Can alternative appraisals help solve the black homeownership gap?

It’s been over 50 years since federal regulators passed the Fair Housing Act to ban discriminatory lending practices. Despite this, Black and Latino families are routinely denied mortgage loans at rates white families enjoy and the racial homeownership gap is wider than it’s ever been. In 2021, Black homeownership rates were at 44%, while 74% of white individuals owned a home.

Homeownership is the traditional path to building wealth in America—it’s baked into the American dream. Lisa Rice, EVP of the National Fair Housing Alliance, recently told the Chicago Tribune, “Wealth and financial stability are inextricably linked to housing opportunity and homeownership…For a typical family, the largest share of their wealth emanates from homeownership and home equity.”

The median white family in America currently holds eight times the wealth of Black families and five times the wealth of Latino families.

On June 1, 2021, in an effort to introduce more equity into property appraisals for families of color, the White House announced its Action Plan to Advance Property Appraisal and Valuation Equity. Known as PAVE, the interagency initiative was tasked with evaluating the causes, extent, and outcomes of appraisal bias in the mortgage lending industry and submitting recommendations to eliminate racial and ethnic bias in home valuations.


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