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A lawsuit in California says homes of Black families are being under-valued

DON GONYEA, HOST:

A lawsuit in California claims that an appraisal company there undervalued one family's home because that family is Black. The suit says this is a form of redlining, an old practice of housing discrimination. From member station KQED, Kate Wolffe reports.

KATE WOLFFE, BYLINE: Ten minutes north of San Francisco, across the Golden Gate Bridge, there's a small, historically Black community called Marin City. That's where Paul Austin lives with his wife and two school-aged kids. They bought their home five years ago for $550,000. Since then, they've extended the living room, built out the ground floor and added a deck with a commanding view of the San Francisco Bay.

PAUL AUSTIN: So all over, the doors open up, and, you know, it's pretty peaceful and enjoyable.

WOLFFE: In 2020, Austin wanted to refinance, so he got his home appraised. When the number came back a few weeks later, it was way lower than he thought it should be. The appraiser valued the four bedroom, two bath house at just under a million dollars.

AUSTIN: When you put a lot of work into your home and you go from being excited - you know, like, oh, like, let's see what this - how this is going to turn out, to feeling upset.

WOLFFE: So Austin and his wife scheduled a new appraisal, but this time they asked a white friend to pose as the homeowner. That appraiser valued the house at almost $1.5 million.

AUSTIN: We were relieved a little bit - right? - but still mad, right? Like, yeah, like, we just proved that, you know, the system is so flawed, which we already knew.

WOLFFE: The appraiser who gave the Austins the lower price, Janette Miller, didn't respond to multiple emails and phone calls asking for comment on the lawsuit. Ronald Garland is an appraiser in the Bay Area. He says his industry is susceptible to racial bias.

RONALD GARLAND: An appraisal is a very human process.

WOLFFE: Most often, a house value is determined by assessing the market and finding out what similar properties in the area sold for. Those similar properties are called comps. Garland says when two appraisals are very different, it's because the appraisers were probably using very different comps. He thinks that's what happened to the Austins, given the $500,000 difference.

GARLAND: Quite frequently when I see this much disparity, I see two bad appraisals. I mean - you know?

WOLFFE: In court filings, the Austins allege that their first appraiser used inappropriate comps. Andre Perry is a senior fellow at the Brookings Institution and the author of "Know Your Price: Valuing Black Lives And Property In America’s Black Cities." He says what happened to the Austins in Marin City is indicative of what happens with comps in predominantly Black neighborhoods.

ANDRE PERRY: The problem with that approach is when you compare one home to another and a home that's been discriminated against, you effectively recycle discrimination over and over again.

WOLFFE: Perry and his colleagues have studied the issue and found that homes in Black neighborhoods are undervalued by $48,000 on average.

PERRY: Black people are still deemed unworthy of investment, reminiscent of the redlining of the past.

WOLFFE: Redlining is a historic, now illegal practice of banks literally drawing red lines on maps around areas where Black people live to show where home loans should not be approved because it would be considered a bad investment for the bank. As for homeowner Paul Austin, he says he wishes he didn't have to file this lawsuit.

AUSTIN: We shouldn't have to be fighting a fight that our grandparents fought when they were young.

WOLFFE: But Austin says he's willing to be the face of this fight and expose racism in the appraisal industry. For NPR News, I'm Kate Wolffe in Marin City, Calif.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.