The number of homeowners refinancing their mortgages was up last month, according to the data firm Black Knight, and more than half of all loans made were refinances. One reason homeowners decide to refinance is to cash out some of the equity they’ve earned, and that amount of equity often depends on a home appraisal.

But the home-appraisal industry has been criticized for contributing to the gap in valuation between white-owned homes and Black-owned homes. According to research by sociologists Junia Howell and Elizabeth Korver-Glenn, comparable homes in predominantly white neighborhoods appraise at three times the value of those in Black and Latinx neighborhoods. And earlier this summer, President Joe Biden established a task force led by Housing and Urban Development Secretary Marcia Fudge to look into home-appraisal discrimination.

“Marketplace” host Amy Scott spoke with Howell, an associate professor at the University of Illinois Chicago, about her research. The following is an edited transcript of their conversation.

Amy Scott: How does discrimination show up in home appraisals?

Junia Howell: Yeah, well, when you say the word “discrimination,” often what we think is individual decisions or behaviors or biases that negatively impact a certain population over another. And that happens in appraisals, for sure. But the bigger story when we’re talking about racial inequality and appraisals is actually not so much about an individual appraiser’s decision as much as how the system or the way that we appraise houses more generally is structured or arranged, such that we have historically and continue to give more value to white spaces and white homes.

Scott: And some of that is baked into the system we have of using comparable sales to estimate property values. Can you talk about how that perpetuates historical patterns?

Howell: So comp sales, for anyone who’s not familiar with it, is the process of using recent previous sales to help determine how much a property is worth. This is the primary method that we’ve used in our country for appraising for almost 100 years. And what it means is that you’re constantly pulling past sales to help define how much the current sale should be. And so that means that we have historically pulled redlining and processes of racial discrimination in house prices into the present. On top of that, often appraisers define what is similar to your house based on the racial composition. And so, in two ways, both the historical polling and the contemporary use of defining areas based on race continue to perpetuate racial inequality in home prices.

Scott: So as much as the system drives a lot of this inequity, it also comes down to human bias and just simple decision-making. I was struck that even something as seemingly objective as floor space can actually vary quite a bit, appraiser to appraiser.

Howell: Yeah, that is something that really surprised me because it’s not something that I would have expected either. I definitely came in with the bias that a square foot is a square foot, but what we see is there’s a lot of different ways that you can measure square footage. And there’s a lot of different ways that appraisers pull square footage. So you see, one house appraised by six different appraisers will have three or four different square footage. For most appraisers, it’s a key indicator and how they compare the comparability between the house they’re looking at and those comps that we were just talking about. And so when the square footage is off, it actually can make big differences. Thousands of dollars, tens of thousands of dollars in some cases, on how much your house is worth. And so, part of what we are pushing for as scholars who are looking at this, and people in the appraisal industry, is standardization — ways to standardize some of these processes. So we’re taking out the inconsistency and the biases that we’re seeing throughout the process.

Scott: So we’ve seen property values rising rapidly across the country, given the tight supply of housing. But I’m wondering how this equity gap in appraisals is contributing to differences in both the building of wealth but also in the loss of wealth as protections for homeowners who can’t pay their mortgages expire.

Howell: Yeah. So this is something I am currently superfascinated by. Not only have home values skyrocketed, the racial inequality between those home values has also increased. And so what you’re seeing in the pandemic is partly a lack of housing, right? There’s a lot of reporting about how we have less housing, why that is, why construction is down, etc., etc. But we still have more square footage of housing per person in the U.S. than we’ve had for decades. So we are also buying bigger homes, more and more people have two or three homes, that’s happened in the pandemic too. The story about it just being a lack of construction, a lack of space, is part of it. But I would argue the bigger part is because we are giving more and more access to credit and thus the ability to accumulate wealth and buy these homes to affluent individuals and predominantly white individuals, while we’re not getting that to everyone else, and [have] further discontinued the true relationship to the need to live and be in a home from the actual space because it’s become more about investment and credit than it has about the need of housing.