President Joe Biden visited Tulsa, Oklahoma, Tuesday to mark the 100th anniversary of the Tulsa Race Massacre.

In a speech there, he laid out a number of policy proposals aimed at narrowing the racial wealth gap, including several aimed at reducing racial discrimination in housing and increasing Black home ownership.

One way the Biden administration hopes to do that is by addressing the significant racial disparities in home appraisals.

Homeownership is one of the key ways for people to build wealth in the United States. But white Americans are much more likely to own homes than Black or Latinx Americans, and their homes are also worth more, said Junia Howell, a sociologist who studies housing appraisals. 

“Homes in white neighborhoods are worth, on average, almost $250,000 more than comparable homes and similar socioeconomic Black and Latinx communities,” Howell said.

One major reason for that, Howell said, is that homes in predominantly white neighborhoods are often appraised at more than comparable homes in predominantly Black or Latinx neighborhoods.

“The racial inequality in appraisals is growing over time,” she said.

The gap nearly doubled between 1980 and 2015. One of the main factors appraisers consider in determining how much a house is worth is how much other, comparable homes nearby have sold for recently. And after years of redlining, segregation and other forms of housing discrimination, “When you compare homes to others in neighborhoods that have been discriminated against, you essentially recycle discrimination over and over again,” Andre Perry at the Brookings Institution said.

It’s a vicious cycle.

“That can really determine how much wealth you accumulate by owning your home,” Elora Lee Raymond at Georgia Tech said. “And so that is going to contribute hugely to the wealth gap in this country because home equity is 50% of household wealth.”

Raymond said the Biden administration’s plan to address racial discrimination in home appraisals is an important step, “but it doesn’t necessarily make it possible for Black households to become homeowners. It doesn’t really do much about that.”

One thing that would, Raymond said, would be some kind of down payment assistance.