Nearly Half of Minority Homebuyers in a 2016 Housing Market Survey Felt They May Have Been Discriminated Against When Trying to Buy a Home

Real Estate News & Analysis

Nearly Half of Minority Homebuyers in a 2016 Housing Market Survey Felt They May Have Been Discriminated Against When Trying to Buy a Home

Among 2,000 people who bought or tried to buy a home last year, 569 identified themselves as Latina/Latino, East or South Asian American, African American, Arab American or Native American. Of those minority buyers, nearly half (48.8%) felt that home sellers or sellers’ real estate agents were less eager to work with them because of their race. Twenty-eight percent of white people felt the same. These results come from a Redfin-commissioned survey conducted by SurveyGizmo in December 2016.  It reached more than 3,000 people–of which 94 were Redfin customers–who tried or succeeded to buy or sell a home in 2016, or plan to this year. Respondents spanned 11 major metro areas.

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The findings weren’t isolated to just one race or even to certain parts of the country. To better understand this data, we spoke with Redfin real estate agents nationwide about what they’ve seen and heard, and about what their customers experienced specifically in 2016. The agents we spoke to about this survey rarely observed blatant acts of discrimination. The clearest example of racism was a buyer’s agent’s account of an appraiser making a derogatory comment about an ethnic group “taking over the neighborhood.” The rest described situations in which the customer or the agent herself had a feeling or suspicion that the seller or seller’s agent was driven by bias when rejecting an offer or backing out of a deal. In each of these cases, however, the seller or seller’s agent had a reasonable and fair explanation for their decision.

According to the survey, 67 percent of Arab-American homebuyers felt that sellers or their agents were less eager to work with them because of their race or ethnicity. The sample size for this group was too small to be statistically significant; only 18 respondents indicated they were Arab American. But we feel this is worth highlighting in part because our agents also cited instances of Arab-American discrimination.

Despite misgivings, U.S. neighborhoods are getting more diverse

This is the first time we’ve asked these questions, so we can’t report a trend, but the results come at a time when neighborhoods across the U.S. are becoming more integrated. Redfin measured neighborhood diversity across the U.S., using the most recent Census data, from 2015, and found that 32 percent of Americans lived in diverse neighborhoods in 2015, up from 23 percent  in 2000.

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How technology helps make the real estate industry more equal

Just as neighborhoods evolve over time, so does the real estate industry. The internet has already begun to act as an equalizer. It enables a person of any color to find out about homes for sale in every neighborhood, rather than relying exclusively on a real estate agent to show them available homes. We believe that when homebuyers and sellers find an agent online instead of through a family or friend’s referral, they are more likely to hire one based on her experience and expertise than on a shared background. This also gives everyone, regardless of race or socioeconomic background, a better shot to build a successful career in real estate, leading to greater diversity in the profession.

Redfin recently wrote about the diversity of its employees and its efforts to recruit a more diverse workforce. Overall, Redfin’s field organization is more diverse than the industry average, but still not reflective of the general population. The company’s field organization is 77 percent white, compared to the National Association of Realtors, which is 85 percent white. Only 1 percent of U.S. Realtors are black, compared to 6 percent of Redfin agents. As we stated in this report, in an industry that’s always recruiting new agents, the pool of untapped talent is massive.

Of course, discrimination is not a new problem in the real estate industry. As a small start toward modern solutions, we hope to use the information in this report to foster conversations within Redfin and with our colleagues in the industry. We are exploring ways to better advocate for our customers in these situations and strategies to eliminate the potential for bias in the home-buying and selling processes. It is our hope that together, and with the help of technology, we can become an industry in which discrimination and racism have no place.

Method and data

In December, Redfin commissioned SurveyGizmo to survey 3,300 people who bought or sold in the past year, tried to buy or sell in the past year or planned to buy or sell in the next year. The respondents spanned the following 11 metro areas: Baltimore, Boston, Chicago, Dallas, Denver, Los Angeles, Portland, OR, San Diego, San Francisco, Seattle and Washington, D.C.

Table: Count of survey respondents who identified their race

White/Caucasian 1350
Latino/Latina 170
African American 139
East Asian American 112
South Asian American 80
Arab American 18
Native American 50

1,919 people who identified their race responded to the question, “During your homebuying process, did you ever feel that sellers or their agents were less eager to work with you because of your ethnicity or race?”

Block group data came from the 2015 5-year American Community Survey and the 2000 U.S. Census. Each block group defines its own “neighborhood” in this study.

To measure neighborhood diversity, Redfin used the Gini-Simpson index, representing the chance someone’s neighbor will be a different race than themselves:

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Races came from the U.S. Census, and they were exhaustive, adding up to 100% of the population of each block group. Races included: other, white, black, asian and hispanic or latino.

Areas were defined as “diverse” if a block group’s Gini-Simpson index was at least 50.

 

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