Fair Appraisals: New Jersey Passes Housing Discrimination Law

NEW JERSEY — You’ve heard the story before, advocates say. A minority homeowner gets their property appraised and – suspecting it has been undervalued – has a white person stand in for another appraisal … who then gets a higher number.

According to the New Jersey Institute for Social Justice (NJISJ), this scenario is something that happened to Tomeka Thompson, a Black woman who says that she was present when her home was appraised for $475,000. After removing all family pictures and being absent from the second appraisal, her home’s value increased to $515,000.

Unfortunately, Thompson’s experience isn’t unique in the Garden State, the nonprofit says. And because homeownership is a direct driver of wealth, it’s throwing fuel on a much-deeper problem – a staggering $300,000 racial wealth divide in New Jersey. Read More: Race, Wealth And Homeownership: New Jersey Still Seeing Troubling Gaps

That may be about to change with a new state law that aims to combat racial discrimination in home appraisals, its supporters say.

Serving as acting governor, Lt. Gov. Tahesha Way signed A2280/S1311 into law earlier this week. The legislation was sponsored by Yvonne Lopez, Verlina Reynolds-Jackson and Tennille McCoy in the Assembly, and Nellie Pou and Teresa Ruiz in the Senate.

The legislation lays much of the burden for change at the feet of the home appraisal industry. Here are a few things that it will do, according to a statement from the governor’s office:

CODE UPDATE – “The law updates the Real Estate Appraisal Act and confirms that it is illegal for real estate appraisers to consider certain personal characteristics when determining the value of a property, including race, color, religion, sex, sexual orientation, gender identity, age, marital status, disability, familial status, or national origin of current or future owners or occupants of the property or nearby property owners or occupants.”

ENFORCEMENT – “The law, enforced by the Appraisal Qualifications Board, provides yet another mechanism through which to address home appraisal discrimination. In January 2024, for instance, the Division on Civil Rights launched the Home Appraisal Discrimination Initiative and issued guidance regarding the application of the Law Against Discrimination to appraisal discrimination. With today’s signing, property owners will now have multiple avenues to seek remedies for home appraisal discrimination.”

BIAS TRAINING – “Additionally, the new law requires a real estate appraiser to complete a fair housing and appraisal bias education course offered by the Appraisal Qualifications Board of the Appraisal Foundation to satisfy the appraiser’s continuing education requirements. The purpose of this course is to educate appraisers on how to avoid bias in their work.”

“When buying or owning a home in New Jersey, we must strive to provide our residents with fair and equal treatment,” Way said.

“For far too long, systems were in place that would perpetuate racial bias,” she added. “With this bill, we will ensure that personal biases don’t influence appraisers.”

How widespread is the problem? A 2022 study from the Brookings Institution found that nationally, transactions in majority-Black neighborhoods are nearly twice as likely to be appraised under the contract price than homes in majority-white neighborhoods.

Neighborhoods with a majority of Latino or Hispanic and Asian American residents are also more likely than majority-white neighborhoods to experience “under-appraisal” when it comes time to sell their homes, the study found.

And yes, New Jersey is seeing the same trend, officials say.

Earlier this year, the New Jersey Attorney General’s office announced that the state is launching a Home Appraisal Discrimination Initiative to tackle “persistent systemic inequities” in the industry.

Attorney General Matthew Platkin said he supports the state’s new law as yet another way to fight back against the racial wealth gap.

“Discrimination in the housing appraisal industry has prevented far too many – particularly people of color – from acquiring the benefits of community stability and wealth creation through homeownership,” Platkin said.

• See Related: NJ Advocates Defend State's Affordable Housing Rules Amid Lawsuit

Leaders with several advocacy groups cheered the new law, including the NJISJ, the Housing & Community Development Network of New Jersey, New Jersey Citizen Action, the Fair Share Housing Center, the National Low Income Housing Coalition and the National Community Reinvestment Coalition.

“The passage of this legislation – in combination with the Attorney General's initiative to also address appraisal discrimination – is a crucial step toward fairer home appraisals in New Jersey,” said Laura Sullivan, director of the Economic Justice Program at the NJISJ.

“Home appraisal discrimination strips wealth from Black and other families of color, contributing to our state's staggering racial wealth gap – one of the highest in the nation,” Sullivan said.

• See Related: New Jersey’s Racial Wealth Gap Isn’t Getting Better, Study Says

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