New AEI analysis using latest FHFA dataset confirms that appraiser racial bias on purchase transactions is neither systemic nor commonplace


Share of Under-valuations by Purchaser Race or Ethnicity: Various Geographic Controls

Share of Under-valuations by Purchaser Race or Ethnicity: Various Geographic Controls
Share of Under-valuations by Purchaser Race or Ethnicity: Various Geographic Controls

WASHINGTON, Nov. 02, 2023 (GLOBE NEWSWIRE) — New AEI Housing Center analysis shows that seemingly large differences in the share of under-valuations–appraisals where the appraised value is below the contract price– received by people of color are almost entirely or entirely due to differences in geographies where people, regardless of race or ethnicity, reside. When comparing appraisals for people of color to those for non-Hispanic white people within the same geographies, a new study by the American Enterprise Institute’s (AEI) Housing Center finds that there are no or hardly any differences.

The study is the first of its kind using newly released, appraisal-level data from the Federal Housing Finance Agency’s (FHFA) Uniform Appraisal Dataset Appraisal-Level Public Use File and confirms earlier AEI research, which had reached a similar conclusion.

The study suggests that commonalities in people’s experiences in buying a home (e.g. first-time home buyer status) or local market conditions (e.g. the presence of a market frenzy or seller concessions) are far more important than differences in people’s race or ethnicity when it comes to determining who receives an under-valuation and who does not. This suggests that studies by FHFA, Brookings, or Freddie Mac with their singular focus on appraiser racial bias have misdiagnosed the issue.

To facilitate further analysis, the AEI Housing Center urges FHFA to expand its appraisal-level dataset to include first-time home buyer status, seller concessions, or loan-to-value ratio. To better measure and document appraiser racial bias, the study also urges FHFA, Fannie Mae, or Freddie Mac to review every appraiser on an individual basis for racial bias and deliberate inaccuracies with input from researchers.

This study is the latest in a series of reports by the AEI Housing Center, which have found serious flaws in widely circulated research of significant and systemic devaluations of black neighborhoods, systemic and large valuation differences in refinance appraisals, and higher mortgage decline rates for minority borrowers. The AEI Housing Center remains committed to correcting false narratives, as a proper diagnosis of the problem is a pre-condition to making appropriate policy recommendations.

Confirming Alternative Explanations for Appraisal Under-Valuations: New Evidence From Appraisal-Level Data

Media Contact Details:

Tobias Peter
American Enterprise Institute Housing Center
Washington, DC
[email protected]

A photo accompanying this announcement is available at:

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