"Our analysis rules out all the factors that are typically associated with home value and still finds a significant difference between the values of otherwise nearly identical homes in similar Black and white neighborhoods. We're left with bias and systemic racism to explain the variation in home values," said Redfin senior economist
The fact that homes in Black neighborhoods are worth less is one reason for the racial wealth gap in the
Although Redfin's analysis measures the undervaluation of homes in primarily Black areas after accounting for similarities and differences in neighborhoods, racial bias has also led to gaps in amenities between Black and white neighborhoods. For instance, areas with a high share of Black residents are likely to have less access to green space than white neighborhoods, and schools in minority neighborhoods are much more likely to be underfunded than those in white neighborhoods. Discrepancies like those undervalue homes in Black neighborhoods beyond what's measured by Redfin in its analysis.
The home-value gap between Black and white neighborhoods has remained essentially the same over the last decade
The value gap between homes in Black and white neighborhoods has held steady over the last eight years, fluctuating just slightly year by year. Homes in primarily Black neighborhoods nationwide were valued at an average of roughly
"No real progress on the racial home-value gap has been made over the last decade, which highlights the depth of the problem and how difficult it is to change," said Redfin Chief Economist
Though undervaluation of homes in Black neighborhoods is larger in 2021 than any other year included in this analysis, the 2021 data only accounts for data through February and is likely to change as the months go on.
Case Study: Homes in primarily Black neighborhoods in
To illustrate undervaluation, Redfin looked at homes that have sold over the last five years in
"Homes in majority-Black parts of
Although neighborhood differences contribute to the gap in home values, similar homes in similar neighborhoods still show a gap in home values when the only observable difference is the racial makeup. To illustrate the point, Redfin compared two similar properties in neighborhoods with similar crime rates on the
Median home prices in
A combination of causes and possible solutions
Redfin's report outlines several causes that contribute to the continuing disparity in home values in Black versus white neighborhoods. This includes current racial biases of individuals—such as real estate agents, appraisers, and homebuyers themselves—as well as systemic racism at play within institutions involved in the homebuying process.
It also explores potential solutions to reduce discrimination and work towards equality in home valuations. This includes investments at the federal and local level in communities and directly to Black homebuyers, confronting the racial bias of individuals involved in the homebuying process, diversifying the real estate industry, and more.
To read more about these causes and solutions, see additional case studies and review metro-level home valuation data, please visit: https://www.redfin.com/news/undervaluation-homes-black-versus-white-neighborhoods/
Redfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Since launching in 2006, we've saved customers nearly
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the
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