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Racism in the housing industry?

by Dan on November 9th, 2007

Do banks discriminate against minorities? That’s certainly a loaded question, and a new report from the Service Employees International Union is stirring up arguments on both sides.

The report, released on Nov. 1, says that Bank of America – the largest bank in the country – has a dismal record when it comes to serving minority communities. The report says that the bank continues to make far fewer mortgage loans to African-American or Latino buyers than it does to white consumers. The bank also has fewer branches in predominantly minority neighborhoods than do its competitors, according to the report.

A spokesperson for Bank of America disputes this, and says that the union’s study is “deeply flawed.” Is it? I have no idea.

But I do know, from covering the real estate and mortgage industries for a decade, that the housing industry is still dogged by charges of racism. Much of it comes from the business’ shady past when it comes to dealing with non-white homebuyers. We’ve all read horror stories of real estate agents steering black buyers away from white neighborhoods. Those stories, unfortunately, aren’t myth.

Take my neighborhood when I was a youngster. I lived in a quiet community on Chicago’s South Side, one that was hugely white. Our local civic association long discouraged – though they could not forbid – homeowners from placing “For Sale” signs on their front lawns. The stated reason was that such signs cluttered neighborhoods and made it look like the community wasn’t a stable one.

The hidden reason? A lot of homeowners didn’t want African-American buyers to see one of those “For Sale” signs and bid on a house. (By the way, these homeowners would never, ever utter the words “African American.” For some reason, they consider it a travesty that anyone would refer to themselves in such a way. These folks tend to be the same ones who fly into a rage whenever they have to “Press 1” for English.

Now that was more 25 years ago. Things have gotten better, right? Well, yes and no.

The vast — and I need to emphasize the word “vast” here — majority of real estate professionals serve everyone, regardless of race, equally. Racism in the housing industry is not nearly as overt as it once was, but it’s still there. It’s a mirror of society, really: People, except for the real idiots, tend to keep their racism a bit more hidden these days. That doesn’t mean it’s not there.

Don’t believe me? Then take a trip to my old neighborhood. My parents sold their home in this same neighborhood about eight years ago. They happened to sell it to an African-American family. Our neighbor, who’d been living alongside my parents for decades, instantly stopped talking to them. They were livid that my parents had dared to sell to a non-white buyer. They didn’t care that to refuse to sell to someone because they were African-American is a crime. They only cared that their new neighbors weren’t going to be white.

So, maybe the Bank of America survey is flawed. Maybe the bank does a great job of serving minorities. Like I said, I don’t know. But I do know that the housing industry has, whether the professionals working in it want to admit it or not, a long history of mistreating minority buyers. It needs to stay ever vigilant against repeating its past mistakes, even if those mistakes are subtler than they used to be.

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