Channel 2 Investigation finds that homes in majority-Black neighborhoods are undervalued

A Channel 2 Action News Investigation revealed racial bias in home appraisals. African American families found out their homes’ values went up tens of thousands of dollars after they hid their race.

Now, Channel 2 Investigator Justin Gray took a look at how racial bias also affects entire neighborhoods.

One of the things that makes metro Atlanta special is thriving, Black upper-class neighborhoods. But the numbers clearly show that, on average, homes in those majority Black neighborhoods are valued less than in majority white neighborhoods.

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Amber Pouncey is a YouTube star and cosmetics entrepreneur who fell in love with a 6,000-square-foot home. She put in an offer that was accepted, but then the appraisal came back.

“We are talking it appraised almost $200,000 less than what they are asking for,” Pouncey said.

Pouncey met the seller in the middle, paying $120,000 cash for the furniture on top of her loan and down payment to make the deal happen. The Henry County neighborhood of high-end homes with big lots and big amenities is nearly all Black.

“You naturally have to say, ‘What made the difference here?’ And there’s only one thing that stands out like a sore thumb, which is this is an all Black neighborhood,” Pouncey said. “It’s sad to think that the color of my skin would affect the value of a home.”

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The numbers back her up. A 2021 study from mortgage giant Fannie Mae looked at 12 million appraisals over five years and found that homes in majority Black neighborhoods were nearly twice as likely as homes in white neighborhoods to be assessed under the contract price.

In a Channel 2 Action News investigation earlier this week, we showed you how metro Atlanta homeowners, after getting low first appraisals, performed an extreme home makeover to hide the fact that they were Black for a second appraisal and saw major increases in value.

“For the second appraisal, we not only removed everything in the home, but my husband and I removed ourselves,” homeowner Asmirh Davis said.

Pouncey’s real estate broker, Robin Andrade, calls it desensitizing when she has her Black clients clear out signs of who they are, but she said in metro Atlanta, entire neighborhoods are undervalued because of race.

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“I’m not asking white clients to take their paintings down,” Andrade said. “I feel like Black people have been paying the ultimate price for so long and it makes you wonder like, when is this playing field going to be level?”

Gray talked to the head of the White House Task Force called PAVE, created to address appraisal bias. Their report found that on average, homes in majority-Black neighborhoods are valued at less than half of those in neighborhoods with few or no Black residents.

Melody Taylor, the executive director of PAVE, said part of the problem is that the appraisal industry is 97% dominated by white men.

“Maybe we ought to consider hiring appraisers who are familiar with neighborhoods,” Andrade said.

Pouncey bought her home in August of 2021, when an appraiser said it was worth $595,000. Now she’s under contract to sell the home in an all-cash deal next week, where the buyer was able to choose their appraiser, which does not happen with bank loans. That appraisal came in at $725,000, an appraisal much more in line with where Pouncey’s real estate agent thinks the home and neighborhood should be valued.