According to a 2018 report from the Brookings Institution, owner-occupied homes in majority-Black neighborhoods are undervalued by $48,000 per home on average, amounting to a cumulative loss of $156 billion nationwide. Factors such as crime rate and commute times are being used to reduce the values of homes, even if the home is located in a historic district, which usually garners higher prices in these residential areas.
“Homeownership is the path to building equity and wealth for many families,” said Assemblywoman Angela McKnight (D-Hudson). “Discriminatory practices in housing are not new in black and brown communities. Historically, redlining, or lending discrimination, has plagued home buying for people of color for years. With the latest discussions emerging on home appraisals and the use of racial bias due to the location of the home, it seems there is a racial divide in real estate that still remains.”
Under the legislation (A-5146) Assemblywoman McKnight has recently introduced, holders of appraisal licenses or certifications, or appraisal management company registrations, may have their licenses, certifications or registrations revoked or suspended, or be subject to fines if after an appropriate investigation it is concluded that they have knowingly engaged in a discriminatory appraisal of a residential property based on the property buyer or property seller’s race, creed, color, or national origin.
“There’s a cost to devaluating property. Many homeowners use home equity to support their families’ dreams and goals— college, business endeavors or just to get through tough times,” continued McKnight. “The past few years have been critical as property values have gone up. However, some people are not provided the same access to home buying incentives because they are discriminated against during the appraisal process. Every homeowner should have the right to be given the true worth of their home.
“This legislation is a strong start to curbing discriminatory housing practices and understanding the impact of these actions on New Jersey communities. No one should be left out of building equity and wealth through homeownership.”
The bill provides that upon first interaction with a property buyer, a licensed real estate broker, broker-salesperson, or salesperson must make available to the property buyer a document, prescribed by the New Jersey Real Estate Appraiser Board, informing the property buyer of the opportunity to report, through the Division of Consumer Affairs’ website or telephone number, any suspicion of a discriminatory appraisal by the holder of a license, certification or registration based on a property buyer or seller’s race, creed, color, or national origin.
The legislation was referred to the Assembly Regulated Professions Committee.