During National Fair Housing Month, we take time to reflect on the legacy of housing discrimination and segregation. Recent research shows us that, despite the passage of the Fair Housing Act more than 50 years ago, housing discrimination still exists, real individuals and families are impacted every day, and REALTORS® must recommit to examining their own actions and biases so that there can be equal opportunity to housing. Housing discrimination can manifest in more ways than some might realize.

How Do We Study Housing Discrimination?

One common way researchers analyze housing discrimination is through “paired-testing studies.” In a paired-testing study, two individuals (called “testers”) that are the same gender and similar ages—but are of different races or ethnicities—go through the process of working with a real estate professional to rent or buy a home. Because all other characteristics of the two testers are identical, the disparate treatment can provide evidence of housing discrimination.

The Department of Housing and Urban Development (HUD) funds nationwide paired-testing studies every 10 years. The last HUD study was conducted in 2012.

What is the Long Island Study?

Between 2016 and 2018, the Newsday newspaper undertook its own paired-testing study of the for-sale market on Long Island, New York. They trained 25 testers who interacted with 93 real estate agents. The real estate agents were from 12 real estate firms on Long Island, which accounted for more than half of all sales transactions during the time period. In the study, Black testers were treated differently than White testers 49% of the time, compared to 39% for Hispanic, and 19% for Asian testers.

According to the Newsday study, 40% of real estate agents in the paired housing transaction violated fair housing, most often through steering. “Steering” is the practice of influencing a buyer’s choice of communities based upon one of the protected characteristics under the Fair Housing Act. Despite the fact that steering is illegal, many real estate agents in this Newsday study were clearly limiting buyers’ choices by explicitly or implicitly directing them away from certain neighborhoods.

What Are Some Examples of Steering?

The Newsday study captured statements from real estate agents that researchers determined were evidence of the coded language of steering. Below are examples of statements real estate agents made to White testers, but not to Black or Hispanic prospective buyers.:

“Follow the school bus, see the moms that are hanging out on the corners.”

“Some of [the neighborhoods] are not as nice…You know, maybe not as nice in terms of statistics.”

“In [a particular neighborhood]…the Hispanic community came in—and they really took over…”

“Wherever you’re going to buy diapers, you know, during the day, go at 10 o’clock at night, and see if you like the area.”

What is the Impact of Steering?

Studies of housing discrimination, including the Newsday study, find that minority home buyers are offered fewer housing options than are White buyers, and they are less likely to be able to view a home in person. Guiding buyers to particular neighborhoods based solely on their race or ethnicity limits choices, reinforces segregation, and widens economic gaps.

  • Research has shown that discriminatory steering leads to a disproportionate number of non-white households living in high poverty neighborhoods and is a key factor explaining the gap in intergenerational mobility between Black and White households.
  • Racial steering contributes to widening gaps in housing equity, as homes in primarily minority neighborhoods have more price volatility and lower price appreciation, in general.
  • Limiting a family’s choice of neighborhoods through steering can have a serious impact on the quality of the schools children attend and, ultimately, children’s overall opportunities and well-being.

But it is not just research findings that highlight the impacts. Testers in the Newsday study were also surprised at the different treatment they had received since the real estate agents were all cordial and generally seemed professional. Many had no idea that they were being treated differently than their “pair.” As one African American tester said:

“To sort of have the options to be limited in that way sort of makes me think about what options are available that people might not know about. And who’s making those choices? That’s the other thing that I feel, is that the choice, in terms of the choice of what would be theoretically the best choice for me and my family, was sort of removed.”

What Can You Do to Ensure You Steer Clear of Steering?

While overt housing discrimination has become less common since the passage of the Fair Housing Act, implicit discrimination, including racial steering, is still relatively common. While the Newsday study focused on the Long Island housing market, steering of prospective home buyers happens all over the country—including here in Virginia.

The National Association of Realtors® has offered ways that REALTORS® can help ensure that they are not violating fair housing laws by limiting prospective buyers’ housing choices through racial steering:

  • Provide clients with listings based on their objective criteria alone.
  • When a client uses vague terms such as “nice,” “good,” or “safe,” ask impartial questions to clarify their criteria, such as property features and price point.
  • Only communicate objective information about neighborhoods, and direct clients to third-party sources with neighborhood-specific information.
  • Learn to pay attention to your unconscious biases. When evaluating what a client objectively wants, ask yourself why you have eliminated certain areas, if you have.

Click here to send any comments or questions about this piece to Virginia REALTORS® Chief Economist Lisa Sturtevant, PhD.