New Jersey Bill Would Help Prevent Racism In Home Appraisal Industry

NEW JERSEY — There’s a big reason why many New Jersey residents put up with the endless headaches that come with being a homeowner – and it can usually be measured in six figures or more. The problem? A troubling number of Black and Latino families face uphill battles when it comes to getting their homes appraised at a fair value, advocates say.

On Monday, a proposed state law in New Jersey moved forward in the Legislature. If S-1311 crosses the finish line, a real estate appraiser would be prohibited from considering “race, creed, sexual orientation, and/or other personal characteristics” as part of the appraisal process. The bill would also require appraisers to complete a fair housing and appraisal bias education course.

The New Jersey Senate voted 26-10 to advance the proposed law on Monday. A companion bill, A-2280, has been introduced in the New Jersey Assembly.

How widespread is the problem? A 2022 study from the Brookings Institution found that nationally, transactions in majority-Black neighborhoods are nearly twice as likely to be appraised under the contract price than homes in majority-white neighborhoods.

Neighborhoods with a majority of Latino or Hispanic and Asian American residents are also more likely than majority-white neighborhoods to experience “under-appraisal” when it comes time to sell their homes, the study found.

And yes, New Jersey is seeing the same trend, officials say.

Earlier this year, the New Jersey Attorney General announced that the state is launching a Home Appraisal Discrimination Initiative to tackle “persistent systemic inequities” in the industry.

“Although we have some of the strongest anti-discrimination protections in the nation, bias continues to affect the real estate industry,” Attorney General Matthew Platkin said.

“That is unacceptable, and in New Jersey it is unlawful,” he added.

The attorney general’s announcement got a thumbs-up from the Newark-based New Jersey Institute for Social Justice, which has released its own analysis of the state’s longstanding home ownership gap.

“It is unacceptable that a home owned by Black residents can be appraised at a substantially lower value than when white people stand in for an appraisal on that same home,” said Laura Sullivan, director of the nonprofit’s Economic Justice Program.

“Home ownership is a key driver of wealth, and with a staggering $300,000 racial wealth gap – one of the highest in the country – New Jersey should be vigilant in ensuring that the appraisal process is fair,” Sullivan added.

• See Related: Race, Wealth And Homeownership: New Jersey Still Seeing Troubling Gaps

The past years of lobbying on part of advocates hasn’t been lost on state lawmakers.

“Roadblocks within the housing industry are extremely detrimental to low-income communities, and disproportionately affect people of color,” said Senate Majority Leader Teresa Ruiz, one of the sponsors of S-1311.

“These discriminatory practices in real-estate appraisals produce damaging long-term effects for working families, including limiting the building of equity and generational wealth,” added Ruiz, who represents the state’s 29th District.

Sen. Nellie Pou, another sponsor of the bill, said that racial bias remains a “bitter reality” that is still experienced by too many residents who wish to purchase a home.

“Research shows that appraisals remain lower for Black and Latino families than for white families across the country,” Pou said. “This law will help further protect families from discrimination and help to lower the racial wealth gap.”

Pou recently noted that according to the Chicago-based Appraisal Institute, there were 78,015 housing appraisal professionals working across the nation in 2019. More than 85 percent were Caucasian or white, 4.3 percent were Hispanic or Latino, and 1.3 percent were Black or African American.

• See Related: NJ Homeowners vs. Flippers: New Law Helps To ‘Level The Playing Field’
• See Related: Bank ‘Redlined’ NJ Home Buyers In Newark Metro Area, Feds Allege

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