Real estate brokerage Redfin found that for more than 7 million homes listed and sold between 2013 and February 2021, the average house in a primarily Black neighborhood was worth $46,000 less than one in a mainly White neighborhood. Redfin said the analysis looked at homes in the top 10% of U.S. cities by population and took into account “fundamental factors” in home values, including square footage, condition, and neighborhood amenities. The disparity in home values underscores a primary reason for the wealth gap between Black and White Americans. Data from the Census Bureau shows that Whites are much more likely than Blacks to own homes—a key route to wealth-building. In 2019, the median Black household had only 12 cents of wealth for every $1 held by the median White family, according to the Federal Reserve. The disparity in home values may also reflect unconscious racial bias in the home-appraisal process, with homes in Black neighborhoods frequently assigned lower values, as well as discrimination in mortgage lending, Redfin said. According to an analysis by the brokerage last year, nearly 16% of Blacks who apply for mortgages are rejected, compared to 7% of Whites. “The undervaluation of homes in Black neighborhoods is a problem worth addressing in 2021 because it has a very real impact on the financial well-being of Black Americans,” Redfin Chief Economist Daryl Fairweather said in a statement. “The wealth people accumulate in their homes affects so many long-term outcomes for families, from the ability to fund college and other educational opportunities to having enough money to start a new business.” The Redfin analysis found the country’s biggest undervaluation of homes in mostly Black neighborhoods occurs in New York, where the Black homes were valued at an average of $263,000 less than homes in mainly White neighborhoods. After New York came Pompano Beach, Florida, where the average undervaluation was $57,000, followed by Chicago (with a $56,000 difference), Los Angeles ($56,000) and Baton Rouge, Louisiana ($54,000).
