April is Fair Housing Month. Celebrated since 1968 (when the Fair Housing Act was passed), the month honors the idea that anyone can live in the community in which they desire without fear of being met with discrimination. April is a reminder of the work that’s been accomplished so far and the fact that there is still work to be done.
Like much of American history, the story of fair housing is the story of race. Reports to this day find Black homeownership rates sagging behind white homeownership, and that’s no accident.
J. Lennox Scott—chairman of Seattle-based John L. Scott Real Estate and 2023 diversity chair for the National Association of REALTORS® (NAR)—is a crusader for diversity among both real estate consumers and professionals whose advocacy goes back years. In 2008, he testified to the Commission on Fair Housing and Equal Opportunity, saying: “For the real estate community, the importance of fair housing encompasses two business imperatives: One, strong fair housing laws support our ability to serve our clients and customers, and two, we must constantly be aware of these laws to ensure that we do not engage in practices which discriminate.”
However, Scott says that the “horrific” murder of George Floyd by former Minneapolis police officer Derek Chauvin in 2020 made him and his team even more aware of continued racism in America and inspired them to take further action. Partnering with Washington REALTORS®, John L. Scott lobbied for the passage of a law that allowed homeowners to have remaining racist language removed from property deeds and public records. The brokerage also offers Washington homeowners personal appointments to file the modification documents for their property deeds.
During the early- to mid-20th century, when housing discrimination was not illegal, many communities maintained “racial covenants,” or language in property deeds asserting that homes in the neighborhood could not be sold to anyone but white people. These are now unenforceable, but Scott felt that the language shouldn’t just be stripped of its power, but removed entirely. Scott cited a passage from Dr. Martin Luther King Jr.’s iconic “I Have a Dream” speech when explaining his motivation for removing the racist language:
“We can never be satisfied as long as our children are stripped of their self-worth and robbed of their dignity by signs stating, ‘For Whites Only.’”
John L. Scott Real Estate Chief Company Operating Officer Phil McBride has also spearheaded a partnership with Amazon Global Initiatives to scan digitized property documents for further racist language and remove it.
They have also passed a rule mandating Washington REALTORS® take fair housing education to get their licenses renewed. Scott expanded on this rule:
“It was to get your first renewal, but also every two years after that to keep the conversation alive. Just part of the foundation of the infrastructure within the real estate industry, because we’re really on the front lines of where fair housing conversations/situations may arise because we’re involved with transactions. So we thought it was extremely important to have an elevated amount of education.”
Indeed, to make fair housing a reality, you must first understand its history. Only by understanding the barriers that non-white Americans have faced in becoming homeowners can real estate professionals help surmount those barriers.
The myth of de-facto segregation
The systems that made fair housing laws a necessity go back to the birth of the American suburb in the early 20th century. The New Deal is often held up as the golden era of American progressivism, but even its achievements were racially exclusionary.
Many of the enduring New Deal programs concern housing. The Federal Housing Administration (FHA) was created with the National Housing Act of 1934, and the USHA with the subsequent Housing Act of 1937. However, public housing was typically segregated and remained so until 1962, when President John F. Kennedy explicitly prohibited “discrimination based on race, color, religion or national origin in federally owned, operated or assisted housing.”
Private housing was no different. The GI Bill, which delivered benefits to World War II veterans, is widely credited for creating the American suburb and middle class. Returning soldiers who previously lived and worked in urban metro areas could buy houses in outlying, newly-developed suburban areas. However, the GI Bill was structured to exclude African Americans from reaping the benefits. Moreover, suburban neighborhoods such as Long Island’s Levittown (named for its developer William Levitt) included “racial covenants” in their property deeds, explicitly banning non-white Americans from owning property there.
The federal government sanctioned this discrimination with a practice called redlining. The origin of this term/practice is believed to go back to 1936, when the Home Owners’ Loan Corporation (a government agency created during the New Deal to refinance mortgages) drew maps ranking neighborhoods where they insured mortgages from “A” (coded green) to “D” (coded red). Green neighborhoods, where white people lived, were deemed the safest investments, while Red neighborhoods, where Black people lived, were considered the riskiest. This meant that those in Red neighborhoods couldn’t secure government-insured home loans, essentially locking them out of the American Dream.
Scott cited “The Color Of Law: A Forgotten History of How Our Government Segregated America” as an educational resource he and his team have used.
Richard Rothstein is an expert on the history of American residential segregation, and author of “The Color of Law.”
“We do not have a de-facto system of segregation [in America],” Rothstein tells RISMedia. “We have a racially explicit, intentional one implemented by government at all levels […] designed to ensure Black and white people could not live near each other in any metropolitan area. It’s an unconstitutional landscape and requires remediation.”
Rothstein says segregation could have been prevented from affecting housing integration had the federal government taken the needed steps. Instead, the federal government not only failed to prevent housing discrimination, it encouraged it.
“The FHA had a manual distributed to appraisers all over the country, whose job it was to evaluate the applications of builders and developers before bank guarantees,” he explains. “The manual said explicitly that you could not recommend, for a federal bank guarantee, a loan to a developer who was going to sell to an African American. The manual went so far as to say that you couldn’t even recommend a guarantee to a developer of an all-white project if it was going to be located near where African Americans were living.”
A 1938 FHA Underwriting manual, recovered by the Bill of Rights Institute, states that: “If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally contributes to instability and a decline in values.”
A potential benefit of federalism is that state and local governments are “Laboratories of democracy.” As this handy timeline assembled by NAR shows, states indeed had to “experiment” with fair housing before it became national policy. The first metro area to establish desegregation laws was New York City, with the 1957 passage of the Fair Housing Practices Law. Two years later, Colorado became the first state to enact anti-discrimination in housing, signed into law by then-Governor Stephen McNichols. These laws were just the first steps for bigger changes to come.
With good reason, the 1960s are often considered the landmark decade for civil rights advancement in America. 1964 saw the passage of the Civil Rights and Voting Rights Act, which outlawed discrimination in employment and public accommodations such as schools and businesses. This was followed in 1965 by the Voting Rights act and then the 1968 Civil Rights Act, commonly called the Fair Housing Act because of its prohibition of housing discrimination; such discrimination had technically already been outlawed in the 1866 Civil Rights Act, but that law lacked an enforcement method for prevention. The law was co-authored by Senator Edward Brooke (R-MA), the first African American elected to the Senate.
These laws were long overdue. However, critics (Rothstein included) maintain they didn’t go far enough. This goes back to the secondary utility of housing in America: the building of generational wealth, as homes are assets that appreciate in value. As African Americans had been barred from homeownership for decades, the gap between their wealth and white families’ wealth remains in place even to this day. After the 1960s, African Americans were allowed to live in Levittown, but they still couldn’t afford to.
Fair housing today
The continuing appreciation of property values makes homeownership even more unaffordable and has reverberating effects.
Analyses have found that low-income, majority minority neighborhoods overpay in property taxes (while those in more valuable properties underpay) due to failure by local governments to conduct regular property value assessments.
Rothstein cited an assessor in Cook County, Illinois, who believes that African Americans are entitled to tax refunds due to overpaying on their property taxes. However, this is currently unenforceable, and Rothstein describes this as a solution that can only work on the local level.
Vlora Sejdi is a New York REALTOR® affiliated with HomeSmart, currently serving as chair of the Hudson Gateway Association of REALTORS®’ (HGAR) Fair Housing Committee. Governor Kathy Hochul recently signed new state-wide laws to further fair housing; among others, this legislative package increased the required anti-discrimination/fair housing training for New York real estate professionals.
However, there’s still work to do, and Sejdi says this is where real estate professionals can be activists.
“(HGAR is) a strong supporter of any bill that will help with transparency and fair housing,” says Sejdi. “We’re actually going to Albany on May 2 to lobby (the New York state government).”
Sejdi and HGAR are currently working to see a bill that would create transparency in co-op living applications passed.
“You apply to a co-op, and if it’s not consistent with everyone that comes in, you really do have a breeding ground for unfairness,” she says. “There’s no reason why you should treat one applicant differently from the other, so we want to promote transparency. There needs to be a deadline from when you’re interviewed to when you get your response; there should be a reason attached to your denial. Otherwise, how do you know if the reason was fair?”
Scott believes that REALTORS® are on the “front lines” of fair housing as they are the ones who oversee housing transactions. Sedji adds that REALTORS® play an important role in educating people, both each other and their clients, about current housing laws. These functions mean that REALTORS® have a responsibility over who lives in what homes or neighborhoods.
What REALTORS® can do
“What REALTORS® did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality,” said Oppler. “I’m here today, as the president of the National Association of REALTORS®, to say we were wrong. We can’t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye.”
What actions has NAR’s “Diversity, Equity, and Inclusion” plan designed to create a more diverse real industry and narrow homeownership gaps? The organization has created the anti-bias courses for its members, such as “Bias Override: Overcoming Barriers to Fair Housing” and the Fair Haven digital simulator. To incentivize REALTORS® to promote fair housing, the organization launched the Fair Housing Champion Awards in 2022.
Both Sedji and Scott believe that education and “keeping the conversation going” are vital to ensuring fair housing. The latter and his team have created a website, John L. Scott for Diversity, as a homepage for their advocacy. They offer resources, including a list of books REALTORS® can read to begin their Fair Housing education. “The Color of Law” is at the top of the list. Rothstein has an upcoming book, “Just Action: How to Challenge Segregation Enacted Under the Color of Law,” that also covers the history of segregation.
Sedji believes that real estate business leaders should educate their clients about Fair Housing, too—not just their agents or teammates.
“If I work with a buyer, I explain not just the process, but things to look out for,” Sejdi says. “It’s really important that we guide people through the process. That includes protecting their rights by letting them know when they are being violated and also telling sellers what they should not be doing in order to avoid crossing the line of fair housing.”
Sometimes education isn’t enough; Sedji recalled situations where she had to deal with malicious sellers.
“It’s not my job to judge people, but if I’m uncomfortable with the way someone is behaving or what they’re asking me to do, then I terminate my relationship with that person,” says Sedji. “I’ve had to do that before when sellers might say they want a certain type of person in their neighborhood—okay, I’m not helping you do that. I’m going to let the proper people know that’s the way you feel. I actually believe the majority of agents I’ve met have that same principle.”
You don’t have to wait to take action until you’re fully educated, either. Scott says that attitude is everything:
“Fair housing is all about treating each individual as a powerful spirit, based on their desires and what they want to accomplish in life,” he says. “That’s the real foundation of fair housing. It’s not ‘you would prefer this area or this area,’ it’s listening to each individual, each buyer, no matter what group of diversity they’re from.”
