The Chicago Urban League said educating consumers about the home appraisal process and increasing diversity and cultural proficiency within the real estate appraisal industry will be important factors in addressing barriers to building Black wealth through homeownership. These observations were among several shared last Friday, May 17 during the League’s 2024 Policy SUMMIT, which included an audience of nearly 300 business professionals, civic leaders, and community members at the Marriott Marquis Chicago.
The Policy SUMMIT, themed “The State of Black Chicago: Solutions,” focused on efforts to address key economic disparities that were outlined in the Chicago Urban League’s 2023 State of Black Chicago report, which was released last June.
“We know from our 2023 report and from previous reports that Chicago’s Black residents have the lowest household income, the highest levels of poverty and unemployment, and a far greater likelihood to be burdened by rent payments than the city’s other residents,” said Chicago Urban League President and CEO Karen Freeman-Wilson. “We know what the problems are. What’s important is to talk about solutions. What are the ways we can all work together to erase economic disparities in particular?”
The Policy SUMMIT focused on addressing wealth building through access to both homeownership and careers that can support a family. Executives from PNC Bank, Nexamp, and Fifth Third discussed efforts their companies are making to create more opportunities for Black Chicagoans and other underserved communities. They also shared personal stories about the role homeownership can play in building wealth.
For Black residents who do own their own homes, they too often find that their properties are significantly undervalued compared to other homes in the city—and the disparity has gotten worse over time. As cited in the report, the racial gap in home values in the Chicago area increased from $50,000 in 1980 to an astounding $325,000 in 2020.
Following the release of the 2023 State of Black Chicago report, the Chicago Urban League formed an Appraisal Bias Task Force that includes appraisers, public officials, bankers, mortgage lenders, realtors, realtists, researchers, and nonprofit professionals. Since November 2023, the task force has been meeting to develop recommendations for policy solutions to address issues around the undervaluation of Black-owned properties. The task force expects to release a full report by the end of 2024 but shared six preliminary observations during Friday’s convening. A summary of those observations follows:
- Appraisal bias is a symptom of the much larger issue of homeownership for Black Chicagoans.
- The root causes of racial disparities in homeownership—e.g., historic segregation, redlining, etc. –require complex analysis.
- While a lot of concern has been raised about racial bias by real estate appraisers (more than 90% of whom are white), no one industry is responsible for addressing the racial disparity in homeownership. Many industries will need to work together to provide comprehensive improvements.
- Improving diversity and cultural proficiency in the appraisal industry would improve confidence in the appraisal process.
- Many consumers do not understand the appraisal process, leaving many to assume that lower values are evidence of discriminatory conduct when it can be evidence of appraisal mistakes.
- The process for appealing an appraisal that is believed to be erroneous is fraught with challenges that could be solved by a more consumer-friendly process driven by community and industry collaboration.
More detail about the observations and the task force can be found online.
While the speakers took questions during the event, there was not enough time to respond to all of the questions posed by the audience. In the coming weeks, the Chicago Urban League will host an event via Facebook and LinkedIn Live to address any outstanding questions and to further explore solutions.
