Freddie Mac Finds Home Appraisals in Black, Latino Areas More Likely to Fall Short
Lower-than-expected appraisals can threaten home sales, depress property values
Homes in Black and Latino neighborhoods appraise for less than their agreed-upon purchase price more often than in white areas, according to new research from government-backed mortgage giant Freddie Mac.
About 15.4% of single-family properties in majority-Latino census tracts and 12.5% of homes in majority-Black areas appraised lower than their contracted price between 2015 and 2020, Freddie Mac researchers found. The rate in white neighborhoods was 7.4%.
Appraisals are at the heart of the home-buying process: Lenders use them to make sure a property is worth enough to cover the mortgage. Independent appraisers look at a home’s condition, nearby sales of comparable properties and other factors to determine its value. If an appraisal comes in lower than the contracted price, a buyer might have to put up more money to cover the difference or risk the deal falling through.
Lower-than-expected appraisals can set a floor on a property’s value, limiting the equity a buyer can build over time. The values are then considered during future appraisals, potentially depressing property values throughout an entire neighborhood.
Rest here…
Well it’s been 6 years since we were forced out of our home on a snowy day in March 2015 – by the buyer and his dad….Greg and Pat Dorn. It was the worst experience of my life that I will never get over. I lost my family property on the waterfront in Baltimore County. My father had purchased and we had lived on – year round – since 1958. I can see where this is leading – minority homes are at risk now….no one paid attention until it spread to white people (I am white)….It’s all been done beforre. The greedy bastards on Wall Streed crashed our economy in 2008. None of us got bailed out but them No one will pay attention until it’s too late. Housing is alrady way overpriced.