But then came the appraisal.
In two new discrimination complaints filed with the U.S. Department of Housing and Urban Development on Wednesday, Robinson says she was lowballed by around $400,000 on the value of her property, largely because she and some of her neighbors are Black. The claims reflect the latest in a series of cases where Black homeowners in and around the Bay Area say they’re being unfairly shut out of favorable financing and historic real estate gains as home prices hit record highs. It’s a nationwide concern that also recently pushed President Joe Biden to vow new appraisal reforms.
“This is our present-day redlining,” said Caroline Peattie, executive director of Fair Housing Advocates of Northern California, which filed the complaints on Robinson’s behalf. “It just continues the cycle.”
In the blur of paperwork and bidding wars that can come with buying, selling or refinancing a home, hiring an appraiser to officially determine the value of a property can seem like just one more real estate formality. But Robinson’s case illustrates how these subjective valuations can also reinforce long histories of racist land use policies and the racial wealth gaps they helped create. Advocates like Peattie are now pushing to change all that by calling for more federal enforcement of discrimination laws and new checks and balances on home appraisals.
As it stands, Black home loan applicants in Oakland are more than twice as likely to get denied as white applicants, federal mortgage data shows. Around one-quarter of the city’s Black residents own their homes, according to a 2018 city analysis, compared to more than half of white residents.
The racial homeownership gap points to what author and Princeton University professor Keeanga-Yamahtta Taylor calls a system of “predatory inclusion” that emerged after legal forms of housing discrimination were barred in the 1960s. Since then, Black residents of many U.S. cities have been sold a lesser American Dream of aging homes in poor condition, bad loan terms and lax enforcement of fair housing laws, Taylor wrote in her book “Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership.”
“The source of inequality is not just in the difference between the numbers of African Americans and whites who own homes,” Taylor wrote. “Even when African Americans do own their own homes, they experience the supposed benefits differently in comparison with white homeowners.”
Robinson’s home on Martin Luther King Jr. Way sits at a crossroads near the Oakland-Berkeley border. In the 1930s, the Temescal neighborhood just to the east was noted by Oakland building officials for its new $5,000 bungalows and pleasant climate. But to the west was a nameless area color-coded red on the city’s “residential security map,” meaning that most banks would not lend there.
“Certain blocks of the area are nearly 100% Negro and constantly spreading,” an Oakland building inspector wrote in a 1937 report archived by the University of Maryland and mapped by artist Josh Begley.
Today, real estate agents are trying to rebrand the neighborhood as NOBE, short for North Oakland-Berkeley-Emeryville. By last August, when Robinson was hoping to refinance, quaint cafes and craft beer bars had combined with the region’s acute housing shortage to boost the median local home sale price to $1.2 million, according to the National Association of Realtors.
That’s why Robinson was so shocked when the appraisal for her 2,300-square-foot home came back at just $800,000. But then she noticed that the appraiser incorrectly wrote that the house had four bedrooms instead of five, and that the house would fall under local rent control rules, which it didn’t. Most jarring, Robinson realized that the homes the appraiser compared hers to were in historically Black neighborhoods south of her property, instead of whiter and wealthier nearby Rockridge.
“I was caught totally off guard,” Robinson said in an email. She couldn’t shake one question: “Would he have done that if I weren’t Black?”
Though lower-than-expected home appraisals are a risk that real estate agents warn clients of all races about, Peattie said race can creep into the process in several ways. She’s advised both Black and Latino homeowners who similarly received low numbers based on comparisons skewed toward values in nearby non-white neighborhoods. In other instances, Black homeowners have “whitewashed” their homes, removing personal photos or asking a white friend to stand in for the inspection, and gotten higher values.
In February, a Black couple in Marin City went public with their story of spending $400,000 on home renovations, only to see their home value inch up $100,000 after an appraiser noted the home’s “distinct area.” Marin City, like Oakland and other historically Black Bay Area communities, was forged by a combination of racist housing covenants and industrial “war corridor” jobs that attracted Black migrants from Southern states in the 1900s.
Even high-profile Black public officials have been caught up in appraisal backlash. Earlier this year, former Stockton Mayor Michael Tubbs spoke out when an appraiser valued his property at $70,000 less than what the prospective buyers offered, causing the deal to fall apart.
“That’s money we now are unable to pass on to our 19-month-old and our unborn child,” Tubbs told ABC7 News at the time. “And not because the house wasn’t worth that much, but because we’re Black.”
In Robinson’s case, a second appraisal didn’t help. She went to a different lender who hired the same appraiser. In November, he said the house was worth $825,000, according to the federal complaint. The mortgage lender, the individual appraiser and a company hired to facilitate the appraisal are all named in the complaints.
The next step in the case is for federal housing officials to investigate and evaluate either a settlement or a lawsuit, Peattie said. She also hopes Robinson’s story will contribute to potential reforms like shifting to more auto-generated valuations, providing a range of appraisal values or requiring multiple appraisals. Appraisal industry groups are also offering scholarships and trying to diversify the industry’s ranks.
While that much bigger discussion plays out, Robinson was finally able to refinance early this year. Her monthly payments dropped by $769 after a third mortgage lender sent a different appraiser in February, who valued the home at $1,239,000. She estimates that the delays cost her about $4,000, not including the money she could have saved last year with even lower interest rates.
It all seemed like it should have been so simple, Robinson said, until she found herself in the middle of a new version of an old civil rights battle.
Lauren Hepler is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org; Twitter: @LAHepler