Steering by Realtors

The Roles Realtors Played in Housing Segregation

Racial Steering Has a Long History

When real estate agents point homebuyers toward or away from certain neighborhoods on the basis of the buyers' race, that's called racial steering. The federal Fair Housing Act of 1968 made racial steering by real estate agents illegal. The National Association of Realtors formally opposed the passage of the Fair Housing Act of 1968, and evidence exists that the practice of race-based realtor steering continued well after 1968, nationally and in Lexington.

In the 2021 book Freedom to Discriminate: How Realtors Conspired to Segregate Housing and Divide America, Gene Slater asserts that realtors have played a definitive role in establishing and maintaining segregation in the US. Slater says realtor organizations committed themselves to a principle of property owners' freedom, without regard to the rights of others, and have used that principle to circumvent legal requirements designed to make home-buying racially equitable. 

From 1924 to 1950, the Code of Ethics for the National Association of Real Estate Boards explicitly supported realtor steering, with the following language:  

Article 34: A Realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individuals whose presence will clearly be detrimental to property values in that neighborhood (National Association of Real Estate Boards, 1924, emphasis added).

In 1950, the national Code of Ethics was amended to include a fuzzy language statement that offered some protection for realtors who continued to steer clients based on race: 

Article 34: A realtor should never be instrumental in introducing into a neighborhood a character of property or use which will clearly be detrimental to property values in that neighborhood (National Association of Real Estate Boards, 1950).

This language provided some cover for realtors because of the untested, unproven, but widely shared belief that Black home ownership caused property values to decline. (The film Segregated by Design addresses this belief.)  The steering provision of the Code of Ethics was not fully repealed until 1974. 

Up to the Late 1960s, Most Lexington Realtors Resisted Integrated Housing

In 1965, an African American couple, Dr. Joseph Walter Scott and Sara Scott, bought a home in Cardinal Valley, then a predominantly White neighborhood that had been developed in the previous 4 to 7 years. Ben Story, a White Lexington realtor, represented them.  Dr. Scott was a professor at the University of Kentucky (Lexington Committee on Religion and Human Rights, June 7, 1965). This was the first known sale of its kind in Lexington. The sale was perfectly legal, but Mr. Story faced resentment and criticism from other realtors, and anonymous threats to blow up his office or car.  James W. Hammons, in an oral history interview, said Mr. Story received "an incredible amount of abuse" (Hammons, 1987). In addition, at a professional realtors' event not long after the sale to Dr. Scott, there were publicly stated calls, clearly directed at Mr. Story, for realtors not to sell homes in White neighborhoods to Blacks.  At that time racial steering was still legal and had not been removed from the national Code of Ethics, and the kinds of responses Mr. Story received could be seen as informal sanctions for his failure to comply with the realtors' group norms. Mr. Story describes his experience in this oral history interview, conducted by the Urban League in 1978. 

Dr. Scott became chair of the Housing Subcommittee of the Lexington Committee on Religion and Human Rights. In late 1965 the subcommittee wrote to the NAACP "for legal advice on the matter of real estate boards refusing to admit Negro real estate brokers." Membership in the Board of Realtors was not just a formality: at the time only members had access to the multiple listing service—the list of all available housing. The NAACP sent two legal briefs, and O. M. Travis, Jr., a prominent Black real estate and insurance broker, agreed to apply for membership in the Lexington Board of Realtors.  (Lexington Committee on Religion and Human Rights, Nov. 29, 1965, Summer 1966). 

Mr. Travis's application to the Board of Realtors was denied. He applied again some time later, and his application was again denied.  Mr. Travis later told the Lexington Leader that  the Board never told him why they turned him down, but he believed the reason was the Multiple Listing Service: "[The Board] didn't want a black salesman or broker to have listings of all the housing available in Lexington." (Woestendiek,1978, A12) .  When Mr. Travis applied to the Board a third time -- in 1973, after passage of the Fair Housing Act -- he was finally admitted.  

In 1978, the Kentucky Commission on Human Rights
Documented Racial Steering in Lexington and Louisville 

Racial steering was made illegal by the Fair Housing Act of 1968.  In 1978, the Kentucky Commission on Human Rights (KCHR) conducted a careful examination of race-based discrimination in realtor practices. The study featured trained, well-matched potential homebuyers who differed in no substantial way other than race. A Black and White potential homebuyer with equal buying power approached specific realtors with exactly matched requests, and then noted the differences in the two experiences. The bottom line for the Lexington portion of the study:

At the rate of two out of every three cases, blacks and whites seeking homes or apartments in Fayette County were given racially discriminatory information about the availability, prices and requirements during a scientifically conducted test of 30 real estate agencies and 30 apartment complexes (Kentucky Commission on Human Rights 1978, 7).

The report cited an example of two testers, one Black and one White, who asked to see houses in Lexington's Gardenside area. The real estate agent showed the White woman the multiple listing book and took her to see some of the houses. An agent in the same firm told the Black woman that there was no housing available in Gardenside of the type that had just been shown to the White woman. The agent suggested she look in a Northwest Lexington neighborhood that was "generally described as a low turnover area in racial transition and considered somewhat less desirable than the area requested" (Kentucky Commission on Human Rights 1978, 7).

The testers found numerous other examples of clearly discriminatory practices. For example, in at least two cases, real estate agents told Black (but not White) testers that they could not be shown houses until they applied and qualified for loans. 

By 1987 Racial Steering Persisted in Lexington but Had Decreased

In 1987 the KCHR reported on a similar study in which they sent testers to 17 real estate agencies. The average rate of discrimination per test was 38.3%—an improvement over the findings of the 1978 study (Kentucky Commission on Human Rights 1987, 1). However, Black testers were shown fewer houses than Whites (61.5% of all tests), offered fewer houses as serious possibilities than Whites (50%), and asked to inspect fewer houses (43.7%) (Kentucky Commission on Human Rights. 1987, 20).

In the Early 1980s, the League of Women Voters Documented
the Ongoing Struggle to Integrate

In 1980, the League of Women Voters in Lexington, with printing help from local government Community Development Block Grant funds, published For the Record: Fair Housing Laws and Social Reality, a booklet containing several articles, including a Black professor's personal story of difficulty finding an appropriate house to buy. Portions that are particularly relevant to race-based realtor steering in home buying in Lexington include these excerpts:

By the Late 1990s, Matters Had Improved Some in Lexington

In 1996, the Lexington Herald-Leader reported that in the previous two years the Lexington-Fayette Human Rights Commission had received no complaints of real estate agents treating Black and White clients differently or discussing the racial makeup of neighborhoods. Even before the 1987 Kentucky Commission on Human Rights study, the Lexington Board of Realtors had begun training real estate agents in non-discriminatory techniques. William Wharton, Executive Director of the Lexington-Fayette Human Rights Commission, said the realtors' training had continued, with help from his agency, and has made a difference. Wharton also said that the leadership of the Board of Realtors had been "very sensitive to the things we've asked them to do." In fact, the realtors interviewed for the article indicated that questions about the racial make-up of neighborhoods, while rare, were generally raised by home buyers rather than realtors (Honeycutt 1996).

The present-day Lexington-Bluegrass Association of Realtors (LBAR) maintains a Realtor-Community Housing Foundation and provides information about diversity to their members and the public through the Diversity Equity Inclusion" section of their website. 

And yet...a National Study Found Realtor Steering in 2000, and again in 2012

In 2000, the US Department of Housing and Urban Development (HUD) and the Urban Institute conducted the national Housing Discrimination Study. The study used paired testers posing as homebuyers, who visited real estate offices in 20 metropolitan areas with populations over 100,000. The study did not include Lexington but was "weighted to make the results nationally representative" (Galster and Godfrey 2005, 254) . 

The researchers found that "steering of various types continues, perpetrated by words and deeds, unabated over the last decade" and reported that they could identify "no statistically significant changes to support the hypothesis that steering involving Black/White or Hispanic/White homebuyers had decreased from 1989 to 2000. On the contrary, we a found statistically significant increase in the net measure of segregation steering in Black/White tests" (Galster and Godfrey 2005, 260). 

Editorializing (making gratuitous evaluations about areas the client should or should not consider) was found to be the most prevalent means of Black/White steering. In 12–15% of the cases "agents systematically provide gratuitous geographic commentary that provides more information to White homebuyers and encourages them to choose areas with more White and fewer poor households" (Galster and Godfrey 2005, 260).  

The authors asserted that relying on victim-initiated complaints was a flawed approach in that "few victims of steering are likely to suspect it and file suit were they to become suspicious." This is because agents make their "most egregious" comments about minority-occupied areas to White clients, who are unlikely to file a complaint. Minority buyers, on the other hand, are unlikely to suspect they are being steered because agents usually show them some homes in predominantly White areas and offer some commentary (Galster and Godfrey 2005, 263).

In 2012 the Urban Institute and HUD conducted a follow-up study, this time including 28 metropolitan areas (but again not Lexington).  A review of that study found that "housing discrimination had declined over time in some important types of agent behavior, such as making an advertised apartment available to a customer. Discrimination against Black and Hispanic homeseekers has not declined very much in some other types of agent behavior, however, and the steering of Black homeseekers away from White neighborhoods appears to have increased over time."  (Oh and Yinger 2015, 40)


The long-term impact of past realtor steering. 


In November, 2020, the National Association of Realtors (NAR) apologized for its past practices, including steering, redlining, and creating racially restrictive covenants. NAR President Charlie Oppler said, “What REALTORS® did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality. We are sorry."

During the same presentation, NAR’s director of fair housing policy Bryan Greene acknowledged the impact of past realtor practices:  “Our neighborhoods are still very segregated... Many of these discriminatory practices denied opportunities for families to pass on wealth...That’s reflected in the homeownership gap today, where there’s a 30-percentage point gap between African Americans and white Americans. White Americans own 10 times the wealth of African Americans.”  (Cole, 2020)

We cannot know for sure whether realtor steering continues in Lexington, but we do know that it occurred in the past. Real estate agents steered Black home buyers into neighborhoods where they were overrepresented, and steered White home buyers into overwhelmingly White neighborhoods. Because White homebuyers typically dominate the housing market in terms of both numbers and purchasing power, past steering (along with redlining and restrictive covenants) helped to "skew the pattern of demand such that different rates of home appreciation are evinced in minority and White neighborhoods" (Galster and Godfrey 2005, 261).

If homes in predominantly Black neighborhoods appreciate less or more slowly than homes in majority-White neighborhoods, the owners of those homes will accumulate home equity (wealth) at different rates. The homeowners whose equity has grown are in a significantly better position to help when their children need money for down payments on their own homes. In fact, of people who bought homes between 1991 and 1996, Whites were four times more likely than Blacks to receive help from their parents in paying their down payments. Of the Black home buyers, 90% paid their down payments entirely from their own savings; of the Whites only 54% did (Charles and Hurst 2002, 291). Many Black young adults are unable to purchase homes because they cannot come up with the down payment.

Without substantial equity in their homes, homeowners in under-appreciating neighborhoods may not be able to make improvements or repairs.  As residents' wealth stagnates they find it more difficult to move; and as their homes and neighborhoods decline further, it becomes more difficult to find buyers other than absentee landlords or "flippers." 

"Thus, steering forms a key link in what might be termed a vicious circle of mutual reinforcing relationships that abets interracial differentials in homeownership and wealth accumulation" (Galster and Godfrey 2005, 261).