Discrimination during the homebuying process is illegal but still occurs— often in subtle ways, such as steering.
So, what is steering? Steering in real estate is when prospective homebuyers are guided toward or away from certain neighborhoods based on their race. Too often, steering places diverse first-time homebuyers at a disadvantage compared with otherwise similar white homebuyers because of their race, color, religion, gender, disability, familial status, or national origin.
“Steering refers to the practice of guiding potential homebuyers toward certain neighborhoods, often based on factors such as race and ethnicity,” says Jon Sanborn, co-founder of SD House Guys, a real estate company in San Diego. “It can take many forms such as providing information only about certain neighborhoods, misinforming buyers about availability in other areas, or simply refusing to show properties in certain neighborhoods. Steering can be subtle and difficult to detect, making it important for real estate agents and brokers to understand their legal obligations when it comes to working with potential homebuyers.”
Key Takeaways:
- Steering is a form of housing discrimination in which a prospective buyer’s race or other protected characteristic influences the type and location of homes they are shown.
- Though the practice is illegal under federal law, steering remains a common problem for nonwhite buyers in today’s real estate market.
- Knowing what to look for and reporting suspected steering can help buyers combat the practice and maximize their homebuying choices.
How Steering Works
Steering occurs when a real estate agent encourages a client to buy a home in a neighborhood based on their race, ethnicity, or other protected characteristic. White homebuyers are given more listings and are discouraged from moving to diverse areas, while homebuyers from various racial and ethnic backgrounds are given fewer options that are exclusively located in diverse areas.
“Steering works by exploiting the buyer’s lack of knowledge about the area and presenting them with a biased view of the available properties,” says Humberto Marquez, a real estate broker at Awning in Houston. “Agents might show you only certain listings or steer you away from others based on your demographic information.”
Examples of steering in real estate
Steering can manifest in several different ways. Here are some examples:
- Agents assume that their clients would prefer to live in neighborhoods that match their own race, and only show them listings in these neighborhoods.
- White homebuyers are shown more listings than nonwhite homebuyers.
- Agents talk negatively about nonwhite neighborhoods and discourage white homebuyers from buying there.
- White homebuyers are told that nonwhite neighborhoods are less safe and have subpar schools.
- White homebuyers are told about security concerns that are not disclosed to nonwhite homebuyers.
History of Steering in Real Estate
Steering has long been a problem in the real estate industry, and continues to make homeownership more difficult to achieve for nonwhite buyers.
“It’s been a problem for a long time, and there are countless examples of agents using this tactic to discriminate against minorities and other marginalized groups,” Marquez says.
As recently as the 1950s and 1960s, the Federal Housing Administration refused to allow Black families to buy homes in the suburbs because the FHA claimed it would hurt property values in those neighborhoods.
“During the Jim Crow era, and throughout much of the 20th century, steering was used as a tool to enforce segregation by guiding people toward certain neighborhoods or away from others based on race or ethnicity,” Sanborn says. “Even when legal guidelines began to be enforced, some agents continued to steer unknowing buyers to certain areas, resulting in many cases of discrimination.”
Steering is not the only prejudiced practice that puts buyers from various racial and ethnic backgrounds at a disadvantage. In addition to having fewer buying options, it has been historically more difficult for minority homebuyers to get a home loan.
“During the 1920s and 1930s, the federal government built the Home Owners’ Loan Corp. to help homeowners refinance their mortgages during the Great Depression,” says Loretta Kilday, attorney and spokesperson for Debt Consolidation Care in Reno, Nevada. “The HOLC used ‘redlining’ maps to categorize neighborhoods based on their perceived riskiness for mortgage lending. Neighborhoods with high percentages of African American, Hispanic, or immigrant populations were often labeled as ‘hazardous.’ Real estate agents would use these maps to steer (white) clients away from these areas.”
In 1968, Congress passed — and President Lyndon B. Johnson signed — the Fair Housing Act as part of the Civil Rights Act of 1968. This made it illegal to discriminate in housing based on someone’s race, color, national origin, religion, familial status, or disability. The law has been amended since then to add sex, people with disabilities, and people with children to the list of protected characteristics.
“The Fair Housing Act of 1968 was enacted to prohibit discrimination in the housing market and has been a major step towards curbing steering practices,” Marquez says.
Even though this legislation outlawed steering, the practice continues to fly under the radar in many cases today.
“Since the initiation of the Fair Housing Act, there have been numerous legal challenges to steering practices in real estate,” Kilday says. “Many real estate professionals have been fined or had their licenses revoked for engaging in discriminatory practices. Despite this, steering continues to be a problem in some areas, and many fair housing advocates continue to work to raise awareness of this issue and to promote equal housing opportunities for all.”
How To Spot Steering
While overt steering can be obvious, it’s also possible that you may not even know you’re being steered. Agents may be guilty of steering without realizing they’re doing it because of their own internalized prejudices.
“Identifying steering in the real estate industry can be challenging, as it often involves subtle forms of discrimination,” Kilday says.
According to Kilday, the following are some signs that you may be experiencing steering:
- Your agent is showing you limited options.
- You’re being treated differently than your agent’s other clients.
- Your agent has made negative comments about certain neighborhoods that are associated with a particular race, religion, or other protected characteristic.
- Your agent is making assumptions about you and your preferences based on a protected characteristic, like race.
- Your agent refuses to serve you based on a characteristic.
- Your agent refuses to show you certain neighborhoods.
“To spot steering, keep a lookout for agents who only show you properties in certain neighborhoods, refuse to show you homes in other areas, or provide misleading information about the amenities of different neighborhoods,” Marquez says.
How To Combat Steering
The Department of Housing and Urban Development enforces the Fair Housing Act through the Office of Fair Housing and Equal Opportunity. If you think you’ve been the victim of steering, you can file a complaint online, by phone, or by mail. In addition to reporting the incident to the federal agency, you should contact local authorities.
“If you believe that you are being steered, it is important to document any information that seems suspicious,” Sanborn says. “Be sure to keep records of the agents and brokers you spoke with as well as any emails or other communications. You should then contact your local housing authority for advice on how to proceed.”
FAQ: What Is Steering in Real Estate?
Here are answers to some frequently asked questions about steering.
A recent investigation conducted by Newsday on Long Island looked into how widespread steering can be in real estate. Published in 2019, the newspaper reported that agents directed white homebuyers to different communities than minority homebuyers 24% of the time.
Blockbusting is another practice used to discriminate against homeowners from various racial and ethnic backgrounds. Historically, real estate agents would tell white homeowners that minority families are moving into their neighborhood, which will hurt their property value. The hoped-for result is “white flight” — where white homeowners decide to move quickly and sell their homes at a loss. The real estate agents and developers then buy those homes at a discount, sell them to Black homebuyers at full price, and turn a profit.
Steering has several consequences, including:
— Minority homebuyers are left with fewer home options.
— Schools and neighborhoods remain segregated.
— Homes in Black neighborhoods appreciate at a slower rate.
— Black homebuyers are steered toward areas with more air pollution.
— Upward mobility in Black neighborhoods is stifled.
The Bottom Line on Steering in Real Estate
The practice of steering continues to limit opportunities for homebuyers from various racial and ethnic backgrounds. Pay close attention to the options that your real estate agent gives you and the language they use to describe any neighborhoods you’re considering buying in. Understanding the ways in which steering can manifest could help you spot and report the practice.
- Newsday (2019)
