WALNUT CREEK, Calif. (KGO) — A house in the East Bay has redefined the term “fixer-upper”, leaving you to do the fixing from the framing on up, and only adding to the countless stories of the Bay Area’s housing market.
The posted online listing has a disclaimer to “bring your contractor, architect, and designer,” but reads “this one is ready to start fresh and build to suit your style preferences”.
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: lauren.hepler@sfchronicle.com; Twitter: @LAHepler
Patricia Franklin and her husband, Doug, dreamed about a second home in Lake Tahoe during the COVID-19 pandemic as a family retreat.
The couple started out with a $700,000 budget, enough, they thought, to get a move-in ready home in a nice community.
After six weeks of online searching and masked home tours, the Franklins found their answer — a million-dollar fixer-upper on the Nevada side of the lake. The family, including two college-aged children, has made several visits from their Novato home to their new property. “We had lawn chairs in the living room, a blow-up mattress in the back,” Patricia Franklin said. “It was kind of like glamping.”
This is one of the 102 homes Breck Overall and his agents sold in the Truckee Area over the past year. This multi-million dollar estate is located adjacent to a golf course in the gated community of Lahontan, in Truckee, California. (Photo by Steve Keegan)
Even as the state eases out of pandemic restrictions and companies call workers back to the office, Bay Area families are paying premiums for second homes and a retreat to Tahoe’s natural beauty and outdoor pursuits. Homes are selling at a record pace and for record prices in relaxed resort towns.
“The demand has not slowed at all,” said Truckee agent Breck Overall. “Not one bit.”
Home values in Nevada County, including Truckee, rose 29% to $604,000 between May 2020 and May 2021, according to Zillow data. Nearly 4 in 10 homes sold above list price, triple the pre-pandemic rate.
A sign marks the entrance to the gated community of Schaffer’s Mill, located in Truckee, California. (Photo by Steve Keegan)
Home values in El Dorado County, which stretches from the Sacramento suburbs to the shores of South Lake Tahoe, rose 27% in May over the previous year, hitting $599,000. That’s nearly three times as fast as Bay Area home values rose during the same period. “The pace of price appreciation there is astronomical,” said Zillow economist Jeff Tucker. ” And we haven’t seen a slowdown yet.”
Nationally, home values increased 13.2% over the same period, according to Zillow.
Real estate agents and residents say the great northern land rush has been driven by Bay Area residents. An analysis of U.S. Postal Service data showed an influx of 14,700 San Francisco and East Bay residents into the greater Tahoe-Sacramento region. By comparison, just 3,000 San Francisco and East Bay residents left for Austin, Texas, according to an analysis by real estate services firm CBRE.
Construction workers labor to build new homes inside the gated community of Schaffer’s Mill, in Truckee, California, as demand for homes in this Sierra community continue to rise. (Photo by Steve Keegan)
Tahoe has even seen a spike in the ultra-luxury market, with record-setting prices for estates. A seller listed their 5-acre lakefront estate with guest houses for $60 million this month, which could set a record for Incline Village in Nevada.
The market has become a seller’s dream and has buyers scrambling to bid on the relatively few properties for sale. Despite Bay Area companies bringing employees back to the office, many techies and wealthy buyers have chosen to invest in second homes in the most exclusive enclaves of Tahoe.
Realtor Breck Overall and his agency sold 102 homes in Tahoe last year. Most of the properties have been purchased as second homes by Bay Area residents. Often, the properties are located in exclusive, gated neighborhoods adjacent to golf courses like this one in the community of Schaffer’s Mill. (Photo by Steve Keegan)
Tahoe City agent Jamison Blair said Bay Area competition has seeped into the once-sleepy resort market, bringing bidding wars, cash offers and “as-is” deals. “We just don’t get that up here,” he said.
Families have become more attuned to the quality of living during the pandemic, he said, and still want to stay close enough to their Silicon Valley jobs. Buyers once looking for open space and a bonus room for the kids now top their wish lists with high-speed internet, office space and big closets that accommodate long-term stays.
Jenna Rose Madrid, a Compass agent based in Incline Village, said she’s seeing more California residents looking to move into Nevada with an eye toward retirement and to take advantage of the state’s lower taxes.
The pace has been frantic. Madrid said she’s sold at least a half-dozen homes after giving clients a Facetime video tour, without buyers setting foot onto the properties. “It’s like, ‘Go, Go, Go!’” she said.
Dan Clark and his wife sold their investment property in San Francisco and wanted to find a vacation property that could transition into a full-time residence. The couple, baby boomers who had recently become empty-nesters, searched in Palm Springs and Tahoe — losing a few bids along the way. “We picked the two hottest markets” in California, Clark said.
They finally outbid other buyers for a $1.5 million home in Tahoma, paying about a 10% premium over the list price to buy a home big enough for children and grandchildren to gather for holidays and vacations. The intense search surprised Clark, a veteran Berkeley real estate agent. “I didn’t know it would be that competitive,” he said.
Overall, with Sotheby’s International, said his office handled 102 sales last year, and “not a single one of those families sold their primary residence.” His typical buyers have been from the Bay Area, between 45 and 65 years of age. Many are looking to transition into retirement, he said.
Early in the pandemic, Overall represented a buyer who signed a deal for a $6 million home without ever stepping foot on the property. “That was a sign to me, that, you know what, people really want to get out of the city,” he said.
But agents also said the relentless demand for homes has taken many investment properties and rentals off the market. Locals and tourists have struggled to find adequate part-time and year-round housing.
“There’s less and less vacation homes because more and more people want to be here full time,” said Madrid, a Tahoe native. Many of her childhood friends have been priced out, she said.
This golf course is located inside the gated community of Schaffer’s Mill, in Truckee, California. The course winds throughout the community and is viewable from the backyards of most of the homes. (Photo by Steve Keegan)
But the inflated housing market has done little to slow Bay Area buyers.
Patricia Franklin started searching for Tahoe homes with a friend just a few months into the pandemic. The Franklins compromised. Doug Franklin, a retired insurance consultant, agreed to take on the fixer-upper.
Their home in Incline Village has a solid frame and a decent roof, Franklin said, but it needs floors, an electrical system, windows and new siding. The couple just started renovations in June, a year after their purchase. Before fixing a thing, the home’s value has appreciated as much as 20%, she said.
“If you really want to live up here,” she said, “you really have to jump on it.”
SAN FRANCISCO, Calif. (KRON) – Some good news for home buyers, housing inventory is rising.
According to Zillow, people in the market for a new home are seeing more options popping up in their searches.
KRON4’s Michelle Kingston reports the demand for homes remains strong and prices continue to stay high.
Inventory rose by more than 3% across the United States for the second straight month in a row and that includes right here in the Bay Area.
“I think that wild west kind of market has settled down slightly, so I think we are seeing a better opportunity for buyers right now,” said realtor Jessica Lopez.
The housing market may be on the road to rebalancing after a long, crazy year of low inventory.
“The markets shifted a little bit. We are seeing a little increase in inventory. Average days on market has increased for the higher-priced points, so about 14-17 days on market versus maybe 5 days a few months ago. Things are still going pending at asking if not over even with that increase in time.”
In the San Francisco metro area, inventory is up 3.2% from May and up 15% since this time last year.
The typical home is now worth $1.2 million dollars up 15.4% since June of 2020.
And in the San Jose metro area, inventory is up 1.6% from May and up 19.4% since last year. The typical home is now worth 1.4 million, up 16.9% since this time last year.
“The anomaly there is that home prices are still really high in this market even though we have this growing inventory which isn’t what we necessarily see going on at the same time,” said Zillow economic Data Analyst Nicole Bachaud.
“I feel like if COVID taught us anything it’s that we can’t predict what this market is doing, but I do think that things are leveling out again to be a little bit more fair,” Lopez said.
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