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    NILE Blog
    August 17th, 2020
    Discrimination in the Housing Market
    by Khaled Yatim

    The black and white homeownership gap remains as wide today as it was 100 years ago. Think about that for a minute. Even here in Los Angeles, in the most progressive of communities, I’ve seen racism firsthand – and it’s tragic. I’ve seen an MVP Superbowl champion rejected for a home lease because he was a young black man. I’ve seen a 65-year-old woman rejected from a wealthy white suburban neighborhood just because of the color of her skin. No one ever comes out and says: “I’m racist!” They make an innuendo here, or an eye slant there, or put forth some rhetoric that they try to pass off as calculated and analytical but is, in fact, just plain discriminatory – and it’s prevalent.

    Redlining and other forms of housing discrimination, going back to slavery, have laid the foundation for a deeply unequal real estate experience. Zillow conducted an eye-opening study on the subject, and published Home Values Remain Low in Vast Majority of Formerly Redlined Neighborhoods, which outlines how redlining and other forms of systemic discrimination, going back to slavery – laid the foundation for a deeply unequal housing experience for non-white and white Americans and continues to affect homeowners and whole communities today:

    In the 1930s and 1940s, representatives for the Home Owners’ Loan Corp. (HOLC), created as part of Franklin D. Roosevelt’s New Deal to bolster the economy by refinancing homes, ranked neighborhoods in cities nationwide as “best,” “still desirable,” “definitely declining” and “hazardous” for lending. Neighborhoods were assigned colors to match their perceived danger to lenders: Green, blue, yellow and red, respectively – hence the term “redlining,” the practice of shading red the areas that the government labeled least desirable/most “hazardous” for lending. The HOLC maintained segregation, and the neighborhood designations were closely tied to race.

    “A neighbourhood earned a red color if African Americans lived in it, even if it was a solid middle-class neighborhood of single-family homes,” Richard Rothstein writes in The Color of Law: A Forgotten History of How Our Government Segregated America. Today, homes in areas that were deemed “hazardous” and “definitely declining” continue to have lower median values than those in areas previously labeled “still desirable” and “best.”

    The widening gap between neighborhoods that were labeled “hazardous” (red) and “best” (green) is particularly noticeable right here in Los Angeles. In 1968, the government passed the Fair Housing Act, which prohibits the discrimination concerning the sale, rental and financing of housing based on race, religion, national origin or sex. Sadly, 50 years after the passing of The Fair Housing Act, the effects of redlining persist.


    Discrimination lurks all around us, and we all have an obligation as human beings to do better for ourselves and for each other. And we can each do that in our own communities, and our own industries.

    CNN released a thorough analysis of why the black and white homeownership gap hasn’t changed much in 100 years, and concluded that systemic racism is deeply rooted in our nation’s housing market. They found that in the mid-1990s, black mortgage applicants were roughly twice as likely to be denied as whites. By 2016, the situation had gotten even worse: black people were 2.6 times as likely to be denied a conventional mortgage as their white counterparts.

    This of course is quite upsetting, but I think that’s the whole point – we can’t shy away just because it makes us uncomfortable. The onus is on all of us within the industry to open our eyes to the injustice in order to make a positive change. And we can make changes, particularly with technology at our disposal.

    The way the housing market is structured now, there is too much room for human error – whether deliberate or unintentional. People should be making decisions based on what and why, not who. But the California Association of Realtors (CAR) perpetuates structural racism in housing starting with the most basic rental application; page one alone is a minefield of discriminatory questions – asking for far too much information that should have absolutely no bearing on the leasing process. Even businesses in California don’t request this much information when making hiring decisions. CAR sticks to old ways of doing business, because innovation will ultimately result in lower fees (which it should!!!). But instead of modernizing, CAR hangs on to relic methods, and bad virtues, and their focus is boosting their membership and protecting their almighty dollar. Whether they intend to or not, CAR creates an environment ripe for discrimination.

    The fact is that technology can play a much-needed role in eliminating these systematic biases. What if, instead of making decisions based on who a potential buyer is as a person, we shift the focus and assess how well they are qualified to purchase a home. Technology to make this possible already exists in droves, and successful examples of this method already exist in droves. Countless companies, universities and governments use point systems to make democratically fair decisions. Until this kind of technology is implemented and accepted across the board in the real estate industry, racism will continue to rear its ugly head. The government’s HUD’s anti-discrimination policies are rendered useless when the largest trade group – the National Association of Realtors and their regional offices – continue to use antiquated processes that disturbingly prop-up systematic racism.

    As an immigrant with an ethnic name, I am no stranger to what racism feels like. But I am hopeful, that within our industry, we can begin to effect positive change. I’m proud to be part of a force of professionals bound and determined to make housing and the real estate industry better in all ways. As they say, change begins at home, and I’m determined to do what I can – whether that means calling out racism when I see it, or building technology that helps improve the situation, or supporting companies like Ender and MoveBubble, who are already making our industry more equal and democratic through technological innovation.

    My hope is that together – real estate professionals and clients alike – we will make a move to support companies that say no old ways of thinking, and yes to innovation, data and democracy – and do our part to combat systemic racism at home.

    References
    About the Author
    Khaled Yatim | The Ideator

    Khaled Yatim is NILE's Co-Founder, dreamer and Chief Executive Officer. A California native with an innate passion for real estate, by 20 Khaled was the youngest licensed broker in the state. In the ensuing 15 years, Khaled honed his skills working with an array of real estate clients on a variety of property types, ultimately closing over 100 million dollars in sales. A people person with a passion for problem solving, Khaled identified key deficiencies in the traditional brokerage model, and set out to find a solution. Addressing an unmet need in the market, Khaled set to integrate the best of classic brokerage with modern technology, co-founding NILE.