Residential Real Estate in your city

[Investing In Chicago]

Originally Posted by iheartthed

Why would the presence of black families decrease the desirability of the neighborhood?

Are you unfamiliar with the fact many white americans don't want to live in Black Neighborhoods for a variety of reasons? And the presence of Black families moving in, can give off a "there's goes the neighborhood mentality amongst current residence and future residence. REALLY you don't understand that? I find that hard to believe. Like shockingly hard to believe.

[montréaliste]

Originally Posted by jmecklenborg

Because, by far, wealth has been generated in the United States by stocks, not by ownership of primary residences, and no mechanism has ever prevented minorities from buying U.S. stocks.

A quick google search sez the U.S. stock market has appreciated in value by 21,000% since 1970.
https://en.wikipedia.org/wiki/S%26P_500#/media/File:S_and_P_500_daily_linear_chart_1950_to_2016.png

Assuming a trickle down savvy factor exists in a given culture, social circle, whatnot; what percentage black traders existed in US stock exchanges until recently?

What resources could be allocated to these investments when people were circumscribed by de facto segregation? To ignore this and impute it to incompetence is sad. This isn’t about making excuses for bad life choices and cultural shortcomings in the AA community. It’s about realizing the shortfall that befell American society, at large.

The usual arguments on threads for knocking the topic of segregation/ lack of opportunity are that it sows division, and undermines solidarity in National terms.
I don't believe that, either in Canadian or American contexts.

[iheartthed]

Originally Posted by Investing In Chicago

Are you unfamiliar with the fact many white americans don't want to live in Black Neighborhoods for a variety of reasons? And the presence of Black families moving in, can give off a "there's goes the neighborhood mentality amongst current residence and future residence. REALLY you don't understand that? I find that hard to believe. Like shockingly hard to believe.

If this is what you believe then why is it so hard for you to understand that appraisers would factor in perceived race of home owners in the appraisal? What do you think is the purpose of an appraisal?

[Crawford]

The feds have done lots of appraisal testing, and there's no question that appraisals are kind of a crapshoot anyways. But beyond that, there appears to be a "living while black" factor, where (to take an example) you have a black family get appraised at 600k, and then they switch out the photos and keepsakes with the white family next-door, and it gets appraised at 800k. This doesn't have anything to do with neighborhood decline, white flight and the like, it's more like appraiser bias. You'll see this with the few AA households in affluent white areas too.

And, yeah, if I'm buying that house at 800k and it gets appraised at 600k, if I'm a typical buyer, we have a big problem. The sale isn't going through, at least not at 800k.

[DCReid]

Originally Posted by jmecklenborg

Because, by far, wealth has been generated in the United States by stocks, not by ownership of primary residences, and no mechanism has ever prevented minorities from buying U.S. stocks.

A quick google search sez the U.S. stock market has appreciated in value by 21,000% since 1970.
https://en.wikipedia.org/wiki/S%26P_500#/media/File:S_and_P_500_daily_linear_chart_1950_to_2016.png

Unfortunately, that wealth has been concentrated in the top 1-10% of high income earners and professionals. I would guess that in 1970 CEOs earned maybe 5 or 10 times as much as the average worker for their company, and even if they got stock options at least the average worker got a decent pension. Now, CEOs make 200-300 times the average worker, get loads of stock options, and most average workers don't have a pension.

[jmecklenborg]

Originally Posted by Crawford

you have a black family get appraised at 600k, and then they switch out the photos and keepsakes with the white family next-door

EVERYONE needs to erase themselves from their house when they list it for sale. Has a selling agent, in the history of the sales of homes, ever suggested to his seller to post MORE photos of themselves? MORE indications of their religious and ethnic background? To remove new furniture and replace it with old, worn-out furniture? To place more obnoxious pets in the house instead of removing all of them from the house?

The sale of a home is a BUSINESS. It's not a term paper. It's not a Twitter/reddit post. It's not about YOU. If you want to leave $10,000-100,000 on the table by posting obscene artwork on the walls in a family-friendly neighborhood, well then go for it.

I remember going to a condo open house more than 10 years ago where a seller left his pet rabbit in its cage right off the kitchen. Everybody walking through that unit kept playing with the rabbit and joking about it. Hardly anyone really looked close at the unit.

[Investing In Chicago]

Originally Posted by Crawford

The feds have done lots of appraisal testing, and there's no question that appraisals are kind of a crapshoot anyways. But beyond that, there appears to be a "living while black" factor, where (to take an example) you have a black family get appraised at 600k, and then they switch out the photos and keepsakes with the white family next-door, and it gets appraised at 800k. This doesn't have anything to do with neighborhood decline, white flight and the like, it's more like appraiser bias. You'll see this with the few AA households in affluent white areas too.

And, yeah, if I'm buying that house at 800k and it gets appraised at 600k, if I'm a typical buyer, we have a big problem. The sale isn't going through, at least not at 800k.

I'm not saying this doesn't happen, but every single time I have an appraisal (which as I said, I'm hoping for a low number) i'm given a report showing the justification part of which is comps. I just find it hard to believe this is happening at any sort of meaningful scale. Actually the last appraisal I was involved in, they appraiser didn't even enter the building.

The other question is, what is gained by giving a Black Family a lowered appraised value of their home? If I'm not selling my home, that just likely means a lower property tax bill for me. If I am thinking of selling my home, I don't need an appraisal, if I've sold my home as a black family and the lender for the buyer requests one, the race of the seller isn't that relevant. What is the real life use case here?

[jmecklenborg]

Originally Posted by DCReid

Unfortunately, that wealth has been concentrated in the top 1-10% of high income earners and professionals. I would guess that in 1970 CEOs earned maybe 5 or 10 times as much as the average worker for their company, and even if they got stock options at least the average worker got a decent pension. Now, CEOs make 200-300 times the average worker, get loads of stock options, and most average workers don't have a pension.

Pensions often die completely when the primary beneficiary dies. Sometimes, the surviving spouse gets 50%, but at some point the pension quits paying. If someone works for 30 years and dies after 1 year of retirement, they enjoy almost no payout (that circumstance is ideal for the pension fund, however).

The switch to the 401k in the early 1980s changed everything. It now became the responsibility of the worker to manually invest and then annuitize that sum upon retirement, either formally or informally. The huge advantage is that if you die with $1 million one year after retirement (or even before retirement), that full sum can be passed on to your spouse and heirs.

The giant risk in the 401k system is individuals not taking advantage of the tax-advantaged accounts OR withdrawing the money before they retire. My first job out of college was working in the early retirement withdrawal dept at Nationwide Insurance. This was before the process was digitized so I read the handwritten withdrawal requests and the rationale was sometimes rational - a huge medical expense - but as or more often they wanted the money to buy an RV or boat or jet ski.

[jmecklenborg]

Originally Posted by Investing In Chicago

What is the real life use case here?

Right, there is no real life use case. Which is why it's just a Twitter/Reddit battle over absolutely nothing.

The Zillow Zestimate, for example, has no idea whatsoever what the race of an owner is or what the condition of the interior of a property is. The Zestimate doesn't care about decorations or damage from pets. It's going by square footage, bedrooms/bathrooms, and comps.

But this is why the Zestimate (and its competitors) are merely rough guides. It is still up to you, the seller, to do the work necessary to maximize the property's value.

[Crawford]

Originally Posted by jmecklenborg

EVERYONE needs to erase themselves from their house when they list it for sale. Has a selling agent, in the history of the sales of homes, ever suggested to his seller to post MORE photos of themselves? MORE indications of their religious and ethnic background? To remove new furniture and replace it with old, worn-out furniture? To place more obnoxious pets in the house instead of removing all of them from the house?

I don't know if this is a local thing, but when we bought our apartment, we wrote a letter with family pics, and included very personal info. It was also partially in Portuguese (my wife speaks/writes it and we knew the sellers were Brazilian). The sellers hinted that the letter/pics helped seal the transaction. The agent encouraged the letter/photos and said most of her client offers include something personal.

There were two competing buyers who offered more or less the same package (slight term differences, but price was essentially the same). IMO, it isn't just a business transaction, it's an emotional decision.

We also viewed an apartment that looked like Patrick Bateman of American Psycho lived there. It looked like the kind of place where women would disappear. We weren't interested. Again, emotions overruling business considerations. Investment properties are one thing, but not primary residences.

[suburbanite]

Originally Posted by Investing In Chicago

The other question is, what is gained by giving a Black Family a lowered appraised value of their home? If I'm not selling my home, that just likely means a lower property tax bill for me. If I am thinking of selling my home, I don't need an appraisal, if I've sold my home as a black family and the lender for the buyer requests one, the race of the seller isn't that relevant. What is the real life use case here?

I mean the skeptical view would be someone thinking that a black family living there would somehow deteriorate the value of the home, and as such, wouldn't want to give financing on an appraised amount above this baked in deterioration factor in case they ended up in possession of the asset. For someone buying or selling a home on the resale market I have no idea why it would matter.

[moorhosj1]

Originally Posted by jmecklenborg

Ordinary people get wealthy by consistently contributing to tax-advantaged retirement accounts that are mostly invested in the S&P 500. There has never, ever been any law that kept minorities from buying stocks. The U.S. stock market has exploded in value in the 60~ years since the least vestiges of discriminatory practices were illegalized. The value of single-family houses has not.

“Ordinary people” is an odd term to use. I just showed you data that proves that middle-class people’s main asset is their primary residence. Investing in the stock market requires disposable income, which multiple people have showed you is higher for white people than black people with the exact same education.

Also, home values have done pretty well, according to Census.gov

Median home values adjusted for inflation nearly quadrupled over the 60-year period since the first housing census in 1940. The median value of single-family homes in the United States rose from $30,600 in 1940 to $119,600 in 2000, after adjusting for inflation

You are tying yourself in knots to prove your point, but you don’t realize it is based on your own experience not “ordinary people.” People require shelter, owning a home allows them to live in a place and build equity at the same time. Investing in stocks requires paying for a place to live AND ALSO having money to invest in the stock market.

[jmecklenborg]

Originally Posted by Crawford

I don't know if this is a local thing, but when we bought our apartment, we wrote a letter with family pics, and included very personal info. It was also partially in Portuguese (my wife speaks/writes it and we knew the sellers were Brazilian). The sellers hinted that the letter/pics helped seal the transaction. The agent encouraged the letter/photos and said most of her client offers include something personal.

This gets back to my comment in this (or maybe another) thread - you can delete redlining but people will still self-segregate. No law orders us to sell our homes to the highest offer.

I was out for a walk a few months ago and commented to a guy who was moving out of a house that "I almost bought that house back in 2013". He was like yeah, that's when I bought it. I said "wasn't it listed for like $75,000?" and he was like yeah, that's about what I paid for it.

He then told me that he was retiring to Alabama (weird) and turned down many offers for the house from institutional buyers and was selling it to a married couple with kids for about $50,000 less than what he could have gotten from the hedge funds.

I acted like I agreed with his choice but no way would I have done that. I have no more emotional attachment to the neighborhood (it's a college rental area) than anybody from out-of-town. I also didn't understand why a family with kids would want to live in a college rental area. It made me suspicious that this was a story he was telling people to look like he's "one of the good ones", or whatever, since he doesn't think anyone's actually going to look up the transaction on the Auditor's website.

[LosAngelesSportsFan]

Originally Posted by Investing In Chicago

I'm not saying this doesn't happen, but every single time I have an appraisal (which as I said, I'm hoping for a low number) i'm given a report showing the justification part of which is comps. I just find it hard to believe this is happening at any sort of meaningful scale. Actually the last appraisal I was involved in, they appraiser didn't even enter the building.

The other question is, what is gained by giving a Black Family a lowered appraised value of their home? If I'm not selling my home, that just likely means a lower property tax bill for me. If I am thinking of selling my home, I don't need an appraisal, if I've sold my home as a black family and the lender for the buyer requests one, the race of the seller isn't that relevant. What is the real life use case here?

Exactly. This nonsense about blacks getting lower appraisals is 🞵🞵🞵🞵🞵🞵🞵🞵. Its not reality and I don't care what a few anecdotal reports say. If you have ever seen an appraisal, you would know.

[LosAngelesSportsFan]

Originally Posted by Crawford

I don't know if this is a local thing, but when we bought our apartment, we wrote a letter with family pics, and included very personal info. It was also partially in Portuguese (my wife speaks/writes it and we knew the sellers were Brazilian). The sellers hinted that the letter/pics helped seal the transaction. The agent encouraged the letter/photos and said most of her client offers include something personal.

There were two competing buyers who offered more or less the same package (slight term differences, but price was essentially the same). IMO, it isn't just a business transaction, it's an emotional decision.

We also viewed an apartment that looked like Patrick Bateman of American Psycho lived there. It looked like the kind of place where women would disappear. We weren't interested. Again, emotions overruling business considerations. Investment properties are one thing, but not primary residences.

Love letters to sellers is pretty much prohibited / illegal now in California. Ive certainly had had offers selected based on personal letters in the past since it can create a relationship with the seller

[moorhosj1]

Originally Posted by LosAngelesSportsFan

Exactly. This nonsense about blacks getting lower appraisals is 🞵🞵🞵🞵🞵🞵🞵🞵. Its not reality and I don't care what a few anecdotal reports say. If you have ever seen an appraisal, you would know.

I like how you dismiss it as "a few anecdotal reports" and then provide your data of having "seen appraisals." Is your personal experience somehow not anecdotal?

Just takes a simple google search to find out that it is far more than a few anecdotes. Actual scholars, looking at actual appraisals have studied it and found the reality. [1,2,3]

A low appraisal hurts the seller, which lowers the amount of money they make on their house, which impacts their ability to build wealth over time, which was the entire discussion. A low appraisal can also hurt the buyer because it limits the amount they can borrow to purchase the house, which means you have to put more money down, which hurts your ability to build wealth. It's odd that people who are experts in real estate wouldn't understand this.

1. Brookings study

2. Washington University study

3. NYT article with more sources

[Wigs]

Ohio bank to pay $9M as Justice Department tackles redlining and racial justice

Grace Hauck
USA TODAY
Feb 28, 2023

The Department of Justice announced another multimillion-dollar settlement Tuesday in its campaign to combat discriminatory lending practices across the U.S. — an initiative that has won $84 million in relief to borrowers so far.

An Ohio bank accused of redlining majority-Black and Hispanic neighborhoods in the Columbus area has agreed to pay $9 million, said Kristen Clarke, assistant attorney general of the Justice Department’s Civil Rights Division.

The settlement marks the sixth such agreement under the department's Combating Redlining Initiative, launched in 2021. It comes a month after the department announced the largest redlining settlement in its history – a $31 million agreement with City National Bank, the largest bank headquartered in Los Angeles.

"When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern-day redlining and exacerbate the racial wealth gap in our country," Clarke said at the Martin Luther King Jr. branch of the Columbus Metropolitan Library. "Unfortunately, redlining has not yet been relegated to the dustbin of history."

What is Park National Bank accused of?

Park National Bank, headquartered in Newark, Ohio, has 92 branches across four states, with 20 in the Columbus area. The federal complaint alleges that, from at least 2015 to 2021, the bank did not provide mortgage lending services by redlining majority-Black and Hispanic neighborhoods in the Columbus area.

https://www.usatoday.com/story/news/nati...-lending-discrimination-doj/11365841002/

But hey, redlining was no big deal in the history of the United States and no longer happens, nor do other discriminatory practices occur, according to some forumers

[LosAngelesSportsFan]

Originally Posted by moorhosj1

I like how you dismiss it as "a few anecdotal reports" and then provide your data of having "seen appraisals." Is your personal experience somehow not anecdotal?

Just takes a simple google search to find out that it is far more than a few anecdotes. Actual scholars, looking at actual appraisals have studied it and found the reality. [1,2,3]

A low appraisal hurts the seller, which lowers the amount of money they make on their house, which impacts their ability to build wealth over time, which was the entire discussion. A low appraisal can also hurt the buyer because it limits the amount they can borrow to purchase the house, which means you have to put more money down, which hurts your ability to build wealth. It's odd that people who are experts in real estate wouldn't understand this.

1. Brookings study

2. Washington University study

3. NYT article with more sources

The point was if you've seen how appraisal reports are put together, you'd know that blatant racism in appraisal reports are nonsense. It's likely incompetent appraisers. You can have any house appraised by 3 different appraisers and get three different numbers

[LosAngelesSportsFan]

Originally Posted by Wigs

Ohio bank to pay $9M as Justice Department tackles redlining and racial justice

Grace Hauck
USA TODAY
Feb 28, 2023







https://www.usatoday.com/story/news/nati...-lending-discrimination-doj/11365841002/

But hey, redlining was no big deal in the history of the United States and no longer happens, nor do other discriminatory practices occur, according some forumers

It's much much easier to discriminate by not lending to black or Hispanic families than it is fudging appraisals. I'm certain that some lenders avoid black and Hispanic families, no dispute there

[jmecklenborg]

Originally Posted by LosAngelesSportsFan

It's much much easier to discriminate by not lending to black or Hispanic families than it is fudging appraisals. I'm certain that some lenders avoid black and Hispanic families, no dispute there

A smart realtor and a smart mortgage broker don't waste time with people who are going to be a struggle to get to the closing table. Hispanics and Blacks have lower credit scores than Whites and Asians.

To make the most money possible as a realtor or mortgage broker, you want to be closing on as many expensive properties as possible. If you're screwing around serving the 650 credit score FHA/PMI crowd, you're going to be wasting months on people buying cheaper houses. Reduced commissions and fewer of them, plus purchase contracts that fall apart. That's why you see listings that say NO FHA and realtors who will ghost you if you only qualify for FHA.

When I bought my second house, my credit score was over 800. I had 25% to put down. The process was a breeze.