New Evidence Points Away From Appraiser Bias

A recent analysis of appraisal data by the American Enterprise Institute provides compelling evidence that differences in home valuations are not primarily attributable to racial bias by appraisers. By examining granular appraisal records, the researchers found that under-valuations relative to contract price occur at similar rates for all racial groups when controlling for geography.

In other words, once location factors are accounted for, there is little difference in appraisal outcomes between white and non-white borrowers. This strongly indicates that previously alleged widespread bias among appraisers was a premature conclusion.

Several prior studies, including from the Federal Housing Finance Agency and others, claimed racial bias was evident in aggregate valuation patterns in minority neighborhoods. However, the AEI analysis shows commonalities like buyer experience and market conditions correlate far more closely with under-valuations than race.

These findings align with concerns many have raised about oversimplifying complex housing data. Sweeping claims of bias risk maligning an entire profession without properly isolating causation.

Of course, ongoing efforts to promote appraisal objectivity and fairness are still prudent. But blunt policy tools like moratoriums on certain valuation methods appear unwarranted given the evidence.

Moving forward, the industry should emphasize appraiser education over punitive assumptions. Policymakers must carefully weigh research methods and avoid confirmation bias on this nuanced issue.

With this new empirical insight, the conversation should shift to practical steps that support appraisal accuracy for all homebuyers regardless of demographics. Above all, buyers need dependable valuations to make wise investment decisions. Facts and fairness must lead the way forward.