaboration in efforts to combat appraisal bias; and share best practices for housing counselors to help impacted clients. HUD Secretary Fudge serves as the co-chair of PAVE, a first-of-its-kind interagency task force comprised of 13 agencies dedicated to ending bias in home valuation. Since the PAVE Action Plan was announced in March 2022 by the Biden-Harris administration, the PAVE Task Force has made critical progress. In particular, the administration's efforts have included committing to making appraisal data from the Federal Housing Administration available to the public, supporting a well-trained and dynamic appraiser profession and empowering consumers to take actions, such as filing fair housing claims through the Office of Fair Housing and Equal Opportunity. Additional information is available at www.hud.gov/fairhousing and www.justice.gov.