On Nov. 17, 2019, Long Island’s Newsday published the results of its three-year investigation into discrimination in the real estate industry. In meetings with 93 real estate agents, undercover investigators (or “testers”) found that 40% subjected people of color to disparate treatment in comparison with white customers. For Black testers, unequal treatment occurred in nearly 50% of interactions.
Coming after a yearlong commemoration of the 50th anniversary of the Fair Housing Act and REALTORS®’ ongoing efforts to uphold the concept of equal housing opportunity for all, Newsday’s findings emphasized that there is still much to be done.
If anything, the tumultuous events of 2020—COVID-19 and its devastating effects on society and the economy; widespread protests following the deaths of George Floyd, Breonna Taylor, Ahmaud Arbery, and so many others; and actions by the White House to roll back certain aspects of the Fair Housing Act—have sharpened the focus on inequities that exist between people of color and whites in American society. Events have prompted many REALTOR® association executives to reexamine the importance of fair housing, foster stronger relationships with their state and local governments and communities, and explore new ways of overcoming the prejudices that people of color encounter when buying, selling, and living in their homes.
For Steve Francks, CEO of Washington REALTORS® and a self described “history geek,” the Newsday report encouraged him to develop a better understanding of how those barriers came into being. What he found surprised him. “Here we are talking about the American dream, and it’s pretty clear that not only does everyone not have access to that dream, but they’ve been actively blocked from accessing that dream,” Francks says. “And we helped—REALTORS® helped.”
Redlining and Restrictive Covenants
The history of housing segregation, unfair credit policies, and institutionalized racism is documented vividly in two recent books, The Color of Law: A Forgotten History of How Our Government Segregated America by Richard Rothstein and The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran. What they tell us is that in the early to mid-20th century, the federal government implemented a series of policies that purposely segregated metropolitan areas across the United States.
“One was the first civilian public housing program, which frequently demolished integrated neighborhoods in order to create segregated public housing,” Rothstein said in an interview with National Public Radio in 2017. “The second program that the federal government pursued was to subsidize the development of suburbs on the condition that they be only sold to white families, and that the homes in those suburbs had deeds that prohibited resale to African Americans.”
In the 1930s, maps drawn by the federal Home Owners Loan Corporation (HOLC) color-coded neighborhoods in 239 cities, using green for “best,” blue for “still desirable,” yellow for “definitely declining,” and red for “hazardous.” Lenders then used the maps to treat entire “hazardous” neighborhoods as credit risks and subject them to stricter mortgage terms primarily because of the residents’ racial and ethnic backgrounds. The red markings on the maps spawned the term “redlining.”
The National Association of REALTORS®, state and local associations, and their members were complicit in such policies. In 1924, the Code of Ethics was revised to include Article 34, which required REALTORS® to practice discrimination in order to preserve the demographic makeup of segregated areas and keep housing values higher in white neighborhoods.
White families were steered away from redlined areas, Blacks and other minorities were steered away from more desirable neighborhoods, and racially restrictive covenants became common.
Although most of these policies and practices were banned with the enactment of the 1968 Fair Housing Act and by earlier laws and rule changes, their legacy still holds sway over who lives where today. Consider these recent statistics:
- While 76% of white households owned homes in the second quarter of 2020, according to the U.S. Census Bureau, only 47% of Black households owned homes.
- In 2019, the net worth of the average white family was 10 times higher than that of the average Black family, the Brookings Institution says.
- A 2018 study by the National Community Reinvestment Coalition found that areas redlined by the HOLC in the 1930s are still much more likely to house lower-income, minority residents.
- A June 2020 study from Indiana University and the University of California, Berkeley found that African Americans and Hispanics pay 10% to 13% more in property taxes than whites, in part because of the neighborhoods in which they live.
“We can erase or annotate the laws, but that doesn’t necessarily create new housing opportunities,” says Bryan Greene, director of fair housing policy at NAR. “As an industry, we have to be more aggressive and take proactive steps to create housing opportunities that didn’t exist before and build a truly diverse, open real estate market.”
Better Tools to Help Overcome Bias
A particularly eye-opening aspect of the Newsday investigation was that the discrimination and bias that the testers experienced was so subtle and ingrained that the testers often didn’t know they had been treated differently until they came together to compare notes. The issue isn’t just about real estate professionals following the law; it’s also about their recognizing and avoiding biases they might not even realize they have in order to provide all consumers with fair and equal housing opportunities.
At the Long Island Board of REALTORS®—several of whose members were named in the Newsday investigation—an important first step toward accomplishing that goal was to reassess the information they provide to members about fair housing and diversity issues. The association converted what had been a basic, static fair housing webpage into an information hub updated regularly with state, local, and national news; podcasts and webinars featuring discussions with diversity and inclusion experts; links to NAR’s Implicit Bias Training; digital books from NAR’s library; and a wide array of other resources.
The Newsday report also prompted LIBOR to rethink its approach to training. “We suspended our in-house training program and worked with outside attorneys and fair housing experts and got them approved to teach CE classes for our members,” says LIBOR CEO Tessa Hultz. “And although New York state doesn’t require it, we started monitoring every single fair housing class to make sure the content meets the standards that were approved by the state.”
The Chicago Association of REALTORS® is taking a similar approach, offering its members a variety of resources, enhanced training, webinars, and online conversations to make the topics of fair housing and inclusion as engaging as possible. It is also experimenting with a program called “sister circles”—similar in concept to sister cities, but on a local, instead of global, scale.
CAR takes listings from one part of town and compares them with addresses in other neighborhoods, asking the agents who represent each property to discuss the similarities and differences between the two properties or transactions. The idea is to bring people together who don’t necessarily realize they have much in common and use their shared experiences as a way to see the city and its residents from different viewpoints.
Building Stronger Relationships
In addition to providing better resources for their members, associations are working more closely with state and local governments to create policies that eliminate biases in real estate. In 2019, the Urban Institute, in conjunction with NAR and the National Association of Real Estate Brokers, produced “A Five-Point Framework: Reducing the Black Homeownership Gap,” which Washington REALTORS® has been using to guide its efforts with the state legislature. “It’s a great checklist of things that state and local associations can move forward on—specific policy actions and initiatives,” says Francks.
“We’re creating relationships with every fair housing agency on [Long Island], whether they’re involved in enforcement or public education,” Hultz says. “We want to know them and what work they do and how we can better cooperate.”
Through the process, LIBOR aims to gain a better understanding of the kinds of problems consumers encounter. “When the public believes it has been discriminated against, our association isn’t necessarily where they turn to file a complaint,” she says. “We know that Article 10 complaints filed at our association don’t represent all of the perceived discrimination happening in the market. If we want to keep our members informed, we have to create relationships with the organizations that have a better pulse on what violations are coming in, how many, and of what nature.”
A Multidimensional Effort
Perhaps more than anything else, a unified, sustained commitment is necessary to overcome the racism and implicit biases that prevent people from achieving home ownership. “The future depends on how committed people are to embracing policy changes that provide everyone with housing opportunities and open the real estate market,” Greene says.
REALTOR® associations at all levels are ideally situated to help facilitate conversations and implement change, but the commitment needs to come from everyone—AEs, leadership teams, real estate professionals, consumers, and others connected with the industry.
“There’s a real opportunity here to move forward on an industrywide basis, beyond just the REALTOR® organization,” Francks says. “Together, we have to do a better job of developing policies that help promote homeownership in minority communities, especially among African Americans, because of the powerful generational wealth-building aspects of homeownership that have been denied to those communities.”