Undervalued: How Appraisal Bias Is Draining Wealth From Baltimore's Black Neighborhoods

When a home appraises below its contract price, the consequences are immediate and tangible. The buyer must come up with a larger down payment. The seller receives less. Cash-out refinancing becomes impossible. The deal can fall apart entirely.

A study published by the Abell Foundation — examining appraisals conducted across the Baltimore metropolitan area between 2013 and 2022 — documents what many Black homeowners have long known: this happens more often in Black neighborhoods, and it happens because of the neighborhoods themselves.

The data, drawn from the Federal Housing Finance Agency’s Uniform Appraisal Dataset, found that homes in areas with larger non-white populations are more likely to be appraised below their contract sale price than comparable homes in predominantly white areas. Conversely, homes in predominantly white neighborhoods are more likely to receive appraisals that exceed the contract price.

The Abell Foundation’s conclusion is direct: the evidence shows “systematic appraisal bias that undervalues homes in predominantly Black communities in Baltimore City and the surrounding counties.”

How It Works

Home appraisals are supposed to be objective. An appraiser assesses a property’s value by examining its condition, size, and features, and by comparing it to similar homes that recently sold in the area — known as “comparables” or “comps.”

The problem is that comps reflect history. In Baltimore, decades of redlining, disinvestment, and racially discriminatory lending have suppressed sale prices in Black neighborhoods. When those suppressed prices become the benchmark for new appraisals, the bias perpetuates itself. A home sells for less because the comps say it should sell for less — and then it becomes a comp for the next appraisal.

The report documents this as a self-reinforcing cycle. Low appraisals become comps that drive down subsequent property valuations. Over years and decades, this compounds into a systematic gap in housing wealth between Black and white Baltimoreans.

The Individual Costs

For individual homeowners and buyers, the impact of a below-contract appraisal can mean:

• A higher required down payment, which may make a purchase impossible for buyers with limited savings
• A lower sale price, reducing the seller’s equity
• The inability to access home equity through cash-out refinancing — a tool that white homeowners frequently use to fund home improvements, education, or small businesses
• Higher interest rates or mandatory mortgage insurance premiums

These are not abstract losses. For families whose home is their primary or only significant asset, the appraisal system determines how much wealth they can build, transfer, and use.

“Troubling Patterns Persist”

The Abell Foundation’s report notes that some improvement is visible in recent years, but emphasizes that “troubling patterns persist.” Despite increased national attention to appraisal bias following high-profile cases in which Black homeowners received dramatically higher appraisals after presenting as white, the structural mechanics of the appraisal system have not fundamentally changed.

The report calls on Maryland policymakers to implement specific reforms targeting the appraisal process — including changes to how comparable sales are selected, greater oversight of appraisers operating in predominantly non-white neighborhoods, and legal pathways for homeowners who believe they’ve received a biased appraisal to seek remedy.

Baltimore in Context

Baltimore is a city where homeownership has historically been one of the few accessible paths to building intergenerational wealth for working-class families. But the appraisal bias documented in this study has worked against that for decades — quietly, technically, in ways that were difficult to prove until large-scale data analysis became possible.

The Baltimore Neighborhood Indicators Alliance tracks homeownership rates and housing market trends across the city’s 55 community statistical areas. Its data consistently shows that neighborhoods with the highest rates of Black homeownership are also the neighborhoods where home values have lagged the most — a pattern consistent with the appraisal bias the Abell study documents.

---

This article draws on “Evidence of Racial Bias in Home Appraisals in the Baltimore Metropolitan Area,” published by the Abell Foundation, and indicator data from the Baltimore Neighborhood Indicators Alliance (bniajfi.org).