This article provides practical advice for how real estate and mortgage professionals can address and counter harmful attitudes and actions toward Black, Latinx and Asian homebuyers and renters.
Racism impacts real estate
There are two types of racism in real estate:
- implicit racism, the more common, but harder to spot form; and
- explicit racism.
Explicit racism occurs when an individual or company in a position of power takes actions against individuals because they are members of a specific racial or ethnic group. For example, a real estate agent or landlord who refuses to show homes to or accept applications from members of a protected group is guilty of explicit racism.
Another specific example occurred during the Millennium Boom, when Countrywide, a subsidiary of Bank of America, targeted thousands of Black and Latinx homebuyers in well-documented instances of predatory lending.
Countrywide discriminated against Black and Latinx homebuyers by:
- charging higher fees even when these homebuyers had equivalent qualifications of White homebuyers;
- encouraging Black and Latinx homebuyers to take on high debt-to-income (DTI) ratios; and
- steering Black and Latinx homebuyers into subprime mortgage products, even though many of the targeted homebuyers had equal or better qualifications than the White homebuyers to whom Countrywide originated mortgages.
This led to targeted homebuyers paying much higher upfront fees, and over time, higher mortgage payments. Therefore, when the housing market crashed in 2007-2009, these homebuyers were much less likely to be able to keep their home. Bank of America ended up paying $335 million to the Countrywide victims in 2012.
Racist actions by lenders, landlords and real estate agents keep qualified participants out of the housing market, reducing turnover and sales. In fact, here in California, we consistently have the third-lowest homeownership rate in the nation, higher only than New York and the District of Columbia. With so many roadblocks in place to prevent much of the state’s large Latinx population from attaining homeownership, the ripples spread far across California’s housing landscape.
Laws to prevent discrimination
Both federal and state laws exist to provide protections against housing discrimination.
California’s Unruh Civil Rights Act protects against discrimination due to:
- age;
- ancestry;
- color;
- disability;
- genetic information;
- national origin;
- marital status;
- medical condition;
- race;
- religion;
- sex (including gender identity and gender expression);
- pregnancy; and
- sexual orientation. [Calif. Civil Code §51(e)]
The highest number of fair housing complaints received each year are in regard to disability status, followed by race-based discrimination, according to California’s Department of Fair Employment and Housing (DFEH).
California’s Fair Employment and Housing Act (FEHA) also offers protections due to an individual’s source of income — including Section 8 housing assistance vouchers — familial status and veteran or military status. It applies to property owners, real estate brokers and agents and financial institutions. [Calif. Government Code §12900 et seq.]
Under the FEHA, the following discriminatory acts are prohibited:
- refusing to sell, rent or lease housing;
- misrepresenting the availability of housing;
- including inferior terms to protected groups;
- publishing advertisements containing discriminatory information or preferences;
- failing to design a multi-family building with four or more units to allow access and use to disabled persons;
- inquiring orally or through writing about a purchaser’s or renter’s protected status;
- refusing to lend or provide financial assistance;
- inducing a person, for profit, to sell or rent a home based on the prospective entry into the neighborhood of a person of a particular protected status;
- denying access to a multiple listing service (MLS), brokerage or other real estate service;
- making housing unavailable to protected groups through planning and zoning decisions; and
- using a financial or income standard in rental housing that treats married couples’ finances differently than non-married individuals residing together. [Gov Code §12955(a)]
Further, the Housing Financial Discrimination Act of 1977, known as the Holden Act, prohibits discriminatory loan practices. This applies to:
- financial institutions;
- mortgage loan brokers;
- mortgage bankers;
- banks;
- savings and loan associations; and
- public agencies that regularly make, arrange or purchase loans for the purchase, construction rehabilitation, improvement or refinancing of housing. [Calif. Health & Safety Code §35800 et seq.]
At the federal level, the Federal Fair Housing Act (FFHA), administered by the U.S. Department of Housing and Urban Development (HUD), prohibits discrimination by real estate owners and agents. This includes prohibitions against:
- blockbusting, when White owners are convinced to sell property at a discounted price out of fear of racial minorities moving in and decreasing property values, and the purchasers then sell the property at a premium to racial minorities, thus profiting off of racist attitudes;
- steering;
- retaliating against someone who has filed a fair housing complaint or assisted in a fair housing investigation;
- harassing people due to their protected status;
- discriminating in the appraisal of a home;
- limiting privileges, services or use of facilities of a home;
- delaying or failing to perform maintenance or repairs; and
- refusing to provide or providing inferior terms of homeowners insurance due to a person’s protected status. [42 United States Code §3601 et seq.]
The takeaway here is that numerous laws exist to prevent discrimination. But the prohibition alone isn’t enough to ensure equal access to housing for all. Acts of implicit discrimination are especially prone to occur, as they can happen without the perpetrator even realizing they are being discriminatory. But this type of discrimination is just as harmful and sometimes more harmful, since it is so prevalent.
Steps to avoid implicit discrimination
The first thing a real estate professional can do to address potential discrimination issues is to identify their blind spots and where there is the widest opportunity for discrimination.
For example, a landlord of a community with few children living on the premises needs to be careful not to advertise their community as an “adult community” or to discourage families with children from moving in. Even if it is well-meaning — “Your children may not enjoy living here because there aren’t any other kids for them to play with” — it is still discriminatory.
Steps that all real estate professionals can take to avoid implicit discrimination include standardizing practices, including the:
- types and amounts of information given to each client, prospective client, renter or prospective renter;
- questions asked of prospective renters;
- forms used to screen prospective renters; and
- fees and rents.
Landlords ought to limit their questions to matters that directly impact their tenancy. For example, ask if they have pets or a waterbed, but don’t ask if they are pregnant or how old they are.
Editor’s note — An exception exists for senior-only housing. A housing project qualifies as senior housing if it is occupied only by persons who are 62 years of age or older. [24 CFR §100.303]
Real estate professionals also need to be careful about their advertising practices.
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For example, a phrase like “perfect for newlyweds” indicates a preference for married couples. Likewise, “walking distance to synagogue” indicates a preference for Orthodox Jewish applicants. Even mentioning a nearby exclusive country club may indicate a preference for homebuyers or renters who have membership in the club, which may cater to a certain type of clientele and present income barriers.
Further, the images used in marketing materials may also indicate a discriminatory preference. For example, religious symbols or flags can indicate a preference for a certain type of homebuyer, renter or client. Even if a client asks for a discriminatory phrase or symbol specifically, the broker seeking to protect themselves from legal action will refuse.
To notify clients and current and potential renters of their rights, real estate brokers are required to display a fair housing poster notifying clients and current and potential renters of their rights:
- in their place of business; and
- at any non-single family residential (SFR) dwelling offered for sale. [24 Code of Federal Regulations §110.10(a)]
Actively combatting racism
Aside from being extra careful to avoid implicit racism, real estate brokers can take positive actions in their offices and communities to encourage equality.
Encourage inclusive language not just in your marketing, but in how you show property. For example, the term “master bedroom” has recently come under fire as an antiquated reference to slavery and plantation life.
Real estate licensees are required to complete Fair Housing education as part of their regular continuing education (CE) every four years. Beyond this, anti-bias trainings for the office are also positive steps brokers can take to get their agents thinking about how they interact with Black, Latinx and Asian clients. Making them aware that these clients are on average shown fewer properties and given less information will help them examine and adjust their own implicit behaviors.
Brokers and agents ought to keep records for each client. This not only helps them identify potential biases but can protect them in case the client or other party files a discrimination case against the agent.
Real estate brokers: How are you combatting racism in real estate in your practice? Share your ideas and experiences with other agents in the comments below.
