by James A. Bacon
When you examine every issue through a racial lens, everything looks like racism. It’s even easier to find racism everywhere when you resort to junk science (or social science, as the case may be).
A case in point is a new study by Housing Opportunities Made Equal of Virginia (Home), which purports to find that systemic bias in real estate appraisals results in under-valuation of properties in predominantly African-American neighborhoods in the City of Richmond. This bias harms African-American property owners, the report contends, despite the fact that if the bias actually exists it would mean African-American homeowners would be paying lower real estate taxes.
So, how does HOME demonstrate bias?
The story begins in 2022 when Dr. Andre Perry with the Brookings Institution make a presentation in Richmond showing that home values are much lower in majority-Black neighborhoods than in predominantly non-Black neighborhoods. While acknowledging that part of the difference arises from differences in the homes and opportunities available in the neighborhoods, his statistical analysis showed that different valuations occur even when comparing “identical homes in neighborhoods with identical (non-racial) characteristics.”
Inspired by Perry’s research, HOME Virginia conducted secondary research and cross-tabulated Richmond tax assessment data (valuation, size, condition), with American Community Survey demographics, supplemented by 50 interviews with homeowners in majority Black neighborhoods.
“Overall, home values tend to be lower in majority Black neighborhoods than in other neighborhoods where Black residents are relatively few,” HOME says. “Racial demographics predict about half of the inequality between neighborhoods in the City of Richmond.”
Some of the gap in home values, HOME concedes, can be explained by the facts that residents of Black neighborhoods tend to live in smaller homes in worse physical condition than residents of non-Black neighborhoods and that they have longer commute times.
But after adjusting for the housing-related factors, HOUSE goes on to argue, the gap persists “even when essentially all other factors except for the racial demographics of the neighborhoods are held constant.” That gap, HOME Virginia calculates, is about 17%.
HOME traces that difference to “explicit forms of institutional racism” such as redlining, urban renewal projects, the demolition of stable Black neighborhoods caused by Interstate construction, and the shortchanging of Black property owners in eminent-domain condemnation. Redlining, Interstate routing, and urban renewal unquestionably were discriminatory and did harm Black property values. Although those practices ended more than a half century ago, HOME Virginia suggests that the pernicious impact persists to this day.
It is one thing to argue, however, that those malign practices negatively influenced Black wealth accumulation back then and quite another to suggest that they bias the discipline of real estate assessments a half century later.
There are two critical factors affecting home valuations that HOME Virginia overlooks in its comparison of modern-day real estate valuations: crime and schools. People pay a premium to live in safe neighborhoods with good schools.
It is intuitively obvious that people place a value on neighborhoods where they don’t have to worry about their homes being burgled, their cars broken into, or their belongings stolen off the front porch. People prefer living where they can stroll around the neighborhood at night without fear of being mugged. They tend not to enjoy the routine sound of gunfire or find it exhilarating to dive for cover to protect themselves from the random spray of bullets.
According to RealListingAgent.com, “Generally speaking, the more crime happens in or around your neighborhood, the less your property will be worth. A 2019 study in the Nordic Journal of Criminology, based on the experience in Sweden, found that housing prices drop by 1.5% for every 1% increase in crime.”
Likewise, households with children place a premium on living in neighborhoods with good public schools. In the Richmond metropolitan area, Richmond public schools are widely seen as a dumpster fire. Public perceptions are reinforced by abominably low Standards of Learning pass rates for most schools.
Now, we can debate the reasons for higher rates of crime and poor educational performance in majority Black neighborhoods. We can probe why many middle-class Blacks flee these neighborhoods as soon as they have the financial means to do so. Even if we accept the proposition that high crime and poor schools are the legacies of historical racism (which I mostly don’t), that is very different from saying that the system for assessing real estate values is biased.
To exclude the impact of crime and schools from an analysis of property values renders the study worthless. The HOME report is not a serious query into the causes of neighborhood variation in property values. It is a polemic dressed up in social-scientific language designed to further an ideological conviction that racism is systemic and to advance a series of redistributionist public policy remedies. It contributes to the unjustified sense of victimhood and grievance that divides our society today. It is reprehensible and should be condemned.