Federal, state and local fair housing laws prohibit discrimination in housing based on a person’s race or color. This means landlords, sellers, property owners and managers, real estate agents, banks, co-op boards and other housing providers cannot refuse to do business with a person because of their race or color.
In this section, we define important terms and detail key issues that can help REALTORS® and their customers understand their responsibilities and rights under the law.
Definitions and Key Issues
Definition of “Race”
“Race” refers to whether a person is white, Black/African American, Asian, American Indian or an Alaska Native, or is a Native Hawaiian or Pacific Islander, or some mixture of two or more of these groups.
Race can be based on actual, perceived or associated qualities. This means it is illegal to treat someone differently because of what race they actually are; what race they seem to be; because of characteristics associated with race, like hair, skin color or certain facial features; or because the person is in a relationship with someone of a different race.
In New York City, discrimination based on natural hair or hairstyles can be a violation of the law. Read more here.
Definition of “Color”
“Color” refers to the visible color and tone of a person’s skin, that is, whether a person’s skin is light or dark.
Color discrimination can involve individuals of the same race as well as between persons of different races. For example, if a housing provider only rented to light-skinned and not darker-skinned African Americans, that would be an example of color discrimination, regardless of the housing provider’s race.
Direct Discrimination
Direct discrimination is straightforward to identify. It can take the form of a refusal to rent to individuals or groups (e.g., families, roommates and couples) based on their actual, perceived or associated race and/or color.
Direct discrimination can also be in the form of disparaging comments about a particular race and/or color, which often signal exclusionary preferences, behaviors or practices.
Steering
Steering is a form of discrimination in which home buyers or renters of a certain race or color are directed toward neighborhoods occupied mainly by persons of the same race or color. It occurs when a real estate agent or broker limits the housing options available to a buyer or renter by not telling them about properties that meet their criteria or by directing them to different neighborhoods or communities or even different parts of the same development according to the prospective buyer’s or renter’s race, color and/or other characteristics protected under the law.
Steering also occurs when a real estate agent or broker expresses views, either positive or negative, about communities or schools with the purpose of directing buyers or renters away from or towards certain neighborhoods due to their race, color and/or other protected characteristics under the law.
Appraisal Bias
An appraisal is an assessment of a home’s value. Appraisal bias, a form of discrimination, occurs when a real estate appraiser assigns a lower value to a home because of characteristics of the person(s) who live there, such as their race and/or color.
Though not a decision made by a real estate agent or broker, appraisal bias has nonetheless adversely impacted equity in housing, which is a concern for all stakeholders concerned about fair housing. Appraisal bias has also contributed to and perpetuated racial wealth gaps.
Indirect Discrimination/Disparate Impact
Indirect discrimination is when policies or practices that appear to be neutral on the surface have a disparate or disproportionate impact on the rights of people with certain protected characteristics.
In other words, discrimination can occur without intent to discriminate, meaning that the policies themselves are not discriminatory but, when put into practice, people with certain protected characteristics are disproportionately harmed.
In 2015, the U.S. Supreme Court ruled that disparate impact can constitute a violation of the Fair Housing Act if a housing-related policy or practice disproportionately affects a particular protected class and the accused entity cannot show a legitimate business necessity for the policy. It would also be a violation if the entity could have achieved its business goal with a less-discriminatory practice.
Unconscious/Implicit Bias
These terms refer to social stereotypes that individuals have about groups of people based on characteristics like race or color, but of which they are not immediately or consciously aware. This form of bias stems from the tendency of humans to simplify judgments by classifying people into larger groups. Since unconscious or implicit bias may affect behavior, it is critical that the real estate community is aware of this phenomenon, takes steps to become educated on this form of bias and works to eliminate its effects when providing housing options for all people.
Discrimination in Advertising
It is illegal to make, print and/or publish advertisements that indicate a preference, limitation or discrimination because of a protected characteristic like race and/or color.
Advertisements should describe the property, not the ideal buyer or tenant, and should never indicate a preference or limitation based on a protected characteristic.
This prohibition applies to both the publishers of the advertising, like newspapers and online directories, as well as the people and entities who place it.
Advertising is broad and includes almost everything written or verbal that relates to the provision of real estate-related services, including online advertisements, social media posts, newspaper and print advertisements, brochures, pictures, TV and radio ads, and speech.
Client Relations
Real estate agents and brokers may unfortunately face situations where their clients engage in conduct that appears to violate fair housing laws. One example is when a seller or property owner asks an agent only to show their home to people of certain races or colors.
If agents or brokers encounter such discriminatory behavior, they must act quickly to remove themselves from the situation and address the conduct. They must never agree to follow their client’s unlawful directive, and they should immediately cease working with any individual who refuses to follow the law. With prompt action, they can ensure compliance with fair housing laws and prevent discrimination from occurring.
Racial Wealth Gaps
Racial wealth gaps are large and persistent differences in the wealth of one racial group in a society compared to others. In the United States, there is a particularly large and longstanding gap between the net worth of white Americans compared to Black Americans and, to a lesser extent, compared to Latino and Asian Americans. This gap is closely linked to massive inequalities in homeownership levels between these groups.
The roots of the racial wealth gap stem from centuries of slavery in the United States, followed by the repression of civil rights, especially discrimination that prevented many families of color from accessing credit, entering well-paying professions, receiving benefits from the post-World War II GI Bill and buying homes in certain areas. Even today, research demonstrates that the inability to buy a home, the undervaluing of homes in certain neighborhoods due to appraisal bias and the lack of access to credit exacerbate this gap across the United States.
From a report by the Brookings Institution
Homeownership lies at the heart of the American Dream, representing success, opportunity, and wealth. However, for many of its citizens, America deferred that dream. For much of the 20th century, the devaluing of Black lives led to segregation and racist federal housing policy through redlining that shut out chances for Black people to purchase homes and build wealth, making it more difficult to start and invest in businesses and afford college tuition. Still, homeownership remains a beacon of hope for all people to gain access to the middle class. Though homeownership rates vary considerably between whites and people of color, it’s typically the largest asset among all people who hold it.
From a report by the Center for American Progress
Despite the economic and political gains that African Americans have achieved since the passage of the Civil Rights Act, significant disparities still exist between African Americans and non-Hispanic whites in terms of access to homeownership, quality education, and employment, among other assets. These disparities are reflected in persisting residential segregation and a racially segmented housing market—and they have significant implications for African Americans’ economic mobility. Segregation, disparate access to credit and homeownership, and the consistent devaluation of homes in black neighborhoods combine to constrict the ability of African Americans to build equity and accumulate wealth through homeownership.
From a report by the National Association of REALTORS®
When homeownership rates are lower among minority groups, their net worth also tends to be substantially lower. For instance, in 2022, the median net worth of a typical white family in the United States was $284,310, more than six times greater than that of a Black family, which stood at just $44,100. In the meantime, lower net worth means reduced access to financial resources, limited opportunities for investment, and a diminished ability to weather economic downturns or unexpected expenses. It also perpetuates intergenerational wealth gaps, as families with higher net worth can provide more support and opportunities to their descendants. Thus, this disparity is not solely a result of differences in income or education; it is largely due to differences in homeownership rates and the resulting accumulation of home equity.