Black homeowners believe appraisal discrimination is rampant, a new survey from LendingTree finds.

Overall, 23% of homeowners of all races believe their home appraisal is too low. But the consumers who are most likely to feel that way are Blacks (32%) and LGBTQ+ homeowners (31%), the survey finds.

Despite the fact that appraisers are prohibited from considering protected classes under the Fair Housing Act in the development of a property valuation, more than half—58%–of Black homeowners believe that race, sexual orientation, or another protected demographic is factored into an appraisal, LendingTree’s analysis finds. One in four Black homeowners who’ve ordered a home appraisal say they’ve even tried to conceal their race from the appraiser. Only 11% of white homeowners said they tried to do the same.

“The more data collected on how people of different races, sexual orientation, or genders have their homes appraised, the easier it would be to identify any problems,” says Jacob Channel, LendingTree’s senior economic analyst.

©National Association of REALTORS®
Reprinted with permission

The U.S. homeownership rate has posted its highest annual rise on record, reaching 65.5% in 2020, 1.3 percentage points over the year before. Hispanic homeownership soared to a record high and is above 50% for the first time on record.

However, Black homeownership continues to lag and has fallen to a lower level than it was a decade ago, according to a report from the National Association of REALTORS®. Black homeowners continue to face significant obstacles to homeownership, like high levels of student debt. They also are among the most likely—along with Hispanic applicants—to be rejected for mortgage loans, the report says.

The homeownership rate for Black Americans is 43.4%, trailing the 2010 rate of 44.2%. By contrast, the homeownership rate for White Americans is 72.1%, 61.7% for Asian Americans, and 51.1% for Hispanic Americans. NAR’s 2022 Snapshot of Race and Home Buying in America report analyzes homeownership trends and identifies housing challenges by race.

Affordability Challenges Persist

“As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face,” says Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans.”

Since 2019, the price of the typical home has risen by 30%, or by about $80,000, according to NAR. About half—51%—of all homes currently listed for sale are affordable to households with an income of $100,000 or more. However, only 20% of Black households have incomes greater than $100,000. In comparison, 35% of White households have incomes of more than $100,000, while 25% of Hispanic American households and nearly half of Asian American households reach that level.

Higher rental costs are also pressing on household budgets. Half of Black Americans spend more than 30% of their monthly income on rent. Nearly three out of 10 Black renter households (28%) and one in five White renter households (20%) are considered severely cost-burdened. That is defined as spending more than 50% of a household’s monthly income on rent.

“Black households not only spend a bigger portion of their income on rent, but they are also more likely to hold student debt and have higher balances,” Lautz says. “This makes it difficult for Black households to save for a down payment and as a result, they often use their 401(k) or retirement savings to enter homeownership.”

Speaking Up for Fair Housing

NAR has taken an active role to combat the racial homeownership gap. The association serves on the steering committee of the Black Homeownership Collaborative(link is external), which has a seven-point plan charged with increasing Black homeownership by a net 3 million by 2030. NAR also has its ACT plan, which emphasizes “Accountability, Culture Change, and Training” to advance fair housing in the industry. NAR offers an interactive training platform, Fairhaven, which puts real estate professionals in simulated situations where discrimination in a real estate transaction can occur. The association also offers its members an implicit bias video and classroom training to offer strategies that help real estate professionals override biases in their daily interactions.

NAR has also taken an active voice to advocate for more housing inventory and affordable housing, which includes expanding and creating tax incentives and zoning reforms. NAR and the Rosen Consulting Group published a report that examines the causes of America’s housing shortage and provides solutions to address it.

View the report: Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing

©National Association of REALTORS®
Reprinted with permission

A federal judge ruled that an Oregon law preventing buyer “love letters” is a violation of First Amendment rights. The letters have commonly been included in home offers, with buyers writing to sellers expressing their desire for a home.

Last year, Oregon became the first state in the country to prevent real estate agents from forwarding such letters to sellers. The law, which was introduced by a real estate agent who serves in the state Senate, was based on the concern that the letters may include photographs and videos and personal details about the buyer which could lead the seller to choose among offers based on the buyer’s personal characteristics, in violation of fair housing laws. The Oregon law did not prevent buyers from communicating with sellers directly, however.

In November 2020, a lawsuit was filed in federal court by the Pacific Legal Foundation on behalf of a real estate firm to block Oregon’s ban.

“Today’s ruling preserves the opportunity of home buyers to speak freely to sellers and make the case why their purchase offers should win out,” Daniel Ortner, a Pacific Legal Foundation attorney, said in a statement about the ruling. “Love letters communicate information that helps sellers select the best offer. The state cannot ban important speech because someone might misuse it.”

The court found the ordinance to be too broad in restricting buyers’ speech, saying laws already exist to prohibit sellers from discriminating against buyers’ backgrounds and characteristics. 

Despite the recent ruling, the real estate industry cautions about the use of such letters. The letters could reveal a buyer’s race, national origin, religion, sexual orientation, or other protected characteristics which could sway sellers in one direction in an offer situation. The National Association of REALTORS® has issued warnings over the use of such letters to its members. Several brokerages and real estate professionals also have taken a stance that they will not deliver such letters on behalf of their buyers due to fair housing fears.

Lisa Bates, a Portland State University associate professor in the Toulan School of Urban Studies and Planning, told USA Today that the letters could lead to sellers who may “consciously or unconsciously” choose home buyers who are similar to themselves, which could reinforce racial gaps in homeownership and neighborhood segregation.

©National Association of REALTORS®
Reprinted with permission

Real estate professionals are legally obligated to uphold fair housing laws, and the language and images you use in your advertising needs to be vetted carefully. REALTORS® also have an obligation to do so under Article 10 of the Code of Ethics.

“Advertisements should never indicate a preference or limitation based on a protected class, which at the federal level includes race, color, religion, sex, disability, family status, and national origin,” Mike Rohde, staff attorney at the National Association of REALTORS®, says in a recent “Window to the Law” video. “HUD recently expanded its interpretation of sex to include sexual orientation and gender identity, and state and local laws may expand the categories of protected classes further.”

Access NAR’s fair housing resources.

Rohde provides a tip: When advertising a property, focus on describing the property, not the buyer or tenant. As such, he cautions against using phrases like “ideal for empty nesters” or “perfect for students” that could raise red flags by implying a preference of one demographic over another. On the other hand, he says phrases like “easy walk to train” or “beautiful Mexican doors” are likely to be acceptable since they describe the property’s characteristics.

Also, Rohde says, just like when you’re advertising properties, describe your services and not whom you want to serve. For example, agents may promote their fluency in a particular language or specialization in an area of the community. But avoid indicating a preference for or limitation to the clients you serve, he says.

Real estate ads are judged using a reasonable person standard, which can evolve over time, he adds. As such, once-overlooked words and images, such as the Confederate flag, could present fair housing concerns nowadays.

©National Association of REALTORS®
Reprinted with permission

The National Association of REALTORS® is leading a large coalition of stakeholders in the real estate industry—property owners, real estate professionals, appraisers, portals, valuation, and public records companies, and others—that is urging the Supreme Court to review and overturn a federal appeals court threatening copyright liability for the use of floor plans in the sale of a home. Realtor.com® operator Move Inc. and the Council of Multiple Listing Services also have each filed briefs in support of reversing the lower court’s opinion.

On Thursday, the coalition filed an amicus curiae (friend of the court) brief with the nation’s highest court, seeking a review of a 2021 Eighth Circuit ruling in Designworks Homes Inc. v. Columbia House of Brokers Realty. Designworks and its owner, Charles James, claimed two real estate companies in Columbia, Mo., had violated copyright law when they created floor plans to assist in the sale of homes that James had built.

A U.S. District Court had ruled in favor of the real estate companies, concluding that a statutory defense shielding the creation of “pictures” or “other pictorial representations” of architectural works covered floor plans. The appeals court disagreed that the law extended to floor plans and vacated the district court’s ruling.

The ruling has chilling implications for homeowners and their agents throughout the country, says NAR General Counsel Katie Johnson. Floor plans are fundamental to the buying, selling, appraisal, and renovation of homes. Buyers rely on them to get a feel for the flow of a house before touring it; appraisers use them to develop an opinion of value; and owners and building contractors use them for a variety of purposes—from furniture installation to home improvement projects.

The brief cited NAR’s 2021 Home Buyers and Sellers Generational Trends Report, which showed that more than two-thirds of online home shoppers found floor plans to be “very useful” and noted that new technologies make it easy to measure properties and create floor plans using a smartphone.

The American Property Owners Alliance(link is external), which joined in the brief, cited its own data(link is external) showing that “89% of respondents strongly agree homeowners should be able to create a floor plan of their home anytime they want and select whomever they want to fulfill that task.”

“It is a safe bet that most Americans would be startled to hear they could be sued for copyright infringement for making floor plans of their home,” coalition members said in the brief, adding that the ruling threatens to severely limit property rights. “Even setting aside litigious home designers, the decision … opens up a new hunting ground for enterprising copyright trolls.” The brief cited one such company that has filed more than 100 copyright infringement suits based on floor plans over the last decade or so.

According to the rules of the Supreme Court, four of the nine justices must vote to accept a case; a decision on whether the court will review the case is expected this year. “NAR, our institutes, societies and councils, and all other entities who signed on to this effort share the common goal of making property ownership desirable and feasible for consumers,” Johnson says. “By joining together in filing this brief, we are asking the Supreme Court to acknowledge that homeowners should be able to create and use floor plans without fear of litigation throughout the ownership and sale of their homes.”

©National Association of REALTORS®
Reprinted with permission