Veros Real Estate Solutions (Veros) Economists and Data Analysts have released their 2024 year-end update to the ongoing study examining the performance of the VeroVALUE Automated Valuation Model (AVM). This research continues to evaluate whether the AVM exhibits evidence of racial bias by analyzing key metrics such as P10L, P15L, P10H, and P15H in relation to neighborhood racial compositions and the determinants of Median Absolute Error (MAE). The updated study incorporates data spanning 12 months, from July 2023 to June 2024, across five major metropolitan areas: Atlanta, Chicago, Houston, Los Angeles, and Philadelphia.
Study Methodology
A comprehensive description of the methodology employed in this analysis can be found in the report, “2022 UPDATED EDITION – AVM Performance: Is There Evidence of Racial Bias?“. The study applies rigorous statistical techniques to ensure transparency and reliability in assessing AVM performance.
Key Findings
The 2024 update yields consistent results with previous findings across all five metropolitan areas, reinforcing the fairness and accuracy of the VeroVALUE AVM:
- No Evidence of Systemic Undervaluation:
- Metrics P15L and P10L do not increase with higher percentages of Black or Hispanic populations in neighborhoods. This indicates that the VeroVALUE AVM does not systematically undervalue properties in these communities.
- No Evidence of Systemic Overvaluation:
- Metrics P15H and P10H do not increase with higher percentages of White populations in neighborhoods, demonstrating that the AVM does not systematically overvalue properties in these communities.
- Accuracy Across Communities:
- MAE is not significantly positively related to percentage of minority communities – VeroVALUE is no less accurate in minority communities.
Comparative Insights
The table compares results from 2024 and 2022 data. To establish systemic undervaluation in Black communities by the VeroVALUE AVM, the analysis would need to reveal a positive and statistically significant correlation coefficient. However, none of the correlations in the table met this criterion. Similar results were obtained for percent Hispanic Population.
Implications for Housing Finance
These findings underscore that the VeroVALUE AVM continues to be a reliable and equitable tool for housing finance professionals. By delivering unbiased and accurate property valuations, VeroVALUE supports fair lending practices and helps stakeholders make informed decisions.
Access the Full Report
The complete results and detailed analysis are available in the 2024 update. To learn more, access the 2024 Study Update on “Does Historical Redlining Influence Today’s AVM Estimates”.
Please contact us if you would like to learn more about the studies or are interested in learning more about VeroVALUE AVM and how it could support your business needs.
