How is the real estate market developing? A buyer's guide to neighborhood segregation (2023)

You are ready to buy a home and the first thing you do ishire a trusted real estate agent. Share your budget, what you're looking for, and the neighborhoods you're considering.

In an ideal world, your agent would listen carefully and then send you any items that might fit your must-have list. Their recommendations are based on your actual needs rather than their own preconceived notions of what you think they might need. They patiently answer your questions and guide you to community resources that can help you make the best decision for you and your family.

Unfortunately, for many homebuyers in the United States, this ideal experience is notespecially minorities.

Real estate agents have a long history of directing buyers to specific neighborhoods based on race, color, religion, and other discriminatory factors. In fact, driving is one of the main reasons for the widespread neighborhood segregation we see in the US today, despite theSupreme Court ruling in 1979that the practice violatesFair Housing Act.

But what exactly is management in real estate and how does it work in municipalities? Let's discuss what you need to know about driving, the laws surrounding this controversial practice, and what to do if you think your agent is driving you.

What drives real estate?

Control is when a real estate agent influences a homebuyer to buy in certain communities based on their race, thereby limiting the buyer's options.

Let's look at a hypothetical driving example: A white buyer and a black buyer approach the same real estate agent who want to buy houses. Both buyers have similar financial profiles and similar needs for their future homes. The agent sends the white buyer 40 offers in 5 different communities, all predominantly white. The agent sends the black buyer 22 offers in 3 communities, all multiracial or mostly black.

(In fact, the above scenario is an example of how researchers determine whether motoring is prevalent and how common it is, using a method known as "paired Test.“)

This is how steering normally works. Agents direct customers to neighborhoods based on their race.

In practice, this means that white buyers are generally given more housing options and discouraged from moving to other neighborhoods. Black buyers are often offered fewer options and move to predominantly black or multiracial neighborhoods.

Driving is illegal under thatFair Housing Act(more on that later). are real estate agentsmandatoryoffer the same professional services to all real estate buyers regardless of race, religion, color, disability, national origin, gender or marital status.

what is direction

Real estate agents generally practice management in two ways:

1. Recommend customers to shop in specific neighborhoods or cities based on their race.
2. Failure to show customers all relevant housing options based on their race.

While driving can be done in many different and often treacherous ways, most driving behaviors generally fall into one of these two categories.

What can management look like in practice?

Let's look at how direction can change in real life. Here are some examples of how agents can guide their customers.

• Show more deals for white homebuyers than for minority homebuyers.
• Suppose the clients want to live in neighborhoods populated mostly by people of the same race and simply show them houses in those neighborhoods.
• Discourage white customers from living in minority areas for "safety reasons" (or other euphemisms like "They don't want to live there; they have really bad schools").
• Educate white homebuyers about neighborhood safety concerns, such as:
• Minority communities disdain for white customers.

If an agent fails to provide an equivalent and professional service to its customers and, without express guidance from those buyers, makes assumptions about what multiracial buyers want, there is a fundamental risk that they will be misled.

which direction not

Real estate agents are obliged to offerequal professional servicefor homebuyers, and the more they do, the more they avoid driving.

How do agents provide equivalent professional services? Provide buyers with choices and present factual information so they can make their own informed decisions.

Give buyers options

"Okay," you might be wondering, "buyers should have choices... but can't buyers have preferences, too?"

Of course they will have preferences andGiving buyers all options is important for agentswithin your original criteria, and leave thebuyerguide the decision of which neighborhood and house is best suited.

When a buyer wants to buy a home in a particular school district or near a particular place of worship, that's usually the caseNOa form of direction as long as the buyer is the one guiding those decisions.

A good broker should cast a wide net for the buyer and leave it alonebuyerlimit the options according to your preferences.

Provide buyers with objective information.

There's nothing wrong with an agent telling customers about the different parts of an area. That's part of an agent's job!

Strong agents have a wealth of knowledge about their cities and understand the ins and outs of each neighborhood like the back of their hand. That's why buyers hire them; for his knowledge of the market.

However, it is not the broker's job to impose his personal opinion on the buyer. This is where objective information comes into play.Agents must offer objective information and resources.Shoppers on local schools, crime and safety and other important community facts. That way, prejudice doesn't come into play and shoppers can make their own informed decisions.

Where agents often have trouble driving, they warn some shoppers (usually white shoppers) to avoid certain neighborhoods due to so-called high crime rates and poor schools. Or maybe an agent will say something like, “You won't like it there; It's shabby at night.

These types of comments can lead to targeted and other discriminatory practices (more on that later).

How common are addresses in the real estate market?

Unfortunately, management is incredibly common in the real estate world. The practice has been well documented for decades, withStudies on driving and its impact on communities that emerged as early as 1976.

Since the late 1970s, the Department of Housing and Urban Development (HUD) has studied motoring by sending pairs of mystery shoppers into US cities to assess how agents treat them.

Ölatest HUD study, published in 2013, found that even when black and white homebuyers had the same financial score, “white homebuyers are more favored than minorities. More importantly, minority home seekers are informed and show fewer houses and apartments than white people."

Acurrent research byNewsa Long Islandfound similar results: "Overall, agents provided white reviewers, on average, 50% more entries than their black counterparts: 39 versus 26," they said.

black participants of theNewswere surprised and disappointed to learn that the officers had discriminated against them.

“I didn't think that without this test there would be a difference between what was provided. My assumption would be that everyone would get the same lists based on their economic and geographic needs," said Martine Hackett, senior professor of public health at Hofstra University, who received mixed treatment from agents three times during the investigation.

"Having such limited options makes me wonder what options are there that people might not be aware of. And who makes these decisions? she guessed.

The subtlety and secrecy of the direction is one of the reasons why it is difficult for buyers to identify the behavior. Most buyers have no idea they have been scammed. How do you know you were given fewer options than another buyer?

To make matters worse, real estate agents often don't even realize they're driving! This type of bias is often unconscious, and the agent believes they are just trying to meet the needs of their buyers as best they can. Therein lies the ubiquity and insidiousness of management.

Management contributes to actual segregation

leadership practice isSowidely used, it works as a tool ofAs a matter of factdemarcation. What does that mean?

Well, many Americans like to think of segregation as an old story, something we learn about in history books, an old story told through black and white photographs.

But the reality is that America is still highly divided, and driving plays a big part in that division. In fact, studies showThe United States is still almost as segregated as it was 50 years ago.when the Fair Housing Act was signed.

a recentNational Fair Housing Alliance reportexplains: “Today in the United States, about half of all blacks and 40% of all Latinos live in non-white neighborhoods. The average white person lives in a neighborhood that is almost 80% white."

Ultimately, this separation has a tremendous impact on communities.

The consequences of counseling in minority communities

Okay, we know driving happens, it's common, and it contributes to neighborhood segregation in the US.Strictly speakingaffect underserved American homebuyers?

Unfortunately, driving has far-reaching negative effects for minority homebuyers, particularly black people.

Fewer housing options

An obvious effect of the address is that it reduces housing opportunities for minority buyers. Studies have found that black buyers consistently receive fewer offers from real estate agents, limiting their home choices.

"This practice has a particularly negative impact on black families in a number of ways," the National Association of Realtors (NAREB) saidHousing situation in black America in 2019.

"Failing to show properties to black buyers in non-Hispanic white neighborhoods and targeting them exclusively to black neighborhoods can seriously undermine the quantity and quality of housing opportunities for black families."

Lower real estate appraisal and ownership rates

Another big consequence of black family leadership? Houses in black neighborhoodsappreciate in valueas much as houses in white neighborhoods, so these owners cannot amass as much wealth.

youngestAmerican Center for Progress surveynoted that “past and present racial prejudice and discriminatory practices in the real estate markets, such as E.g. red-lining, motoring, different valuation methods and the racist perception of neighborhoods by appraisers, among other things, contribute to lower demand for housing in African-American neighborhoods.”

This reduced demand means reduced home prices.

The study continues, “Even after accounting for residential characteristics, homes in neighborhoods with a high concentration of African Americans, as well as neighborhoods undergoing racial transition, are generally worth less and less valuable than those in predominantly African American neighborhoods. .space ”

One nowA Brookings Institution study found that blacks get 18% less for their homesthan whites, even in terms of income.

Homeownership is often touted as the cornerstone of the American Dream and the best way to build wealth in America.don't play the samefor homeowners in black and white.

"Low or falling home prices may contribute to low homeownership rates among black families,"NAREB explained. "Low home price increases can discourage homebuyers, and falling prices can lead to foreclosures, even for borrowers who can afford the required monthly mortgage payments."

segregation and school quality

Technically, we've integrated schools since the landmark 1954 Supreme Court casebrown v. Board of Education of Topeka,Schools remain segregated across the country, still today.

In fact, a recent report found this to be the caseMore than half of American children attend schools in racially concentrated counties(meaning that 75% or more of the students are of the same race). The same report found that nonwhite school districts receive $23 billion less in funding than white school districts, despite serving the same number of students.

As NAREB points out, racial orientation "can further limit blacks' access to better schools, wider recreational opportunities, safer roads, and higher housing prices."

lack of opportunities for advancement

Another important impact of motoring on minority communities is the lack of upward mobility.

ÖThe National Bureau of Economic Research explainsthat even when shoppers' location and income preferences are controlled, "discriminatory driving alone can explain a disproportionate number of minority households found in high-poverty areas of the United States and can be a significant factor in the contributing to the buyer mobility gap Income found between black and white families.

“Intergenerational” is a key word here because it means black families stayfor generationsby address The practice can be as broad aslong-term effectsminority homebuyers.

pollution

Aside from making it harder for minorities to accumulate wealth, driving can have a significant impact on the health of owners. This is because minority homebuyers tend to be pushed into areas with higher levels of pollution.

ÖStudie des National Bureau of Economic Researchfound that the minority testers they sent to buy homes "targeted neighborhoods with a higher concentration of Superfund locations and Toxics Release Inventory (TRI) releases."

That's according to another recent Ohio State University studyDisease-causing air pollution is rampant in certain parts of the United States., that is, in areas populated by black and low-income people.

Other important definitions related to driving and housing discrimination

Driving is not the only discriminatory practice faced by minorities and other underserved homebuyers, nor is it the only cause of segregation. The problem is multifaceted and certainly not just the fault of real estate agents.

In accordance withNational Alliance of Housing Fairs, "Racial and ethnic inequalities in access to credit, the combined impact of the subprime credit crunch and foreclosures, and modern practices of discrimination, racial targeting and redlining have perpetuated racial segregation."

There is a complex system that puts minorities at a disadvantage when it comes to housing. Here are some of the most important terms you should know.

Red line

Redlining is a practice in which lenders refuse to provide mortgages to buyers in certain so-called "high-risk" neighborhoods, such as the United States. B. those with low incomes or predominantly minorities.

Surprisingly, the red line was drawn by the federal government. In the 1930s, after the New Deal was signed, the Federal Housing Authority, created in 1934, actually produced color-coded maps that colored "risky" neighborhoods red (hence the term "red line"). The red areas represented locations where the federal government would not support home loans. YouI can still see those red cards today.

Although redlining is currently illegal thanks to the Fair Housing Act 1968, the effects of the practice are still being felt.

In accordance withCurrent Redfin research, “The typical homeowner in a neighborhood denied by the federal government for home loans made 52% less, or $212,023 less, in personal wealth generated by rising real estate values ​​over the past 40 years than one in an approved neighborhood “.

blockbuster

Blockbusting is a historic real estate practice in which real estate agents, developers, and speculators persuaded white homeowners to sell their homes, fueling fears that black buyers would move into the neighborhood and lower the homes' values.

White homeowners would panic and sell their homes at a loss. Then the realtors would turn around and sell the homes to black buyers at a huge, inflated profit. Back then, there were only a few houses available to black people, so they had no choice but to pay these high prices.

Blockbusting is obviously illegal today and is no longer explicitly practiced. However, this type of scaremongering is still practiced in more implicit ways, such as through modern motoring. Blockbusting was designed to get white people to flee.

white flight

White flight is exactly what it sounds like: White people are migrating from an area that is becoming more diverse. And even though that seems to be a thing of the pastRecent research suggests that whites continue to flee areas as they become more diverse., even more so in middle-class suburban neighborhoods.

Is there a driving ban?

There is a major federal law prohibiting driving called the Federal Fair Housing Act, also known as Title VIII of the Civil Rights Act of 1968.

The Fair Housing Act

The Fair Housing Act prohibits discrimination when looking for housing on the basis of race, color, sex, national origin, religion, marital status or disability.

The law protects home seekers from discrimination, whether they are buying or renting, taking out a mortgage, seeking housing assistance, or engaging in other housing-related activities.

But what exactly does the Fair Housing Act prohibit? Here are some examples.

• Address
• Refuse to rent, sell, or negotiate a home
• Any other way of making living space inaccessible, e.g. B. to prevent the purchase or rental of property.
• Define various conditions for selling or renting a property
• Calculate different sales or rental prices
• Request different eligibility criteria for applications
• Failure or delay in maintenance or repair.
• blockbuster
• Red line

This list is far from complete (especially sinceThere are many nuances in housing discrimination), but make one thing clear: all buyers and renters should be treated equally by real estate professionals. This is the essence of the Fair Housing Act.

And the provisions of the law do protectat,not just those within the protected classes. This means that under the Fair Housing ActIrrespective of this, you are protected against discrimination when looking for an apartmentYour race, color, religion, gender, national origin, marital status or disability.

State and local housing discrimination laws

State and local laws can, and often do, go beyond the Fair Housing Act. One way the laws expand fair housing protections is to include even more protected groups than are covered by federal law.

For example himNew York State Department of Human Rightsexpands the Fair Housing Act to include housing protections for gender identity, sexual orientation, marital status and military status.

Be sure to check your state and city's housing discrimination laws. You may be surprised that it is much longer than federal law. And rememberThere are local laws that go beyond the protections of the Fair Housing Act. No place may circumvent the Fair Housing Act or enact any law that invalidates its protection.

How are driving laws applied?

Driving is illegal, but that doesn't mean anti-discrimination laws are enforced. In fact, it's common for the address to go unnoticed, as most buyers don't even realize it's happening to them. However, there are some main ways in which the Fair Housing Act is applied.

Government agencies that enforce driving laws

The Fair Housing Act is enforced by the US Department of Housing and Urban Development (HUD) through its Office of Fair Housing and Equal Opportunity. HUD enforces the law in a variety of ways.

First, HUD conducts the aforementioned studies, in which it sends test pairs of buyers and renters to cities across the US to measure how they are treated. This is one way to hold the real estate sector accountable. (Although it could be argued that if the studies helped enforce anti-discrimination practices, we would probably get better results after doing them for decades.)

Another way HUD can enforce the Fair Housing Act? You investigate complaints about anti-discrimination,which anyone can submit online, by phone, email or even by post.

Many state and local governments also have their own regulatory bodies. Sometimes an on-the-spot report can be more effective, as state and city governments typically have more specialized knowledge of discriminatory practices in specific areas.

administration and courts

Sometimes homebuyers can also get discrimination rights in court. These cases are often large lawsuits filed by the Attorney General or a local advocacy group on behalf of homebuyers.

For example, there was a first casereal estate forum v. Attorney General of New York State, which took place in 1988. In that case, the New York State Attorney General accused Yonkers real estate agency Realty Forum of "providing housing listings in certain neighborhoods based solely on the customer's race or color." The Realty Forum was eventually found guilty.

So how did the New York Attorney General expose the discriminatory practices? Called by a fair communityHousing options in Westchester, which has received numerous complaints from local tenants through the Realty Forum.

This is one of the reasons why it can be important to report housing discrimination both locally and through HUD. If enough buyers file discrimination complaints, all from the same real estate agent, the state can file a lawsuit against that real estate agent in court.

What to do when you think you're being guided

If you feel like you're being guided by your real estate agent, there is onesome things you can doto defend you

document everything

If you have to sue your agent and you end up having to sue, you want a record of everything that happened.

Make sure you document everything you experience with your agent, such as: B. how many offers he sent you, advice he gave you about neighborhoods, conversations you had, forms you filled out, email communications, etc. This can later be used as evidence if needed .

talk to your agent

Aside from documenting everything, the first thing you should do is talk to your agent.

For example, let's say you recently discovered several listings matching your home search criteria that your realtor never showed you and you think management may be involved. This is an opportunity to talk to your agent and find out what's going on.

First, try to avoid accusing your agent of going straight through the door and consider this a preliminary information search. Just ask the questions directly: “I noticed some entries that you never sent me and that match my search. Can you explain why?

At the very least, this conversation can later be used as evidence of discrimination if the issue is not properly resolved.

Get a second opinion

The bottom line is that you must trust your real estate agent. If you think you're being treated unfairly, then probably you areTime to fire your agentand find a new one who will give you the same professional service you deserve.

Now is the timeInterview some more agentsand find someone who values ​​your business and treats you fairly.

If you aBuyer's brokerage agreement, be sure to read it carefully first. There are certain conditions under which you can fire an agent, although any evidence of discrimination is likely to be covered by the terms of the contract.

Keep in mind that firing your agent doesn't mean you shouldn't report it, but in the meantime, it's also important to find someone you're comfortable working with so you can continue your investigation without interruption.

report behavior

If you think you have experienced discrimination of any kind when looking for housing, consider reporting your behavior to a local law enforcement agency,via HUD, or a local fair housing organization.

Most housing discrimination goes unreported and undetected. While reporting your real estate agent can be exhausting and harrowing, these reports are law enforcement's way of proving patterns of systemic discrimination. Without people speaking up, many discriminatory practices can go undetected.

Lawyer

If all else fails, speak to an attorney who can advise you on your rights and your best options. You always have the option to sue for damages in federal or state courts, but you will need an attorney to guide you through this process.

If you choose to go this route, understand that you can recover only the out-of-pocket expenses you have incurred as a result of the discrimination plus any emotional distress or injury. It is important to assess whether this option is worthwhile for you, as such cases can be time-consuming, expensive and stressful for the plaintiff. Still, it's a good option when the system doesn't intervene.

Remember, you have the right to be treated fairly by your real estate agent regardless of race, color, national origin, sex, marital status, disability or religion.

Header Image Source: (June Dalton / Unsplash)