Racial Inequality In How Chicago-Area Homes Are Valued Is Increasing

The disparity in home values between white neighborhoods and Black and Latinx communities has increased more than six-fold since 1980.

Map of Chicago with Home graphics
Photo FrankRamspott/Getty Images. Graphic Mary Hall / WBEZ
Photo FrankRamspott/Getty Images. Graphic Mary Hall / WBEZ
Map of Chicago with Home graphics
Photo FrankRamspott/Getty Images. Graphic Mary Hall / WBEZ

Racial Inequality In How Chicago-Area Homes Are Valued Is Increasing

The disparity in home values between white neighborhoods and Black and Latinx communities has increased more than six-fold since 1980.

Photo FrankRamspott/Getty Images. Graphic Mary Hall / WBEZ
WBEZ brings you fact-based news and information. Sign up for our newsletters to stay up to date on the stories that matter.

Correction: A previous version of this story misspelled Solonge Robinson’s first name.

Don Robinson wonders if he should start a whitewashing business. It would help Black homeowners erase their presence — taking down Black photographs and artwork so their properties can sell at a higher price.

“One of the things that really hurt us most is that we do have to take the Blackness out, which really shouldn’t have an impact on the value of a home,” said Robinson, a Black real estate agent and homeowner.

Robinson may be tongue-in-cheek and his concept unorthodox — perhaps even dehumanizing. But in his professional and personal life, he has experienced the devaluing of Black homes in Black neighborhoods in Chicago, and with little recourse.

He and his wife Solonge live in a renovated four-level, 4,200 sq. ft. farmhouse in Woodlawn with an abundance of windows and dark wood floors. A spectacular kitchen includes a coffee bar and an island that is the prime gathering place for them and their two young children.

Last year the Robinsons refinanced their home, which required an appraisal. The number shocked them — $480,000.

“Which is $35,000 less than the condos that are being built behind us,” Robinson said. “We were expecting the place to appraise for $660,000. And that $660,000 was reflective of the [comparable homes] in our area in walking distance. We weren’t pulling numbers out of the sky.”

Don Williams a real estate broker stands in his house in the Woodlawn neighborhood
As both a real estate broker and a homeowner in Woodlawn, Don Robinson has experienced the devaluing of Black homes in Black Chicago neighborhoods in his professional and personal life. Manuel Martinez / WBEZ

Lenders require appraisals, which are among the final steps in purchasing or refinancing a home with a mortgage. Licensed appraisers evaluate the inside and outside of the property looking for quality, upgrades and number of rooms to determine the market price. To help them determine a home’s value, they use “comparables” or “comps” — the prices of nearby homes that were recently sold.

Robinson appealed to the appraisal company and lost. He argued that there were mistakes, such as the floors weren’t laminate but a higher quality. He also said a white family lived in the home prior to them and it had a loan for more than $400,000 in 2008 — without any of the Robinson gut renovations such as a new kitchen and flooring.

“For some reason, appraisers have this unusual authority to decide who gets money, how much and they don’t have to really answer to anyone further. But unfortunately, I think that has actually helped to create this [racial] wealth gap that everyone’s talking about,” Robinson said.

Although the federal government and professional appraisal associations removed explicit race language in determining home values, a racialized lens still harms Black communities today. A combination of a historical legacy of undervaluing Black neighborhoods, segregation, lack of knowledge of Black communities and stereotypes of these communities contribute to the wide disparity between appraised values in Black and white neighborhoods across the country.

Last year, sociologists Junia Howell and Elizabeth Korver-Glenn published a study that found the neighborhood race appraisal gap doubled in the U.S. from 1980 to 2015. Across all years, neighborhoods with large Black and Latinx populations have lower appraised values. The lower values in Black and Latinx communities are partially due to historical policies that built smaller, older, and more densely concentrated homes in Black and Latinx neighborhoods as well as contemporary policies that continue to perpetuate socioeconomic inequality across racial groups. Yet, even when the researchers took all of this into consideration and compared neighborhoods with homes of the same size and quality and also with comparable socioeconomic status and location, the inequalities in appraised values still exist.

For example, they compared neighborhoods whose houses, socioeconomic status, and location match the national medians. Homes in Black and Latinx neighborhoods whose housing and demographic characteristics match the national averages were valued at $125,000 in 2015. Yet, homes in white neighborhoods with these same housing and demographic characteristics were valued at $370,000 — or $245,000 more than their counterparts in Black and Latinx areas.

The scholars drilled down their analysis for WBEZ to show the Chicago-area racial gap. They created a model comparing similar style houses in similar socioeconomic neighborhoods with racial demographics as the only difference. In 1980, there was a $50,000 gap between Black/Latinx neighborhood home values and white ones. In 2015, that gap was $324,000.

“Racial inequality is actually increasing over time — suggesting that our contemporary practices, not just our historical legacy, are exacerbating and contributing to how we are further racialized in these spaces and actually valuing white spaces as more valuable despite being really similar,” said Howell, an assistant director at Boston University’s Center for Antiracist Research.

WBEZ collected about 20 appraisals in the Chicago area that raised questions or generated complaints. Some were from real estate agents who believed the low appraisals in Black neighborhoods were because of racial discrimination. The documents show that comparables were sometimes in neighborhoods too far away or didn’t acknowledge all of the features of the home. Often, the agents complained but the appraisers stood by their work.

WBEZ also filed for public records from the U.S. Department of Housing and Urban Development (HUD) and found two local fair housing complaints based on race in 2021 from appraisals in the 60653 ZIP code, which includes the majority-Black Oakland community on Chicago’s South Side and portions of the surrounding Douglas, Grand Boulevard and Kenwood communities. They are still being investigated. Last fall, a complaint was also filed in 60653 because of lending and appraisal practices related to J.P. Morgan Chase. HUD ordered Chase to pay $50,000 to the homeowner last month. In a statement to WBEZ, Chase said: “Our internal review of the appraisal assessment, as well as a market analysis, found no substantive issues and supported the appraiser’s value.”

A number of professional appraisal groups, locally and nationally, declined to be interviewed by WBEZ. However, the Appraisal Institute, the nation’s largest professional association for the industry, said in a statement that methodologies are grounded in fair and objective economic principles.

“When we see even one story of a consumer who feels they were treated differently because of their race, it’s very concerning because that goes against everything we stand for. Appraisers take a lot of pride in being an objective source of real estate value information. We look at the numbers and facts and mirror what the market tells us,” Rodman Schley, the institute’s president, wrote in an email. “We believe that overwhelmingly, there are more good people in this world than bad, including in the appraisal profession — and that today, more than ever, people are committed to listening, learning and changing.”

Currently, a movement is afoot among real estate professionals, fair housing groups and scholars to ferret out the problems of discriminatory appraisals that take a systemic, not individualistic, approach to upend the industry. Among their complaints is the profession’s lack of diversity — the state of Illinois doesn’t keep racial breakdowns of appraisers — and among their solutions are creating pathways to the industry for people of color.

Even U.S. Rep. Bobby Rush, a resident of Chicago’s Bronzeville neighborhood, has been affected. He takes umbrage with an appraisal he had done earlier this year for a home improvement loan. Rush said the number came in $250,000 less than he expected.

He has asked the Congressional Research Service to investigate appraisals and racial discrimination nationwide.

“Ill-informed appraisers that appraise our home have no idea what’s going on in the neighborhood,” Rush said. “And then we are robbed of wealth, individually and collectively.”

Coincidences over and over

King Drive is a notable street on Chicago’s South Side known for its historical significance and its majestic architecture — from the greystones in Bronzeville to the bungalows in Chatham to the Georgians in Roseland.

But some appraisers don’t see the charm or prestige of these Black middle-class blocks.

“We get appraisers from out of the area. They’re suburban appraisers,” said Jason O’Beirne, a real estate agent with Jameson Sotheby’s International Realty. “I say this [King Drive] is a street people prefer to live on. And we’ll see appraisers making substantial price deductions.”

It’s not lost on him that King Drive is named after Dr. Martin Luther King Jr., another reminder that the homes are in Black neighborhoods.

“Each of the homes that I’ve sold on King Drive had appraisal issues. And perhaps that’s coincidence,” O’Beirne said. “But when you see coincidences over and over … it feels like there’s something underneath it.”

He finds appraisals contrast the market. Sometimes there are multiple offers on a property yet the appraisers constantly have lower prices and won’t adjust. For example, the list price for a home on 103rd and King Drive last year was $245,000 and an appraiser valued the five-bedroom property at $216,000. That sale fell through and another buyer, appraiser and lender came to the table and it sold for $247,000.

O’Beirne represents sellers and is white. He has witnessed appraisers being too nervous to get out of their cars in Black neighborhoods, which he said affects their objectivity. So O’Beirne has used his whiteness to assuage those fears by being present at appraisals and explaining the nuances of the neighborhood.

“Frankly, I definitely believe that my skin color influences as positively amongst these appraisers, and secretly I’m wondering if that’s why I’m hired for some of these opportunities. But still, the results are dramatic. The appraisal issues I have on the South Side of Chicago versus the North Side are at least threefold,” O’Beirne said.

Michael Williams shows appraiser Andre Lanier all the additions and modification he made to his Bronzeville home
Michael Williams, left, shows appraiser Andre Lanier all the additions and modification he made to his Bronzeville home. Researchers have found wide inequalities in how homes are appraised across Chicago neighborhoods, when comparing homes of the same size and quality, equivalent socioeconomic status and similar locations. WBEZ

Daniel Eirinberg-Kawabata is a realtor with @properties who has contested and lost a number of appraisal appeals on the South Side. But one, in particular, caused concern. It was for a property he listed in Chatham at $292,000 and the appraisal was $275,000. The appraiser wrote on the form that WBEZ saw that one of the comps came from the lender, Bank of America.

“They’re supposed to have absolutely zero communications,” Eirinberg-Kawabata said of the bank and the appraiser. Appraisers are supposed to be independent evaluators of properties without lender influence. Bank of America told WBEZ that sending over a comp is within its rights. Meanwhile, in this Chatham home sale, the buyer got a new lender and the new appraisal was $292,000 — the list price.

Alysa Peterson is an agent with Redfin. Last fall, she listed a four-bedroom, split-level home in the South Deering neighborhood for $250,000. An appraiser valued it at $195,000. Peterson appealed, arguing that the comps were not homes that had been updated or were too far away. She lost the appeal, so the buyer walked away. A new buyer and a new appraisal entered the picture. The home sold for $256,000.

“Historically, when I do have listings on the South Side of Chicago, it’s always a struggle to get them to appraise out because the appraisers don’t typically know the area or they just always have a preconceived notion of what they feel the value is,” Peterson said.

She said the appraiser also blew her mind when he speculated about the buyer.

“He said if the buyer lost his job and had to sell it next year, he wouldn’t be able to get this price point and the bank would end up losing money. And I’m thinking that’s not his job. Your job is not to forecast what happens to the bank. Your job is to give me an appraisal and tell me what it’s worth right now,” Peterson said.

The largest investment for Black Americans

With increasing attention toward unjust appraisals based on race, there’s movement to document discrepancies. The Federal Housing Finance Agency held an online public comment period for people to submit. The Chicago Association of Realtors and Illinois Realtors have established committees to collect complaints and determine next steps.

Jeff Baker, CEO of Illinois Realtors, which represents 50,000 professionals in the state, said its task force has two goals.

“There are a lot of real estate brokers who when they encounter this issue in the real world, they aren’t sure what they are able to do about it in order to save a deal, protect a seller, protect the buyer,” Baker said. Letting them know how to formally file a complaint is part of the education.

The task force held its first meeting in December. It’s long-term goal is to craft proposals and policy solutions on the state level.

Neighborhood Housing Services Chicago and other local housing groups, as well as the Chicago Association of Realtors, are brainstorming about how to snuff out discrimination in appraisals. Among the ideas are: using appraisers with lived experience in urban neighborhoods; having appraisers do comp justifications in formerly redlined neighborhoods; and requiring them to provide rationale for their appraisals, if there’s a disagreement in the home purchase loan amount and the appraised value.

The Appraisal Institute says it supports Congressional legislation that would establish an interagency task force to evaluate lender collateral underwriting and appraisal guidelines. Sociologists Junia Howell and Elizabeth Korver-Glenn say that legislation focuses too much on Diversity, Equity and Inclusion (DEI) and takes an individualistic approach.

“When it comes to structural inequality, it’s much easier for a group to say, ‘Oh, I see what you’re saying. We’re not diverse and maybe we should do some trainings to make sure people aren’t having implicit bias.’ But I’ve yet to see the structural critiques,” Howell said.

Korver-Glenn, a professor at the University of New Mexico, is author of the new book “Race Brokers: Housing Markets and Segregation in the 21st Century Urban America.” She said since its inception in the 1930s, appraisals considered neighborhoods desirable if they were homogenous and white buyers are considered the default. In her book, Korver-Glenn follows appraisers in Houston.

“Appraisers repeatedly told me that they express this logic, and the training materials that they’re using teach them to define neighborhoods as homogenous places. They teach them to draw boundaries around demographically similar areas, and that is exactly what appraisers do,” Korver-Glenn said.

She and Howell said the comps system should be abandoned. This method continues the cycle of undervaluing Black neighborhoods that continue to wrestle with the vestiges of racist housing practices, such as redlining.

Andre Lanier is a Black appraiser, home inspector and real estate agent in Chicago.

“I don’t want to just buy and sell real estate. I wanted to actually understand the valuation of real estate, because real estate is one of the largest investments that we are going to make, in our lifetime, maybe the largest investments that we’re gonna make in our lifetime as an African American,” Lanier said.

The process to become a professional appraiser takes years. When Lanier studied 19 years ago, he had coursework, a complicated exam to pass and two years as an apprentice. He has witnessed others in his industry do low-ball comps. Lanier said he has stood up to appraisers in the industry by speaking out.

“As an African-American appraiser, what I bring to the table is making sure that your property is collateralized and represents what it’s supposed to for the bank,” Lanier said. “And also that there is no bias in the equation.”

Andre Lanie examines the renovations in a Bronzeville home
Andre Lanier examines the renovations in a Bronzeville home. ‘As an African-American appraiser, what I bring to the table is making sure that your property is collateralized and represents what it’s supposed to for the bank,’ Lanier said. ‘And also that there is no bias in the equation.’ Manuel Martinez / WBEZ

In February, Marisa Novara, Chicago’s housing commissioner, testified in a public hearing in city council chambers.

“The value of a property or a patch of dirt is not intrinsic; it rests entirely on what people are willing to pay in that location,” Novara said. “So the fact that the same house is worth $1 million in Lincoln Park and $200,000 in North Lawndale is due to the fact that people are willing to pay much more to live in majority-white areas. And as more and more people act on that preference, it becomes codified in appraisals as ‘proving’ higher value. Just like race, real estate value may simply be a construct but treating the construct as real has had generational impacts.”

Back in Woodlawn, the Robinsons not only love their renovated farmhouse, they love their neighbors and volunteer at a community garden the next block over. Don is active in gathering and sharing appraisals he finds faulty and is working with the Illinois Realtors group task force.

Solonge considers the dilemma of Black homes not getting their proper value to be part of the cost of living in a Black neighborhood. As a result, Black families can personally lose hundreds of thousands of dollars and miss out on generational wealth. But the problem is also costing them in ways that can’t be calculated in monetary terms. Solonge said even considering whitewashing her home or others’ homes, to erase Blackness in exchange for value, carries a psychological toll.

“We shouldn’t feel the need to remove ourselves from the equation in order for us to get the value that this house presents itself to be,” Solonge Robinson said. “And so psychologically, it is a stressful process. It is saddening because at the end of the day, it’s looked at as if we’re not good enough to be in this house.”

Natalie Moore is a reporter on WBEZ’s Race, Class and Communities desk. You can follow her @natalieymoore.