Realty agents show bias to minorities, study finds

Nation's Housing

April 15, 2006|By KENNETH HARNEY

Are minority homebuyers treated differently from whites by real estate agents? Ask that question to most agents and you'll almost certainly get indignant denials.

But a new two-year study, financed in part by the federal government, suggests that at least for some agents, discriminatory practices are routine. The study was conducted between 2003 and mid-2005 in 12 metropolitan areas using teams of "paired testers" -- individuals or couples posing as home seekers to compare how randomly selected agents treat African-Americans, Latinos and whites.

The 73 real estate firms tested were in the metropolitan areas of Washington, New York, Chicago, Pittsburgh, Philadelphia, San Antonio, Detroit, Atlanta, Austin, Texas; Birmingham and Mobile, Ala., and Dayton, Ohio.

The nonprofit National Fair Housing Alliance conducted all the tests with financial support from the Department of Housing and Urban Development.

The methodology involved sending testers of different racial backgrounds to the same firms looking to buy a home. Each firm was visited by white testers and by either African-American or Latino testers. The study did not identify the offices or firms involved, but the fair housing alliance has filed suits in federal courts against a handful of them in recent months.

The African-American and Latino testers were assigned financial qualifications that were slightly superior to those of white testers. They had higher incomes, could make larger down payments, had longer employment tenures and could afford costlier houses than the white testers.

The results of the tests were sobering: White shoppers routinely were steered away from houses located in predominantly minority or racially mixed neighborhoods, even when they expressed interest in seeing houses in those areas. African-Americans and Latinos routinely were steered to minority neighborhoods and away from more affluent, white neighborhoods, even when they wanted to see houses there.

The rate of steering, according to the study, was 87 percent. "The tests found steering" -- both blatant and subtle -- "to be the norm" in many offices. The tests also documented:

Serious differences in service levels afforded to white testers compared with minority testers. Nearly 20 percent of the time, according to the report, African-American and Latino testers were refused appointments or offered very limited services. In calculating all the tests, white shoppers were shown a total of 1,144 houses -- an average of nearly eight properties per test -- while paired minority shoppers were shown 732 homes, or about five properties per test.

In Marietta, Ga., a white tester asked to see a home in Stone Mountain, a predominantly African-American community. "The [white homebuyer] was told by the agent that she would not want to live in Stone Mountain," according to the report, and the tester was shown "eight homes in predominantly white communities" instead. By contrast, an African-American tester who visited the same realty office was urged to consider Stone Mountain and the agent "drove the tester around [Stone Mountain] pointing out `for sale' signs."

Minority shoppers more frequently than whites were required to provide a lender's pre-approval letter or other financial data before agents would show them houses.

They also were told more frequently to do further shopping on their own.

Agents more frequently offered white testers financial incentives, such as reduced closing costs or lower mortgage rates through affiliated lending and settlement services companies.

Agents frequently used school district quality as a "proxy" for the racial or ethnic composition of neighborhoods. "Instead of making blatant comments about the racial composition," according to the study, "many real estate agents told whites to avoid certain areas because of the schools." Agents asked white shoppers whether they had children, and if they did, emphasized school quality in the selection of houses they showed.

"The demographics of the schools ... were always overwhelmingly white. No schools recommended for the white testers were integrated or predominantly African-American or Latino." Some agents admitted to white testers that they knew they were not supposed to recommend houses based on the racial composition of schools, but did so anyway. One reportedly asked the white tester not to "tell anyone I said that."

What's the significance of the new study? Shanna L. Smith, president of the National Fair Housing Alliance, says the research was "enforcement-based" rather than scientific.

"We are not looking to extrapolate [the results] to the entire real estate industry" -- but instead to study specific companies and document problems. Smith's group already has filed suits against offices of Coldwell Banker, Century 21 and ReMax among others based on evidence developed in the study.

Steve Cook, a spokesman for the National Association of Realtors, said "we agree there is still work to be done in fair housing," and noted that the 1.3 million-member association actively offers training programs to agents and member companies across the country.

kenharney@earthlink.net

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