RACIAL STEERING

When Realtors intentionally guide homebuyers and renters to segregated neighborhoods.

Key Takeaways:

  • Racial steering has been official NAR policy since the early 1920s, persisted beyond the 1948 court decision that invalidated covenants but did not declare private discrimination unconstitutional, and led to the organization’s virulent opposition to fair housing laws throughout the 1960s. 
  • Racial steering was so baked into the foundations of real estate practice through NAR’s earliest decades that it remains a persistent problem in the industry, one additionally enabled through the scarce, scattershot-type of compliance testing available to those scrutinizing the profession’s standards of inclusion today. 

Between Article 34 of the NAREB’s proposed “Code of Ethics” adopted by most state real estate boards and its support and promotion of racially restrictive covenants, that the organization actively promoted the steering of individuals to certain neighborhoods according to their race through the first half of the twentieth century seems obvious. In addition to these points of reference, however, it is important to also note that the NAREB opposed both the first wave of state and local fair housing bills of the 1950s to prevent such racial steering, and the eventual federal Fair Housing Act of 1968, drafting what it called the “Property Owners’ Bill of Rights” to protest those actions and influence state and national politics. The document called for allowing property owners to retain the “freedom” to choose their own friends and neighborhoods, to determine the “desirability” of a potential buyer of their property, and to contract realtors to execute on these desires without interference from laws that granted certain groups “special privileges.”

In California, this campaign helped win a referendum to pass Proposition 14 in 1964, a ballot measure that nullified the state’s 1963 fair housing law by allowing property owners to have total discretion over potential lessees or buyers of their housing units. As Gene Slater writes, California Realtors “identified a single, obscure right, an owner’s right to choose a buyer–which Realtors themselves had restricted for decades with racial covenants–as American freedom itself,” empowering the rise of what some scholars and activists call “color-blind racism” in California and throughout the rest of the U.S. Though the same type of mobilization helped Realtors kill a 1966 attempt at federal fair housing legislation, even the passage of the 1968 Fair Housing Act–defanged shortly after its approval by Congress–has not stopped the long-standing practice of racial steering in real estate that it sought to end. (NAR also spent roughly $20 million in inflation-adjusted dollars at the time to try and kill the Fair Housing Act, by the way.)

Rates of segregation have hardly fallen to acceptable levels in most major cities across the U.S., and the Black-white homeownership gap remains virtually unchanged since the Fair Housing Act’s passage.
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