Bruce's Beach, Willa & Charles Bruce beach property in Manhattan Beach, California being returned, Appraisal, value, by Mary Cummins

Bruce's Beach, Bruce Beach, Willa Bruce, Charles Bruce, park, racism, black, african american, mary cummins, real estate appraiser, real estate, los angeles, california, kkk, whites, racist

UPDATE: 01/03/2022 Bruces will sell property to Los Angeles County for $20,000,000. That's right in line with my historical estimate below. Janice Hahn said "“This is what reparations look like,” she added, “and it is a model that I hope governments across the country will follow.” The question now is will everyone get back property they previously sold via eminent domain? The Bruce's were paid way over market value for their land when they sold it to the government. They signed an agreement. Can everyone undo, redo those sales? If so, I need to start a new business. Imagine everyone who sold a lot worth $10 can now get $20,000,000! There were about 40 lots owned by many different people in that "improper" eminent domain transaction. They were black, Latino, white... Does it matter since it was deemed improper by Janice Hahn? Time to undo the Dodgers site, Chavez Ravine, freeway land, school land... 

https://www.dailybreeze.com/2023/01/03/bruce-family-to-sell-recently-returned-land-to-l-a-county-for-20-million

06/23/2022 Janice Hahn stated the following,

“At long last, the descendants of Willa and Charles Bruce will be able to begin rebuilding the wealth that has been denied to generations of Bruce's since their property was seized nearly a century ago,” said Hahn."

Just to be factual the Bruce's were paid over market value for their land at that time. I did a historical valuation below based on similar land sales reported in latimes.com and other newspapers. Back then all sales were reported in the newspaper. They weren't "stripped of their land." The city bought it from them. They didn't lose their wealth or money. They made a lot of money on the sale. They could have bought other investments with that money and maybe they did. 

The key issue is they didn't want to sell it. They hired a lawyer to fight eminent domain proceedings. They lost. All of the people in that specific block area, white and black, had their land taken and paid for legally by eminent domain. They were all paid over market value with the Bruces getting the most money. Many citizens complained about paying over market value for the park, see articles below. 

Of course no one in eminent domain sales wants to sell their property. If they did, there wouldn't have been eminent domain proceedings. There have been many eminent domain proceedings in Los Angeles and California, some legal, some not so legal. Many times they've been paid over market value. I know because I've done eminent domain appraisals for people, cities and counties in this area. Will we now reopen all of those cases? Bet I could find the descendants of the other nearby lots taken by eminent domain. I could also find the owners of other eminent domain proceedings such as Dodger Stadium, all the freeways, schools, parks, animal shelters... Not all of those were 100% legal actions. Some were taken for one purpose then used for another like the South LA animal shelter. I was on the Prop F Committee when that happened.

And if we're really going to right some wrongs, we need to give all the land in the US back to the Native American Indians. We also need to give land back to Latinos, Asians ... who lost it through forced repatriation and other horrible acts by the government. Otherwise it's a bit discriminatory to pick and choose which person gets reparations for eminent domain transactions and which doesn't. Of course the government couldn't afford that so it's all moot. 

https://www.nbclosangeles.com/news/local/l-a-county-to-return-bruces-beach-property-to-heirs/2923656

Below is the county plan to return the property.

"County staff has negotiated a transfer agreement to return the Property to the

Bruces ("Transfer Agreement"), and a 24-month lease agreement, with an annual rent of

$413,000 plus responsibility for all operation and maintenance costs, to lease the

Property back to the County ("Lease Agreement"). The Lease Agreement includes the

Bruces' right to require the County to acquire the Property within a certain timeframe, and

the County's right to require the Bruces' to sell the Property to the County within a certain

timeframe, for a purchase price not to exceed $20 million. The annual rental amount is

supported by an economic analysis. The purchase price has been confirmed by

appraisals to be equivalent to or less than fair market value..."

There was a lawsuit case #21STCV38353

http://file.lacounty.gov/SDSInter/bos/supdocs/170222.pdf

Another doc.

http://file.lacounty.gov/SDSInter/bos/bc/1126216_BoardMemo-ReportBackonReturningBruce_sBeachtoitsRightfulOwners_6.21.22.pdf

I tried to find the actual appraisal but couldn't. I may request it in a state information act request. I agree with their value but I just want to see it. 

UPDATE: As expected many people now want to revisit their sales, settlements, property transfers in eminent domain actions all over the US. Organizations such as "Where is my land?" have been started to accept and make claims to government for more money starting with California. If government were really serious, they should be giving the original owners of the land, Native Americans, their land back or cash value. There's already talk of revisiting the land sold via eminent domain for the many Los Angeles freeways such as the 101 and the 10. There is even talk of giving money to people who were merely tenants of that land and had no ownership interest whatsoever. Many politicians talking about this today are coincidentally currently running for office. 

I knew this case would cause many new claims. How will each claim be evaluated? What documents and proof will be needed? How will the properties, damages be evaluated? I did research on Bruce Beach, Chavez Ravine, 101/10 freeway eminent domain cases property values. Some were paid under market value, some market value and some over market value for their land when it transferred. Will they just be given today's value of the land or the land, or the difference in values minus cost of money over time? How far back in time will they go? Back to the time of the Native Americans? This will be a complex issue. 

ORIGINAL: In 1912 Willa Bruce bought her first of two lots in what is now Manhattan Beach. The lot was 33' x 100' located at what is now 2600 (2608) The Strand, Manhattan Beach, California. (Scroll down to see information about the property). She stated in 1912 that she paid $1,225 for the lot. Mrs. Bruce opened her beach stand selling food and renting bathing suits so people could enjoy themselves at the beach and swim in the ocean. At the time black people were not welcome at local beaches and did not own land there. Her beach stand became known as Bruce's Beach. 

The park which is currently named Bruce's Beach is not where Bruce's Beach used to be located. Bruce's Beach was located on The Strand on the beach. The park is located a few blocks away from the beach. Based on what's I've seen so far the two lots are about 33' x 100' or about 6,666 sf. combined. The lots are directly where the Los Angeles Lifeguard station is located. 

Below are some newspaper clippings in chronological ordered. I transcribed a few of them starting with one from 1912.

"COLORED PEOPLE'S RESORT MEETS WITH OPPOSITION. REDONDO BEACH. June 24. The establishment of a small summer resort for negroes at North Manhattan has created great agitation among the white property owners of adjoining land. The new summer resort which at present consists of a small portable cottage with a stand in front where soda pop and lunches are sold, and two dressing tents with shower baths and a supply of fifty bathing suits, was opened last Monday by the dusky proprietor and patronized by many colored people from Los Angeles. Yesterday when a good-sized Sun day crowd of pleasure seekers had gathered and donned their bathing suits to disport in the ocean, they were confronted by two deputy Constables who warned them against crossing the strip of land in front of Mrs. Bruce's property to reach the ocean. For a distance of over half a mile from Peck's pier to Twenty-fourth street, a strip of ocean frontage is owned by George H. Peck, who also owns several hundred acres of land in Manhattan in addition where Mrs Bruce's property is situated. This strip has been staked off and "no trespassing" signs put up and consequently the bathers yesterday could not get to the beach without walking beyond Peck's strip of ocean frontage. This small inconvenience, however, did not deter the bathers, on pleasure bent, from walking the half mile around Peck's land and spending the day swimming and jumping the breakers. All along the beach in front of the prohibitd strip which was patroled by the constables, the light hearted "cullud" people frolicked in the breakers or lay on the warm samd enjoying the sea breezes. 

Mrs. Bruce, a stout negress whose home is at No. 1024 Santa Fe avenue says most emphatically that she is there to stay, and that she will continue to rent her bathing suits to people of her race. She owns a lot on Manhattan avenue 33xl00 feet for which she paid $1225, a high price compared to the cost of near by lots. She says she purchased the property from Henry Willard, a real state dealer of Los Angeles. The entire next block in the Manhattan addition between Twenty- sixth and Twenty-seventh streets has been leased to Milton T. Lewis, a colored real estate dealer, by Willard. Lewis proposes to rent space for tents on this block to negroes who desire to come to the beach. 

The situation, as described by Mrs. Bruce, has a pathetic side, for she avers negroes cannot have bathing privileges at any of the bath-houses along the coast, and all they desire is a little resort of their own to which, they might go and enjoy the ocean. "Wherever we have tried to buy land for a beach resort we have been refused, but I own this land and I am going to keep it." She and her associates feel that it is unjust that they should not be allowed to "have a little breathing space" at the seaside where they might have a holiday. Her husband is a chef on a dining-car that runs between Salt Lake City and Los Angeles. Property-owners of the Caucasian, race who have property surrounding the new resort deplore the state of affairs, but will try to find a remedy, if the negroes try to stay." June 27, 1912 Part I, Los Angeles Times. 

June 19, 1919 Juneteenth picnic at Bruce's Beach.

Bruce's Beach, Bruce Beach, Willa Bruce, Charles Bruce, park, racism, black, african american, mary cummins, real estate appraiser, real estate, los angeles, california, kkk, whites, racist

Bruce's Beach, Bruce Beach, Willa Bruce, Charles Bruce, park, racism, black, african american, mary cummins, real estate appraiser, real estate, los angeles, california, kkk, whites, racist

1924 the City of Manhattan Beach voted to condemn Bruce's Beach to build a park. Condemnation proceedings began against the Bruces. This article below states it was racism and hatred against the Bruces and black people. I transcribed the article below the image of the article. The land ended up being vacant for 30 years and no park was built until many years later. They should have won the lawsuit but lost because of judicial corruption against black people. Must have been depressing to be a lawyer representing black people back in the day. Even today it's depressing trying to stand up for your rights in places with judicial corruption like good ole boy Texas and the South. 

December 26, 1924, California Eagle

Bruce's Beach, Bruce Beach, Willa Bruce, Charles Bruce, park, racism, black, african american, mary cummins, real estate appraiser, real estate, los angeles, california, kkk, whites, racist

"Bruce's Beach Fights Condemnation. Mr and Mrs Chas. A Bruce and their son, owners of Bruces Beach, are facing an action in the Superior Court filed by the City of Manhattan in which that city, seeks to condemn all the property owned by colored people at Manhattan Beach, under the pretext that it is to be named for a public park.

Bruces Beach. as it is commonly called is one of the best known resorts patronized by our people in the State of California, and many outings and parties have been held there during the past fourteen years the Bruces have maintained it. 

The Bruces have won an enviable reputation by reason of the upright and Chi??? conduct, and even their enemies at Manhattan Beach who are fostering the papers to confiscate this property under the guise of 'condemnation' proceedings, admit that their conduct has been exemplary and the management of the place of the highest order. 

Atty. Willis O. Tyler has been engaged to prosecute the defense of the Bruces and is preparing an answer to the Condemnation Proceedings in which he will set out the fact that racial prejudice is the real question to be tried and that there is no necessity for the condemnation of the Bruce' property for park purposes. In fact, says Atty. Tyler, there is much vacant-property on both the north  and south side of the property which could have been obtained and the fact that the city seeks to restrict its proposed park to the property owned by colored people duly is palpable attempt to use the condemnation proceedings as a ruse to carry out the race prejudice which has taken this particular form of objection to members of our group having the right to enjoy bathing in the Pacific ocean." 

Turns out the city condemned 30 lots total for the park, see the link below I just found. Five were owned by blacks and 25 were owned by whites. Some had shacks and some were vacant. Allegedly the amount of money paid for the land was more than market value at the time. This caused citizens to be upset that the city spent so much money over paying for the land for a park. The 1929 condemnation payments were for about $100 to $2,900 per lot. The Bruces received about $14,500 for the two lots of land in the condemnation process though their lots were improved. One person received $1,300 and another received $2,900 for one lot in the same block 5. These lots also faced the ocean and were right next to the Bruce's lot. Based on this settlement it appears the Bruces were paid over market for their land. It appears they were paid more than many of the white people. Still, they didn't want to sell and the city didn't build the park. It was an abuse of the condemnation process to run out the Bruces. I feel the white neighbors pressured the city to condemn the land for a park just to push the Bruces out of the area due to racism.

I found some land values from newspapers.com for PECK'S MANHATTAN BEACH TRACT. 1905 the land was offered for $350 to $800. At the same time someone else was offering them for $550 to $1,100. 1908 block 2 lot 11 sold for $10. 1907 lot 1 block 12 sold for $10. Based on what I'm seeing the Bruce's over paid for the property when they first bought it. I assume they were happy that someone would sell them the land as most wouldn't sell to black people at that time. Allegedly Peck sold two blocks to black people via a black real estate agent. The agent and Peck clearly ripped them off for profit. Peck also ripped off white people as it was a less desirable area. This area was farther from the pier and other development. That's why it was vacant for so long. That's probably why Peck allowed black people to buy it. Thank god things have improved though we are still far away from any real equality. The Bruce's paid $10 for their second lot in 1920 when they earlier paid $1,225 for their first identical directly adjacent lot.

I decided to do a historical evaluation of the land as of 1929 when the Bruce's were paid for the land. Lots were still asking $375 from George H. Peck. That's the same price he was asking in 1905. He didn't get it in 1905 and doubt he got asking in 1929. In 1926 the city of Manhattan Beach bought 36 lots on The Strand in a more desirable area north of the Bruce's lots for $75 a front foot from Peck. The Bruce's lots were 33' wide each so that would be $4,950. The Bruce's lots were in a much less desirable area farther from the pier and development. Even then the citizens of Manhattan Beach said the city paid too much for Peck's land. It appears Peck had a good "relationship" with the city for them to pay such a premium for his lots over others. 1929 ocean view lots on the sand in Manhattan Beach for $595 asking max. 

I stumbled upon other news items concerning the Manhattan Beach parks in 1929. The city was going to turn those sites into parks. They stated they couldn't afford to maintain the parks so they asked Los Angeles County to lease and maintain them as a county park. California had just offered $3,000,000 funding for cities, counties to buy land for parks from private parties. The county agreed to take over George H Peck's 1/2 long strip of The Strand June 1929. I think this may have been the strip of land Bruce's patrons were not allowed to cross over so they had to walk 1/2 mile up and around that strip to get to the ocean. That may be a different strip but it's the same sand strip in front of The Strand boardwalk which we now call "The Strand." Based on everything I've seen the Bruces were paid over market value for their land in 1929. Still, they didn't want to sell.  

This land used to be somewhat worthless as it was sand dunes. It was kind of like swamp land back in the day. The land speculators made a ton of money selling the land. Of course Peck liked selling them the land as he made out like a bandit. He over charged many people. Manhattan Beach eventually ended up hauling away the sand dunes and selling the sand to be used in construction elsewhere years later. There is only one sand dune left in Manhattan today.

Willie "Willa" Bruce died September 5, 1934 in Los Angeles, California. "BEACH OWNER PASSES Mrs. Willie Ann Bruce, proprietor of Bruces beach, passed away after a long illness - September 5 Funeral services were held from the First AME church, Eighth and Towne, with Rev. J. B. Isaacs officiating. She is survived by a son, daughter and grandson, all of Los Angeles."

Based on records she had five children but only one survived, her son Harvey Anthony Bruce who died in 1954. Harvey had two sons, Harvey and Bernard who are both dead. I assume they have children. 

Governor Gavin Newson signed Senate Bill SB 796 in 2021 allowing the State of California to allow Los Angeles County to give the land to the Bruce family. 

Information about the land and value

Based on everything I've read the two lots are 33' x 100' each. They are located at 2600 The Strand, Manhattan Beach, California 90266, see map below. The original address was 2608 The Strand, Redondo Beach, CA. The Los Angeles County Lifeguard Training Facility is located directly on top of the land. The County offered to give them the exact two lots or two lots in the parking lot directly next to them. The County also offered to continue to use the land and just pay them rent. 

Below are the parcels circled in red and a satellite image of the same. I don't know exactly which two parcels they are so I'll assume they are interior lots and not a corner. Update, first lot was lot 8 of block 5. They bought lot 9 for $10 in 1920. Both interior lots. The legal description of the entire site today which includes six lots is PECK'S MANHATTAN BEACH TRACT  LOTS 5,6,7,8,9 AND LOT 10. The Los Angeles County Tax Assessor number is 4177-024-901.

Below is a satellite image of the site. It's at the red tiled Lifeguard Training Center building. The Center and its parking lot are six lots. Two of the lots are the lots in question. 

There is more land located on the other side of The Strand which meets the sand. This is the strip of land which used to be owned by George Peck. That land is now owned by the county and Federal government. I think they may have taken it by condemnation. It makes you wonder if the county would have taken Bruce's land by condemnation for the Lifeguard Center years later if Manhattan hadn't taken the land for a park. Of course the Lifeguard Center only took the land because it was a vacant park.

I've appraised a lot of property in this area on The Strand. I don't think the two lots are worth $75,000,000. I pity whoever does the appraisal  because if they don't come in around $75,000,000, they'll probably be called a racist, get negative reviews on their business, death threats and maybe even some complaints against their license. I know that sites right next to those lots are single family homes and duplexes. The lot would have ended up single family zoned if it wasn't condemned for a park. The Bruces were living at the property. It was sold as lots for homes. I pulled all properties located on The Strand right next to the site sold within the last two years. Obviously there are no land sales. If we look at the cheapest home, duplex sales on The Strand with similar sized lots we can get the land value. 

2316 The Strand 5,715 sf lot with 5,500 sf 6 bed, 7 bath home sold 09/2021 for $16.5M newer home.

2508 The Strand 4,556 sf lot with 5,328 sf 4 bed, 5 bath home sold 09/2021 for $12.2M newer home.

2804 The Strand 3,481 sf lot with 3,469 sf 4 bed, 4 bath home listed for $16.4M didn't sell older home. 

2722 The Strand 6,927 sf lot with 6,000 sf 8 bed, 9 bath duplex sold for $17.7M 11/2020 built 1951 sold for land value as a double lot. 

2508 The Strand

Just for a high ballpark figure we can use 2508 The Strand one block away. This has a newer luxury quality amazing house on it and it just sold. If it were only land, it would have sold for $2,677/ft. Obviously the land is worth less than that because it has an amazing house on it. 6,666 sf Bruce Beach site x $2,677 is $17.8M. This would be the maximum, maximum the site would be worth today if it were sold on the open market.

Fortunately 2722 The Strand sold 11/2020 for $17.7M as a double lot development for land value. It's two blocks away. This is slightly larger than the Bruce site. Based on all I've seen the current market value for the site is somewhere about around $17.7M. This is not an appraisal as I have not inspected the site and don't know all the limitations and issues with the site. It might not be possible to build anything on the property today because of the California Coastal Commission, it's in a tsunami zone and low laying area. There could also be an issue because there's a lifeguard tower in front of the site. There is also the other piece of county land that is between the property and the beach/ocean. This is not waterfront property. If that's the case, they should just rent the site to the County Lifeguard Center as is. If they try to develop it or sell it for development, I see a lot of litigation, costs and hassles by neighbors and government agencies. 

It'll be interesting to see if this opens up the flood gates for more people wanting back the land they sold, gave away, had condemned, stolen by the government years ago. I could really see Native American Indians asking for their land back. Their land was stolen outright except for a few who sold though not on fair terms. Some original Mexican owners who owned the land after Native American Indians would also be entitled to some land as well. They had their land stolen or swindled from them. I could see others just wanting to renegotiate or take advantage of the huge increase in real estate values. 

UPDATE: A recent article stated the Los Angeles County Tax Assessor will be reappraising the property with "no zoning restrictions as is." I assume this will be for tax purposes of the assessor is appraising it. If they charge transfer tax or capital gains, there will be a huge tax. They'd have to sell or lease it back instantly. No zoning restrictions means it could be used as commercial, retail, hotel ... anything. I appraised it as it's most likely zoning which is residential. It would be worth more with no zoning restrictions. As they are only two small interior lots bounded by the Life Guard building and parking lot there is no way they would really build anything like a hotel or restaurant. With the Coastal Commission, single family neighbors, NIMBYs and others I doubt they could build anything other than residential. At that point I think the Life Guard would have to move the center entirely. 

Just found this great history of the Bruce's and their land after I wrote the article.

https://www.manhattanbeach.gov/home/showpublisheddocument?id=46093

Nice Powerpoint presentation

https://www.manhattanbeach.gov/home/showpublisheddocument/44319/637333659463800000

Here is a thesis someone wrote about Bruce's Beach from 1956. 

https://scholarworks.calstate.edu/downloads/xk81jm67x

Los Angeles County report on how the land would be returned. They suggest maybe swapping some land in the park for the two lots. Many suggestions. 

http://file.lacounty.gov/SDSInter/bos/bc/1109402_BoardMemo-ReturningBruce_sBeachtoitsRightfulOwners-6-30-21.pdf

Here's a map of tract 8867 which shows people used to own the lots basically on the sand west of The Strand. All that land now belongs to the government as the high tide lines have changed. 

https://pw.lacounty.gov/sur/nas/landrecords/tract/MB0115/TR0115-082.pdf

Another old plat map before the area was further subdivided 

https://pw.lacounty.gov/sur/nas/landrecords/tract/MB0028/TR0028-041.pdf

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.

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Alleged discrimination in real estate appraisal 10222 Elmfield, Loveland, Ohio, Aaron and Erica Parker, by Mary Cummins

erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman, 

Here is another case of alleged discrimination in a real estate appraisal. The owners posted their full names, home location, appraisal values, list and sale prices so I will also share it. 

Aaron and Erica Parker owned a home located at 10222 Elmfield Dr, Loveland, Ohio 45140. They purchased it April 9, 2014 for $371,978. Per the MLS it was listed for sale April 13, 2021 for $525,000 by Amy Goodman of the Sibcy Cline real estate office MLS #1696320. Amy Goodman claims she is the "Fair Housing Officer" for Sibcy Cline real estate. She is not an Officer and not a Fair Housing Officer for the FHA or HUD but merely using that title most likely to promote her business. 

Allegedly Aaron and Erica Parker listed the home for $525,000 then instantly agreed to accept about $504,000 for the property. I assume they still paid the commission to Amy Goodman even though she didn't market or show the property. Erica stated after they got the instant offer she was "ecstatic" and “We were high-fiving each other,” “We were texting our Realtor, like, ‘Can you believe it?’”

Allegedly the first appraisal on May 5, 2021 came in at $465,000 which they said was $42,500 below the contract price. We can do math so contract was $507,500. At first their agent asked them if they would reduce the price. Parkers said no. Is this agent working for the Parkers or is she friends with the buyers giving them this pocket listing without any other bidders?

Per the article. "Goodman and the Parkers asked the appraiser and the buyers’ lender to correct the errors in the report. The appraiser refused, they said, saying he stood by his analysis. The lender had a staff member review the appraiser’s work and stood by the total, too." 

Based on my experience if someone submits a reconsideration of value i.e., an appraisal appeal, with similar higher priced comps and it has merit, the appraiser, AMC, lender will adjust the value. That didn't happen. I'm assuming there was no merit.

For no reason the sellers automatically assumed it was racism per the article. They decided to remove all traces of their skin color from the home and request another appraisal. The article states they "erased blackness from their home." Erica called it "white washing." May 20, 2021 the second appraisal came in at $557,000. They were happy. They assumed the higher appraisal was caused by their skin color washing. Then they sold their house June 11, 2021 for $507,500. 

First, some questions. If they thought it was worth $557,000, why the hell did they sell it for $507,500? That means they agreed to sell it for $50,000 less than it was allegedly worth. Was their real estate agent scamming them by listing it low and selling it as a pocket listing? They allowed a few people and two appraisers to view their home. Why not put it on the market and just not do open houses? No one is doing open houses today anyway. They could have sold it within a week in this market with a few private showings all in one day while they're out. There were photos from the last 2014 sale still online. 

As usual there is more to this story than the poorly researched and misleading media article trying to stoke the flames of racism. While I don't usually support robot appraisals I'm going to post some robot appraisal values for this home. This way no one can claim racism as the values are not from live people. They don't see the home, homeowners or anything because they're just a math formula. I am not appraising this property. Robots provided this value estimate. Below are the robot appraisal values for this home as of today, August 19, 2021. The home was appraised in May and sold in June over two months ago in a quickly appreciating market. Values range from $461,000 to $523,000, $497,000 mean/average, $502,000 median. 

Zillow $523,000
Realtor $504,000
Redfn $501,002
Trulia $507,500 
Remax $487,800
USDA Properties $502,800
Spokeo $461,000

Below is a chart from Redfn which tracks their estimates in the past for this home. Based on statistics average home in Ohio appreciated over 11% last year. That's about 1% a month. That means the original appraisal was in line with market value at the time. The second appraisal is clearly too high. At least Aaron and Erica Parker don't have to worry that they sold their home for less than it's real market value. 

erica parker, 10222 elmfield, loveland, ohio, aaron parker, mary cummins, discrimination, racism, black, white, real estate appraisal, real estate appraiser, real estate, contract price, false, misleading, amy goodman

Below is the listing history for the property. Aaron and Erica Parker had been trying to sell their home for a long time with no takers. They clearly listed it too high for the market each time. They even reduced the price twice. 

04/13/2021 $525,000 Pending Cincy MLS #1696320

04/13/2021 $525,000 Listed For Sale Cincy MLS #1696320

03/04/2020 $465,000 ListingRemoved Agent Provided

01/02/2020 $465,000 PriceChange Agent Provided

11/13/2019 $468,500 PriceChange Agent Provided

11/08/2019 $470,000 PriceChange Agent Provided

11/05/2019 $475,000 Listed For Sale Agent Provided

04/09/2014 $371,978 Sold

Here is my take on the situation. Real estate appraisers are limited by the highest recent similar sold home price. Perhaps a nearby similar home sold around $465,000 before May 5, 2021. While the home is on a cul-de-sac it backs up to a major road with a double line. Not good for families with children besides being a nuisance. 

It's possible that another similar home sold after May 5 but before May 27, 2021 for $557,000. Based on the sales I'm seeing that doesn't seem possible. I will bet that a home which was not similar sold for $557,000. The appraiser used a comp outside of the immediate area or it was larger, had more bedrooms, more full baths, more garages, more land and was fully upgraded. Erica Parker claims her home was upgraded. We don't know but the appraisal allegedly said it was not. Maintenance items such as new paint, new same style roof, replacement AC...are not upgrades. Upgrades would be adding a pool, an addition to the home... 

It's possible Erica was talking about "updates." That only has to do with the kitchen and bathrooms. They bought the home new in 2014. It shouldn't really need any updates in just seven years unless it was a poorly made cheap development. In the appraisal it's page one, "Improvement" section near the bottom. These forms are made for appraisers, lenders, underwriters and not lay people to read or understand. What the layperson does not see is the drop down menu which clearly shows it's only about kitchen, bathrooms updates. An "update" would be new or remodeled kitchen or baths. Below is an image which shows the form with the drop down menu exposed. All the viewer sees is the resultant text in the yellow highlighted box which generally says "no updates within the prior 15 years" or maybe "updated" "remodeled" "within 'x' to 'x' years." Complain to the government who made these forms. Click to see larger. 

real estate appraisal, how to read, updates, condition of improvements, upgrades, updated, remodeled, form, no updates, condition, property, mary cummins, real estate appraiser, complaint, 

In another case a  black woman asked for a second appraisal when she didn't like the first one. She didn't remove any evidence of her skin color. The second appraisal still came in higher for other reasons namely the passage of time in a quickly appreciating market. Removing evidence of skin color is not what caused the increase in appraisal value here. I will bet the second appraiser used comps that were not similar but superior to the subject property. 

Another thing to note is that Erica Parker has a history of calling out people and businesses online. She complains on Twitter about businesses. Then she posts the freebies she gets from those businesses in response to her complaints on her Twitter account. The real estate agent Amy Goodman falsely claims she's a "Fair Housing Officer" because she attended a luncheon where someone spoke about housing discrimination. It appears Amy Goodman is promoting this story in order to drum up real estate business acting like she helped her black client deal with discrimination. She clearly didn't because she sold the home for $507,500 when it was "allegedly" worth $557,000. 

My biggest issue with this misleading article is the fake research they cite. Andre Perry, Michael Neal's research does not show that real estate appraisers appraise the homes of black people for less than the homes of white people regardless of all other factors. Andre Perry used Zillow estimates which were made by robots and homeowners guesstimates of value of their own homes. Michael Neal used the same. Neal stated that the robot appraisal values had the same amount of error variance for both white and black areas. No live person or real estate appraiser appraised any of the properties in the research. The only thing the data showed was that people of color generally make and have less money than white people. This is a fact based on real research. For this reason in general they buy and own homes in less expensive areas which they can afford. 

It's extremely reckless for the media to promote these false and misleading narratives and articles. The definition of racism is "prejudice, discrimination, or antagonism directed against a person or people on the basis of their membership in a particular racial or ethnic group." Assuming all white real estate appraisers are racist is actually racism. We use the same math formula to appraise homes as the robot appraisers which are clearly not racist because they aren't even people. 

In this quickly appreciating market some appraisals fall below contract price. Agents know this so they have added appraisal clauses. Here is an article about the current change in political climate which is causing people to call real estate appraisers "racist" when their appraisal doesn't match the contract price. It's not about racism but data and numbers. Actual racism is a horrible evil which should be banished from our communities. Making up false claims of racism when there is real racism out there to fight just divides and harms the community. 

Original article.

https://www.wcpo.com/news/our-community/this-black-familys-home-appraisal-grew-by-92-000-after-they-removed-all-signs-of-their-race

*I am not and did not appraise this property. I contacted the original author of the article and she never replied.

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.

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Racial discrimination alleged by Cora Robinson in real estate appraisal 5924 Martin Luther King, Oakland, California - by Mary Cummins

cora robinson, oakland, california, real estate, appraisal, discrimination, 5924 martin luther king, duplex, bias, mary cummins

01/04/2022 UPDATE: Based on a response to my FOIA response from HUD I believe the discrimination complaint filed with HUD was dismissed. HUD has not given an official answer though the investigation is over. They did previously force me to refile in order to extend the time to reply. HUD is fighting these FOIA requests forcing appeals. Because Fair Housing Advocates of Northern California didn't release any news saying they won the case it appears they lost. This was just another fake, frivolous discrimination complaint filed against an appraiser promoting the false narrative that appraisers are racists who low ball black home borrowers. 

ORIGINAL: Julian Glover just covered another story of alleged racial discrimination in a real estate appraisal in Oakland, California. After he ran his first story I contacted him via email and Twitter. Julian Glover never replied. 

The owner of the home is Cora Robinson. The home in question which they specifically mention in their public report is 5924 Martin Luther King, Oakland, California. The address is also public if you search for Cora Robinson's name. The author of the article included this information which is why I'm using it here. First, some facts.

5924 Martin Luther King Jr Way, Oakland, California 94609 is legally a 4 bed, 2 bath, 1.5 story home built 1885, 2,336 sf on 6,000 sf end lot. It's listed as last renovation 1940. I searched building and safety and see no permits for any upgrades or additions. The owners were in default in 2012, 2013. It appears one of them runs a hair salon called Your Locs out of one unit which I don't  believe is allowed per zoning. Please, no one report the business or unpermitted additional bedroom, bathroom. Times are tough enough. 

Zillow lists the home as 5 bed, 3 bath with a current AVM or automatic valuation method Zestimate of $1.2M, range $1M-$1.4M. RedFin estimates $1.1M. Trulia $1.2M. RealtyTrac estimates it as a 4 bed, 2 bath home at $1M. Realtor estimates it at $1.2M. CoreLogic refuses to give an AVM or RealValue because it hasn't sold in a long time and doesn't appear to have recent renovations. Their error variance is too high to give an estimate or even a guesstimate. 

Now for some allegations. July 2020 Cora Robinson said it appraised at $800K which would have been within the range of the AVMs at that time. Cora said Zillow was $1.3M at the time which is false. I'm glad she didn't white wash her home before the last appraisal. All appraisers saw the same exact home in the same condition. Oct 2020 appraisal came in at $825K. February 2021 it appraised at $1.2M. March 2021 she got a new 1st loan at $606K which is about 50% loan to value ratio which is a very low ratio. 

Cora states the property, area is not subject to rent control. Yes, it is. Just because she has a relative currently living there doesn't mean the next owner would be free of rent control. Cora states it's in the higher demand area of Rockridge. It's not. It's three neighborhoods south on the other side of the freeway. Cora states the appraiser made two appraisals. He made only one which he appears to have updated. Cora stated the "bad" appraiser used comps with "nearby homeless encampments, liquor stores, trash on the sidewalk, greater structural neglect and other markers of poverty." If you look at the satellite image of the subject property, that describes the subject's area exactly. There's a liquor store on the corner of Cora's block and a homeless camp one block away! Is this lady for real? She wanted the appraiser to use a $1.6M comp from Rockridge which is a mile north, north of the 24 fwy and a much better more expensive area. Cora said the "good" appraiser used comps "in all directions." We are supposed to use the best comps and not comps in "all directions." Cora thinks the appraiser should have only used higher comps located northwest of her home in the nicer "whiter" area of Rockridge. Cora literally said that the appraiser used comps in areas which have more black people i.e. "has a higher percentage of black residents" which Cora states has a negative effect on value. Who is the racist and biased one here?! Just to be clear Cora is black saying these negative things about black people and how they negatively affect property value. These are direct quotes from her actual written and sworn complaint! 

Cora received the home for free from her mother who received it for free from her grandmother. Cora states she was paying about 7 to 13% interest rate on her mortgage which she got in 2008 at the peak of then prices and interest rates. Everyone knows those loans were predatory. To be paying on that loan all those years is crazy. We're clearly dealing with someone who doesn't understand real estate or finance. She feels she should be paid the difference between that higher rate and her current rate. That is ridiculous. Cora agreed to the terms of the old mortgage. The lender is the one who refused the new loan. The main reason for loan refusal is the credit rating of the borrower. Cora states she is retiring which means refinancing again will be impossible. I believe an appraisal done by any appraiser at the earlier time would have been much lower than the current appraisal. You can't "sue" an appraiser for market value. No money was lost here. The appraiser also only works for the AMC and lender not the owner of the property. 

The home is an end lot on a very, very busy street with what appears to be a Metro train which then turns into a highway, see pic below of the subject property taken from across the Metro. 

cora robinson, oakland, california, real estate, appraisal, discrimination, 5924 martin luther king, duplex, bias, mary cummins

There are apartment buildings on the street, vacant lot, homeless camp, trash, liquor store. These things reflect negatively on the value. There are more regular lots than end lots which would skew the value higher for all duplexes in the area. I see current comparable sales at $800,000 to $1,500,000 with most $900,000 to $1,100,000. The sales at the lower end were end lots which have not been fully recently renovated. The sales at the higher end are regular lots away from traffic, apartment buildings which have been very recently fully renovated. These comps were given to me by robots. I don't have MLS for this area so I can't actively search it. No one can say I discriminated in my search for comparables as I didn't actively search beyond typing in the address. 

I just used a robot to do a default search for the property which is +/- 20% size within one mile radius. I only changed it to search for the previous 12 months. The comps I found for when it was appraised the first and second time were $755,000 and $850,000 which were right next to the subject, newer, larger and had more bedrooms, baths. The robot refused to search properties in Rockridge which is actually three communities and over a mile away. The more recent comps are $1.1M, $1.1M, $1.0M and $1.3M. I haven't seen the inside of the properties. They could have been and probably are full remodels. I saw some pics of the subject online. It's an old remodel which needs a full remodel. This claim is now officially busted. 

Below is the map from the search. Maybe this is what Cora means when she stated all the comps were in one direction in the first two appraisals. Most are in one direction even though I pulled a mile radius. Cora's area has commercial, retail, vacant lots, hospital... Maybe there are fewer duplexes in that area. See how far away Rockridge is from the subject, i.e. bottom right of the map. There are cute restaurants, shops, trendy grocery stores, nice parks in Rockridge. In North Oakland there aren't even any fast food chain stores. Fast food chain stores heavily research locations. A location without them has many negative issues. You can get food at the liquor store or the gas station in Cora's neighborhood. Look at the satellite image.

cora robinson, oakland, california, real estate, appraisal, discrimination, 5924 martin luther king, duplex, bias, mary cummins

Median sales price for a duplex this size in this area went from $900,000 to $1,200,000 within the last 12 months. That's a year from Cora Robinson's first appraisal. The property has gone up in value immensely between the time of the first and last appraisal. As I look at the chart it was about flat July 2020 to January 2021 then it went from $900,000 to $1,200,000. That's a 33% increase in value right there. The appreciation in this area has been skyrocketing because it's such an inexpensive area compared to other local areas. People who are priced out of the more expensive areas of Oakland are going to these less expensive areas. The duplexes selling for more have been recently fully renovated. I bet there are flippers buying run down properties and fixing them up for much higher resale which is driving a lot of the increase in value. The combination of flippers and people being priced out of more expensive areas has driven the explosion in value in this area. 

Based on the information about the subject property and the sold comparables I researched the first and second values could have been correct for that time. Based on the same a higher more recent appraised value would have been within the more recent range of values. It's also possible the more recent appraisal came in a little high per the real bed/bath count, location and condition of the subject. I have a feeling the appraiser will be cleared of wrong doing in this specific case. I did an information act request and will post the results when I receive them. They don't release them until after the investigation is finished. 

Fair Housing Advocates of Northern California released a press release stating they are helping Cora Robinson file a complaint to HUD. The complaint is an online form. She didn't need any help filling it out. It's easier than filling out a loan application. I personally feel this non-profit organization released this news for media attention to get donations. They should have hired a review appraiser to review the appraisals before submitting the complaint. They have most likely destroyed the reputation of the appraiser whose name they plastered all over their national press release, articles and media outreach.

Here is the press release from the FHANC.

 https://www.fairhousingnorcal.org/press-releases-and-statements/announcing-discrimination-complaints-filed-with-hud-allege-race-discrimination-in-home-appraisal-process

and the complaints

Fair Housing Advocates of Northern California Complaint 1
Fair Housing Advocates of Northern California Complaint 2
Robinson Complaint 1
Robinson Complaint 2 

FOIA request was made for all information related to the complaint. Results will be posted here. 

Based on my review of a few of these alleged cases of racism in appraising it appears some of these cases partly stem from the lay person not understanding the appraisal, appraisal process or appraised value. Because they don't understand everything, have experienced racism in the past in other ways, have seen the recent false and misleading news articles about racism in appraising they assume racism must be the cause of the value. People misunderstand situations and jump to the wrong conclusions every day. It would be great if people could first ask the appraiser, lender questions before assuming it was racism and attacking the appraiser, profession and all people of a different race/color. Assuming things about people of a specific race/color without evidence is actually the definition of racism. It's hypocritical for someone claiming racism to behave in a racist manner.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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Race and Racism in Real Estate Appraisals - Mary Cummins, Real Estate Appraiser, Appraisal, Los Angeles, California

Mary Cummins, real estate appraiser, appraisal, Los Angeles, California, racism in real estate, race, racism, diversity, discrimination

I just read an article about racism in the real estate appraisal industry. I'm not going to link to it because it's so misleading. The author who is not an appraiser or in the industry stated that because most real estate appraisers are white per one poll that means the real estate appraisal industry is "racist" against Black people. According to the same Appraisal Institute poll they cited most real estate appraisers are male, i.e. 77% vs. 21% female, when females make up 50.8% of the population. Does that mean all male real estate appraisers are misogynists who will appraise women's homes for less than men's homes? Obviously not. That's as ridiculous as the article I just read.

A very important thing to note is the disclaimer in the Appraisal Institute race chart, i.e. "U.S. appraiser population statistics were derived from the ASC National Registry as of Dec. 31, 2018. Additional demographic statistics were derived from Appraisal Institute studies conducted in 2016-2019 that were comprised of randomly selected AI and non-AI real estate valuation professionals. In Q1 2019, the Appraisal Institute invited 15,600 valuation professionals, resulting in 750 responses."

Appraisers in the ASC National Registry are only "State certified and licensed appraisers who are eligible to perform appraisals in federally related transactions." We're talking a small subset of all appraisers in the US. This is not all appraisers in the US. The results don't reflect the racial diversity of all appraisers in the US. It probably represents more successful, wealthier appraisers who are generally white men.

Appraisers in the Appraisal Institute are a even smaller subset of long time, wealthy, successful appraisers. The reason is because it costs a lot of money to become an AI appraiser. We're talking at least $15,000. It costs $370 just to join the group without even being an AI appraiser. These people are even more wealthy than ASC appraisers. They're more likely to be white men.

The appraisers they questioned for their poll on races of appraisers is clearly biased. They only asked wealthier appraisers. We do know that wealth correlates positively with the male sex and being "white." That means poorer people, women, Blacks, Latinos, new immigrants....were most likely excluded. Of course the results would show that most appraisers are white men. 

Below is a chart of race % of nation per US census, real estate appraisers per appraisal institute and real estate agents. 

Let's get to the AI race numbers anyway. Per the Appraisal Institute based on answers to a question on "race," the responses were as follows for licensed real estate appraisers: 

Hispanic/Latino 4.3%
American Indian/Alaska Native .4
Asian 1.1
Black or African American 1.3
Caucasian or White 85.4
Multiracial .7
Prefer not to say 5.1
Other 1.7
Total 100%

Per the US most recent US Census, the responses were as follows. Keep in mind that this represents ALL people including babies, children, retired people, disabled, incarcerated, criminals convicted of finance crimes, people in comas... people who can't be appraisers. It does not represent all the people who could physically, legally, technically be real estate appraisers. Such a subset would more likely be white men based on wealth and income.

Hispanic/Latino, alone, percent 18.5%

American Indian/Alaska Native 1.3

Asian 5.9

Black or African American, alone, percent 13.4

Caucasian or White, alone, percent 76.3

Multiracial, percent 2.8

White alone, not Hispanic or Latino, 60.1
No prefer not to say category
No other category

Total = over 100% because of multiracial and multiple categories

We're not really comparing apples to apples here because of multiple categories including "prefer not to say" and the fact that it includes all people in the US. The population sample of appraisers was also highly skewed because of the limited appraisers they questioned. There still could be more white real estate appraisers than in the general population. In this instance someone tried to state that means appraisers are racist against Black people. Oddly enough people haven't said the same thing about real estate agents. I only see articles about appraisers. Let's look at those numbers and see how they compare. 

White  74.2%

Hispanic or Latino 12.3%

Asian 6.4%

Black or African American  5.0%

Unknown 1.8%

American Indian and Alaska Native 0.3%

Those numbers look pretty similar. They also look pretty similar to the population as a whole. There are more white people in the US than Latinos, Blacks, Asians. Does this automatically mean all white people are racists against Blacks? Of course not. The racial makeup of a population does not mean one race is racist against another specific race. There are also fewer Latinos, Asians, American Indians... They are not the ones specifically complaining today. 

Don't get me wrong. Racism definitely exists in the US. It's a huge problem. More Black people are murdered by police. More Black people are in jail. More Black people are falsely convicted of crimes. There definitely are appraisers who are racist just like in all other professions. My issue here is articles stating that because most appraisers are white similar to the US population as a whole means they definitely are racist toward Black people and intentionally low balling their appraisals. 

Based on experience the real reason people right now are yelling racism in real estate appraisals is because buyers are not getting their loans approved for purchases and are unable to make up the difference in cash. The same goes with refinances. Properties are not just selling over list. They are going under contract over the price of the highest sales in the area for similar homes. Appraisers can't appraise a home for higher than the highest similar closed sale. A similar home is +/- 15% size, within last three months, within a 1/2 mile radius, with same condition/upgrades, amenities (e.g. pool, 2 garages)... The appraiser must use the "most similar" comparables. We must bracket size and amenities. The lender made that requirement. Not the appraiser. We are just following orders and a mathematical formula. Buyers are being forced to make up any difference between the contract and the maximum loan allowed in cash. Black, white, brown ... people are all having their appraisals come in lower than they desired. It's not race specific. In 2019 Fannie Mae stated home appraisals came in low 8% of the time. Today it's over 20% of the time. This affects everyone.

Buyers, homeowners don't seem to understand the purpose of a real estate appraisal in the home buying process. If you want to pay 100% cash for a property, you don't need an appraisal. Pay whatever you like. If you want to make a down payment and have a loan, you need an appraisal to get the loan. The real estate appraiser works for the lender and not the seller, buyer or borrower. The lender is willing to loan a certain loan to value ratio (amount of loan / value of property) on property for a borrower with good credit, steady job, assets, cash, investments and a down payment. The purpose is to make sure that if the owner can't make the loan payment for whatever reason that the lender can foreclose and sell the property for enough money to cover the loan balance and all costs. 

The real estate agent is involved in the same transaction yet people aren't calling them racist. The racial makeup of real estate agents is about the same as appraisers. They are going after the appraiser even though it's the lender who is denying the loan. They could pay the difference in cash but they either can't or don't want to. They would call the lender racist but there is no one individual that represents the lender. It's easier to attack the appraiser who has a name and a face so that is what they're doing. 

If Black people want more Black appraisers to feel better represented, they need to become appraisers. If they are having a problem finding a mentor to get their hours, Black appraisers should form an organization to mentor and support Black trainees. Then Black people should only hire Black appraisers to support them financially. The problem finding a mentor has nothing to do with color. It has to do with the difficult trainee process. One article blamed the problem on white people which is totally false. ALL trainees have the same problem finding a mentor. I actually wanted to start a program to help new appraisers and mentor Latinos and Black people. When I found out how much time, money and hassles it would cost me, I changed my mind. Here's an article I wrote about the mentorship issues. 

FWIW I'm Latino and speak Spanish. I appraise properties in lower priced Black, Latino areas. I understand the issues as they relate to value. 

If your loan is denied because of an appraisal value, here's an article I wrote on how to appeal the appraisal. 

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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Redlining in home loan financing - Mary Cummins, Real Estate Appraiser, Los Angeles, California

UPDATE: 08/12/2023 AEI just posted an op-ed about redlining. It stated only 20% of people living in redlined areas at the time were black owners. I previously stated most who owned property in redlined areas were white. Now we know it was 80% which proves my point with research. Whites were primarily negatively affected by redlining because whites owned the property. This proves that blacks were not the target or "victim" of redlining.

This also shows that blacks and others were pushed into these areas because they were cheaper to rent. That is why they were drawn to those areas. No one corralled them into these areas. Poor whites, Latinos, newer immigrants were also in these same areas for the same reasons. Redlining did not cause the areas to deteriorate.

“Our results suggest that racial bias in the construction of the HOLC maps can explain at most 4 to 20 percent of the observed concentration of Black households in the lowest-rated zones. Instead, our results suggest that the majority of Black households were located in such zones because decades of disadvantage and discrimination had already pushed them into the core of economically distressed neighborhoods prior to the federal government’s involvement in mortgage markets.”

Redlining did not keep black people from owning homes. "However, there was a robust growth of black home ownership during the postwar era; continuously increasing from 21% in 1940 to 54% by 1980."

Another point is the condition of the homes in primarily black owned areas. They previously were middle class white areas which experienced deterioration and decline which is a natural real estate cycle. This made the properties cheaper and blacks and others were more easily able to afford to rent them. Some even owned them. Redlining didn't cause this. It's just a real estate cycle which happens all over the world. Blacks, Latinos ended up reaping the benefit of buying the depreciated homes when the areas went through the revitalization stage and greatly increased in value. They sold the properties at a large profit.

"Unlike the Oliver-Shapiro assertion that “their homes and communities deteriorated and lost value,” many of these black neighborhoods were previously upper-middle class ones. This filtering down housing process provided a financial foundation for many black families. And when the professional classes chose to repopulate some of these neighborhoods, black homeowners, including Washington DC’s Shaw district, reaped the gains from further housing appreciation."

Another interesting point is the wealth gap between whites and blacks. It's not caused by the median or average family wealth differences. It's mainly caused by the upper class wealth. I would bet that most of the overall wealth gap is driven by the 5% most wealthy people who are white. If you removed people worth over $5,000,000, the wealth gap would shrink immensely. It's probably the billionaires driving most of the wealth gap.

"The left-wing blogger Matt Bruenig found that if black households in the lower half of their distribution had their wealth raised to be exactly the same as white households in their lower half, the overall racial wealth gap would be reduced by just 3 percent. As a result, he concluded, “What this shows is that 97 percent of the overall racial wealth gap is driven by households above the median of each racial group.” Indeed, over two-thirds of racial gap reflects the differences in assets held by the top ten percent of households in each group. Class, not race is the major driver of wealth inequality. "

Another reason for the wealth gap is the difference in family structure. Couples have more money than single people.

"To be sure, racial disparities in home ownership rates persist. But a significant share can be explained by family structure. In 2022, overall black homeownership was 44 percent; but for married couples it was 64 percent, virtually the same as the overall white homeownership rate. "

https://www.aei.org/op-eds/the-racial-wealth-gap-myths-and-realities/

ORIGINAL: Redlining - Definition: To refuse (a loan or insurance) to someone because they live in an area deemed to be a poor financial risk.

The National Housing Act of 1934 created the Federal Housing Administration FHA to help revive the US economy after the Great Depression. The purpose of the FHA was to provide affordable loans so people could buy homes. Private lenders would make the loans and the federal government would insure them for losses. The new loans would have lower down payments, smaller monthly payments and were more affordable.

President Roosevelt's New Deal created the Home Owners Loan Corporation to help process the home loans. "To facilitate private investment through the FHA, the HOLC, and the Federal Home Loan Board Bank (FHLBB), the federal government crafted a national set of standards for assessing mortgage risk. Through its 1935 City Survey Program, the HOLC gathered data about neighborhoods from approximately 239 cities and compiled the results into a rating system ranging from A to D. Communities with A ratings represented the best investments for homeowners and banks alike; B, neighborhoods that were still desirable, C, those in decline, and D, areas considered hazardous. "A" communities generally had access to better amenities such as better schools, parks, shopping, transportation and were therefore more desirable. "D" communities generally were located near less desirable features such as industrial properties and they had fewer and lower quality amenities." To visually capture these rankings, the HOLC then turned these ratings into color-coded maps, using green for A, blue for B, yellow for C, and red for D – the origin of the term “redlining.”

Many researchers have stated the HOLC maps were more a consequence of existing ordinary and discriminatory lending practices as opposed to being a cause for them. Still, the spatial isolation could make it a self-fulfilling prophecy over time. Many have stated the ratings were just a description of the current state of the real estate cycle for each neighborhood. A "D" area could be revitalized, redeveloped into a "B" area. If that area improved with the addition of more public transportation, parks, schools, shopping, it could become an "A" area. This is what has happened in downtown Los Angeles and other areas such as Boyle Heights which some refer to as gentrification. Areas which were in a then D zone are now a B zone. The reverse has also happened. Some areas which were B are now D. Real estate risk constantly changes.

Others have shown how the HOLC grades were more a function of factors such as housing condition, residential density, and housing type, as opposed to solely ethnic and racial composition. If the ethnic and racial compositions were not included in the maps, it would not have affected their accuracy in determining loan risk. Over time some of these ratings became more associated with race and immigration status than unbiased risk. The term "red zone" ended up having a connotation of POC, immigrants living in poor areas. Generally poorer people, people of color and immigrants lived in the C, D areas because it was less expensive. Over time the redlining caused less investment in C, D areas and more in A, B areas causing a greater divide between the areas. As people were pushed out of more expensive A, B areas and into C, D areas, those areas became A, B areas.

It must be noted that the actual HOLC maps never stated "D is a black area" or "D is an immigrant area." There were worksheets prepared by individuals which were used to determine the risk of each specific area. Those worksheets included many factors and descriptions including the following from top to bottom (see worksheet for an area of Los Angeles below), population, class and occupation, nationalities, income, sometimes "negro" %, building type, size, age, condition, owner/tenant % occupancy, home price bracket, sales demand, predicted price trend, sales demand, new construction, rate of sale of new construction, overhang of HOLC properties, description and characteristic of area. It's important to note that the maps only covered 239 cities. We have 108,000 cities in the US. The entire US was never mapped. Only .2% of cities were mapped, 1/5th of 1%. It's clearly impossible for the mapping of only .2% to affect all cities today.

Today in real estate appraisal and analysis we use all of the above factors except race and nationality. It's a violation of the Fair Housing Act to consider or mention race or nationality because it would be discrimination. All of the other factors are good indicators of value and trends. Now the US Census does include race and whether or not someone is "foreign born." The census has nothing to do with real estate sales or loans. It's a population study.

That said the areas ended up correlating with higher populations of POC, immigrants and poor people based on affordability. There is a direct correlation between income and POC. Whites make more than Latinos and Blacks. People with more money buy more expensive homes in more expensive areas. If the government wants to correct the wealth gap, they need to fix the income gap. Appraisers can't do it. If one were to note today property in the four distinct phases or life cycles of real estate, one would probably find a higher percentage of POC, immigrants and poor people in those same areas because hazardous, run down, less desirable areas have lower rent and less expensive homes to buy. In some areas, it's all poor white people. The correlation is income and wealth. People buy or rent what they can afford based on their income. Wealth is tied to income. Race correlates with income. The correlation is NOT race = home valuation. The causation is income.

The Fair Housing Act of 1968 made redlining due to race illegal. It became "unlawful to discriminate in the terms, conditions, or privileges of sale of a dwelling because of race or national origin." A bank could no longer refuse to make loans in certain areas based on those specific factors. Banks can only refuse loans based on the credit, credit history, income, assets, debts, expenses of the buyer, borrower. Those were the only factors that ever mattered in relation to risk anyway.

I am using this example below because it specifically mentions race, nationalities. Not all of the worksheets noted it. It was up to the individual filling in the form. The race, nationality had no effect on the rating. It was just reporting. They could have omitted it and ratings would have been the same. We know that race, immigrant status, being poor correlated with the lower C and D ratings because they correlated with lower income, lower net financial worth, lower credit ratings which affects affordability. This is not to say one caused the other. This is just to aid in the explanation of what "redlining" was.

Another important thing to consider is most people in the "redlined" areas were renters. Generally these areas are 80% tenants. The people who owned the property were mainly white. White property owners were the ones being denied loans or charged more for the loans. POC property owners were in the minority but they were also denied loans or charged more. And again this is only for government backed loans. People still got loans on the properties from sub prime lenders. We still have sub prime lenders today who do riskier loans. Those riskier loans are for riskier borrows or properties. A risky borrower has little cash, poor credit, lots of debt, shorter confirmed work history, undocumented work history, little income showing on tax returns, income only from retirement funds or investment property... A risky property is located in a wildfire area, higher risk flood zone, lava zone, tornado zone, next to river/ocean/lake, landslide area, on an earthquake fault, condo development with a major lawsuit, condo development with insufficient repair funds, older property, property not in average condition, property that needs seismic word, property with tenants that refuse to move, property that is behind on property taxes... Notice all these risk factors have nothing to do with race or color. These are just loan risk factors. Any safe bank would consider all of these risk factors especially if they are offering and reselling government backed loans.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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