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Homes In Predominantly Black Neighborhoods Undervalued By $46,000: Report

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Homes In Predominantly Black Neighborhoods Undervalued By $46,000: Report

The average home in a primarily Black neighborhood is worth $46,000 less than a similar residence in a primarily White neighborhood, according to a data analysis published by the brokerage Redfin Corp (NASDAQ: RDFN).

What Happened: Redfin number crunched home valuation estimates for more than 7 million homes nationwide that were listed and sold between 2013 through February 2021. In presenting its data, Redfin took into consideration factors that influence home valuations including size, condition, local school quality and the surrounding community.

But with the considerations addressed, the data study nonetheless determined a $46,000 difference in values between nearly identical homes in Black and White neighborhoods.

“We're left with bias and systemic racism to explain the variation in home values," said Redfin Senior Economist Reginald Edwards. "Today's Black homeowners are missing out on $46,000 worth of wealth due to racist housing policies that were outlawed in the 1960s and continuing biases among homebuyers and housing professionals in parts of the home buying process like appraisals and mortgage lending — and that's $46,000 that would multiply as the years go on and benefit future generations."

See Also: Wells Fargo Makes Equity Investments In Five Black-Owned Banks

Why It Matters: Redfin noted that 74.5% of White Americans are homeowners and roughly 44% of Black Americans own their residences. The Black households who are homeowners also have significantly less equity in their property — the median home equity for Black homeowners was $89,000 as of January, compared to $113,000 for White homeowners.

As an example of the disparity, Redfin compared two three-bedroom and two-bathroom properties in Chicago that were zoned for the same middle school and high school. The property in the predominantly Black neighborhood sold for $172,000 in November 2017 while the home in the predominantly White community sold for $217,500 in July 2016.

"It used to be that many white homebuyers would consider a neighborhood undesirable if there were any Black residents at all, but now diverse neighborhoods aren't as stigmatized," said Redfin Chief Economist Daryl Fairweather.

"However, there still appears to be a stigma against primarily Black neighborhoods. Unfortunately, the longer Black Americans have lower home values than their white counterparts, the longer they are missing out on wealth that could be used for other investments and to pass along to their children."

(Photo by Jens Neumann / Pixabay.)

 

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