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November 29, 2018

Property devaluation in black neighborhoods costs homeowners $156 billion, report says

Homeowners in, and near, Philadelphia are undercut by $36,000 on average

Property Racism
Stock_Carroll - Rowhomes Rowhouses  Thom Carroll /PhillyVoice

Rowhomes in West Philadelphia.

A new report from the Brookings Institution says homes in majority-black neighborhoods across the country are routinely undervalued, at an average of $48,000 per home.

The study, which is authored by Andre Perry, Jonathan Rothwell, and David Harshbarger looked at 113 metropolitan areas with at least one majority-black neighborhood, and it was weighted to account for metropolitan areas that contain large black populations. (The study can be read in full here.)

The authors of the study believe that, by controlling for causes of price differences like education, home quality, and neighborhood crime, their study “suggests that bias is likely to be a large part of the unexplained devaluation of black neighborhoods and some perspective on how anti-black beliefs distort the value of assets.”

“Our findings are generally consistent with the widespread presence of anti-black bias,” the authors contend in their conclusions, “whether unconscious or not, ingrained stereotypes and automatic associations of a particular group, and even outright discrimination and racism.”

Along with the study itself, Brookings Institution included a web tool for searching the metro where you live and finding how much homes in the majority-black neighborhoods around the country have been devalued.

“Our findings are generally consistent with the widespread presence of anti-black bias ... and even outright discrimination and racism.” – Brookings Institution study

The Philadelphia metro area used in Brookings’ report includes the city along with Camden, Wilmington, and parts of Maryland. The report says homes in majority-black neighborhoods in this metro area have a median value of around $112,000; without this systematic devaluation, the report estimates the homes would have a median value of around $148,000.

In the Atlantic City-Hammonton metro area, the study found that median home value in majority-black neighborhoods was roughly $156,000; without the systematic devaluation, the report estimates the homes would have a median value of nearly $180,000.

The study calculated that adding in sum, this results in $156 billion in lost value to property owners in majority-black neighborhoods.

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