Redlining, gentrification, and subjective data have made property assessments spike in Philly’s Black and Latino neighborhoods

Under Philadelphia’s latest property assessments released earlier this month, valuations are rising most rapidly in low-income neighborhoods in West Philadelphia that are near rapidly gentrifying areas.

This continues a pattern of assessment spikes in Philadelphia’s Black and brown neighborhoods. And experts say a complex set of factors, including redlining, gentrification, and questionable government decision making, has contributed to systemically biased valuations.

The latest citywide revaluation of all properties, released Aug. 7 and the first since 2022, will be used to calculate 2025 property tax bills.

An Inquirer analysis of those 2025 values found that property values increased most in heavily gentrified, working-class neighborhoods of color, and a 2022 Inquirer analysis found that the city’s assessments are systemically inaccurate and overassess properties in Black neighborhoods. Researchers at Community Legal Services and Reinvestment Fund, the Philadelphia-based community investment nonprofit, found similar trends in a report earlier this year.

“I do think that we’re in a unique era where systemic biases that were before pushed to the side are being brought to the front,” said Monty Wilson, a senior attorney at CLS. “We are in a kind of new civil rights era.”

Philadelphia’s Office of Property Assessments is working with experts to improve fairness and accuracy, said James Aros Jr., the city’s chief assessor.

“OPA’s goal is to have the most accurate, uniform and equitable assessments possible,” Aros said.

Aros also noted that an external study commissioned by OPA found the agency “meets industry standards for uniformity, appraisal level and equity.”

Starting in the 1930s, redlining allowed the federal government, lenders, and real estate stakeholders to artificially depress home values along race lines. Black neighborhoods and other neighborhoods of color were flagged as having low value.

The practice was outlawed the 1960s, but versions of it persist today.

Those artificially deflated housing prices have impacted investment opportunities. Institutional investors took advantage of historically redlined neighborhoods, buying up cheap property, waiting for neighborhood fortunes to change, then selling properties for higher prices as areas gentrified.

OPA’s use of sales data means gentrification can fuel value spikes.

The city’s mass appraisal system values properties based on recent sales, a home’s characteristics, and the characteristics of nearby properties.

In places where investors resold homes for profit, the sales could be for significantly higher prices than the value of the surrounding homes. In 2020 and 2021, more than 18% of all home sales were made from an investor to a traditional homeowner, according to a study by Drexel University and Reinvestment Fund.

But sometimes rising sales prices accurately reflect what’s happening in a neighborhood. That’s why city leaders focus on expanding tax relief programs.

“The challenge for people who live in gentrifying neighborhoods is, just because the homes around them are worth more, and just because their homes are worth more, it doesn’t necessarily mean that they have the economic wherewithal to afford the tax increases that go along with that,” said Ira Goldstein, senior adviser of policy solutions at Reinvestment Fund.

Sheriff sales, cash sales, and sales to speculators — including the predatory “We Buy Houses” solicitors — make up a fair number of transactions in working-class neighborhoods of color. These types of sales are less common in affluent areas. OPA often uses discretion about whether to include those sales in their assessment data, said Wilson.

“The exclusions are more prevalent in the city’s Black neighborhoods, Latino neighborhoods, and low-income neighborhoods,” Goldstein said.

Cash and investor sales “are subject to review like any other purchase,” Aros said.

Goldstein said OPA was receptive to suggestions from a 2019 study by CLS and Reinvestment Fund’s 2019 study, and he said it’s evident that the city made changes.

“We found there was still a difference between what they excluded and what we would have excluded,” Goldstein said of his organization’s 2023 study, “but the differences were not as severe.”

In addition, OPA in its 2023 assessments included properties with active tax abatements in its assessment modeling, even though city law prohibits it, according to the report by CLS, the Center for Economic Policy Analysis, and Reinvestment Fund.

The report states those sales should be removed, because sales prices tend to be higher for properties that benefit from a property tax abatement for new construction or rehabilitation.

OPA acknowledged that it does use the sales of some abated homes in its assessments. However, the value of properties that are “not new construction or recently rehabbed” wouldn’t be impacted because the city uses codes that groups properties in similar condition, Aros said. He added that OPA’s own review of its 2023 assessments found the inclusion of abated properties followed legal and national standards.

To truly improve accuracy, Wilson said, assessors should visit neighborhoods.

OPA site visits also provide additional opportunities for city officials to spread the word about underutilized exemptions and tax relief programs, Goldstein added.

Aros said OPA “routinely” inspects properties, adding that the agency can’t focus on improvements specifically in low-income neighborhoods because assessors are prohibited from using income data.

OPA also can’t account for race in its assessments. But researchers recommended the city hire a third-party firm to conduct a racial equity study that looks at how assessments inadvertently contribute to racial and economic biases.

Mayor Cherelle L. Parker’s mayoral administration “is laser-focused” on “fairness, equity and accuracy in assessments,” Aros said.

Parker, who took office in January, created a task force to study and submit best practices to help eliminate bias and inaccuracy in Philadelphia’s assessment protocol. Wilson and Goldstein sit on the task force along with other experts and representatives from OPA.