Racial steering refers to the practice of ‘steering’ or directing homebuyers into neighborhoods based upon race and ethnicity. It was common in the USA in the 20th Century, and in isolated pockets, is still found to be practiced to this day.
This is a form of discrimination that has pervaded the real estate market, contributed to residential segregation, and exacerbated the social disparities in regard to access to public services, parks, and other resources (Entin, 2019).
Effects are still seen today in cities that remain racially segregated due to longstanding policies of the past.
Racial Steering Definition
Racial steering is a form of institutional discrimination that is specific to the real estate industry.
It involves real estate professionals (such as brokers and agents) guiding or ‘steering’ homebuyers and renters towards or away from neighborhoods based on their race or ethnicity, under the assumption that people of certain ethnicities should live in neighborhoods with others of the same ethnicity (e.g. segregated societies).
Racial steering can manifest in a variety of ways, including:
- Explicitly: By telling clients not to consider certain neighborhoods or properties because of the race or ethnicity of their residents (Hall et al, 2020)
- Implicitly: By showing them predominantly white or non-white neighborhoods based on their ethnicity, which relies on the implicit bias that a person would prefer to live in a neighborhood that matches their ethnicity.
Racial steering can occur in both the sale and rental of properties and can affect individuals and families of all races and ethnicities.
Historical Context of Racial Steering
Racial steering has its roots in the institutional racism policy of housing segregation in the United States. This was a common and even explicitly assumption of urban planners and real estate agents all the way back back to the early 1900s.
The US federal government, engaged in overly racist policies such as redlining and enforced segregation in the 20th Century. Segregation extended to the practice of declining enrolment of students in public schools based on their race or ethnicity (Hall et al., 2020).
This policy was designed to discriminate against Black and Hispanic families and to maintain white supremacy and control in the Untied Stated.
But real estate professionals also played a role in perpetuating this segregation. This is where racial steering came in, which they used as a way to maintain the racial homogeneity of their neighborhoods.
One way real estate agents supported racial segregation was to engage in “blockbusting” tactics. This invovled scaring white homeowners into selling their properties at a lower price, claiming that people of color were moving into the neighborhood and that property values would decrease (Entin, 2019).
The agents would also sell properties at higher priced in white majority neighborhoods as they were seen to be of a premium quality. Often, if people of color sought the houses, they would raise the price even more, effectively profiting off of racial segregation.
While laws have been put in place to combat this discrimination, the intergenerational legacy of racial segregation and real estate agents’ practices of racial steering are evident in many communities today (Moore, 2016).
For example, many neighborhoods remain racially segregated, with people of color often being concentrated in low-income areas with fewer resources and opportunities.
How Racial Steering Manifests in Real Estate Practices
Racial steering can take many forms, with real estate professionals using subtle and sometimes overt methods to guide clients towards or away from certain neighborhoods.
Some common indicators of racial steering include:
- Showing clients only properties in neighborhoods where residents are of the same race or ethnicity.
- Discouraging clients from considering certain neighborhoods based on assumptions about the racial or ethnic makeup of their residents.
- Suggesting certain neighborhoods or properties based on the racial or ethnic preferences of the client (Moore, 2016).
These practices can limit the housing options available to individuals and families and contribute to the perpetuation of residential segregation.
In addition to limiting housing options, racial steering can also have a negative impact on the financial well-being of individuals and families.
Properties in predominantly white neighborhoods often have higher property values, while properties in predominantly non-white neighborhoods may have lower property values and fewer resources.
The Impact of Racial Steering on Communities
The effects of racial steering are far-reaching and can have significant consequences for disadvantaged minority communities, while helping to sustain wealth among homeowners in white-majority suburbs.
For example, research from scholars such as Entin (2019) demonstrates that racial steering has significantly contributed to ongoing residential segregation, and has led to poorer access to quality public schools, public transit, and healthcare facilities for people of color.
It can also contribute to disparities in property values, with neighborhoods with predominantly white residents often experiencing higher property values than those with predominantly non-white residents.
This has led to exacerbation and perpetuation of an intergenerational cycle of poverty and race-based inequality in communities across the United States.
1. Segregation and Neighborhood Demographics
Racial steering is a key driver of residential segregation, which has been linked to a host of negative outcomes for individuals and communities.
When neighborhoods are segregated by race and ethnicity, residents may lack exposure to diverse perspectives and cultures, leading to a lack of empathy and understanding.
This can have a profound impact on social cohesion, with communities becoming more fragmented and isolated.
Segregation can also limit access to resources and opportunities, including quality schools, healthcare, and job opportunities, which can have long-term consequences for individuals and families.
For example, children who grow up in segregated neighborhoods may attend underfunded schools with fewer resources, limiting their educational opportunities and future prospects.
This can perpetuate the cycle of poverty and inequality, as these individuals may struggle to secure well-paying jobs and access other resources that can help them break out of poverty.
2. Effects on Property Values
Racial steering can also contribute to disparities in property values, with predominantly white neighborhoods often experiencing higher property values than predominantly non-white neighborhoods.
This can have significant consequences for residents of these communities, with lower property values often limiting access to resources and opportunities (Lake, 2017).
For example, homeowners in predominantly non-white neighborhoods may struggle to secure loans or sell their homes at fair prices, limiting their ability to invest in their homes or move to other neighborhoods with better resources and opportunities.
Furthermore, disparities in property values can perpetuate the cycle of poverty and inequality in these neighborhoods.
When property values are lower, municipalities may collect less in property taxes, limiting their ability to invest in public services and infrastructure.
This can lead to underfunded schools, inadequate healthcare facilities, and limited job opportunities, perpetuating the cycle of poverty and inequality in these communities.
3. Access to Resources and Opportunities
In addition to affecting property values, racial steering can limit access to resources and opportunities.
When real estate professionals steer clients away from certain neighborhoods based on their race or ethnicity, they may be limiting their access to quality schools, healthcare, and job opportunities.
This can have long-term consequences for individuals and families, perpetuating the cycle of poverty and inequality in these communities.
Furthermore, racial steering can limit access to cultural resources and opportunities.
For example, individuals who are steered away from neighborhoods with diverse populations may miss out on opportunities to experience different cultures and perspectives.
This can limit their ability to develop empathy, understanding, and a sense of community with people from different backgrounds, perpetuating social isolation and division.
Legal Framework and Fair Housing Laws
While racial steering is illegal under federal fair housing laws, the practice continues to occur in many communities.
The Fair Housing Act of 1968 prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, familial status, or disability (Lenders, 2022).
Real estate professionals who engage in racial steering can face penalties and legal action under this law.
1. The Fair Housing Act of 1968
The Fair Housing Act of 1968 was enacted to combat housing discrimination and promote fair housing practices.
The act prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, familial status, or disability (Entin, 2019).
It applies to all real estate transactions and provides legal protections for individuals who have experienced discrimination in housing based on any of these factors.
2. Enforcement and Penalties for Racial Steering
Real estate professionals who engage in racial steering can face penalties and legal action under the Fair Housing Act.
Penalties for violating this law can include fines, suspension or revocation of a real estate license, and damages to the victims of discrimination (Lake, 2017).
In addition to penalties and legal action, there are also community efforts to combat racial steering and promote fair housing practices.
3. Recent Legal Cases and Developments
There have been many legal cases and developments in recent years aimed at combating racial steering and promoting fair housing practices.
In 2019, the Department of Housing and Urban Development announced changes to its policies and practices to promote fair housing, including increased investigations into allegations of racial steering and other forms of discrimination in real estate transactions (Lake, 2017).
Racial steering was a core problem in the real estate market in the 20th Century, and while it has declined and is less overt today, its effects can still be seen in cities around the United States today. Many cities, like Chicago and Austin TX (Busch, 2014), continue to have heavily segregated communities that are a direct side-effect of racial steering practices that we saw in the recent past.
Busch, A. M. (2014). Racial Dynamics in Early Twentieth-Century Austin, Texas. Journal of American Ethnic History, 33(2), 111-113.
Entin, J. L. (2019). Fair Housing Past, Present, and Future: Perspectives on Moving toward Integration. Case W. Res. L. Rev., 70, 659.
Hall, M., Timberlake, J., Johns-Wolfe, E., & Currit, A. (2020). The Dynamic Process of Racial Steering in US Housing Markets.
Lake, R. W. (2017). Housing Search and Discrimination. In The New Suburbanites (pp. 139-178). Routledge.
Lenders, T. (2022). Racial Discrimination in Lending in San Diego County. Sat, 9, 50.
Moore, S. M. (2016). Ferguson: Undoing the Damage of the Past-Creating Community Wealth. J. Affordable Hous. & Cmty. Dev. L., 25, 297.
Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education. [Image Descriptor: Photo of Chris]