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Racial steering by real estate agents: Mechanisms and motives


Data from fair housing audits conducted in Cincinnati (1983–85) and Memphis (1985–87) are analyzed to discern whether and how racial steering occurs. The six real estate firms analyzed here engaged in some sort of steering during at least one-half of the audited transactions, on average. This steering did not limit the number of alternative areas shown to black auditors, nor their geographic concentration. Rarely were black auditors not shown dwellings in predominantly white areas, especially if they requested such. But of all the homes they saw, black auditors were shown significantly smaller fractions in predominantly white areas, and significantly larger fractions in mixed and predominantly black areas. These racial patterns persisted regardless of the geographic definition of area chosen: census block, census tract, school district, or community. In addition, blocks adjacent to the homes shown black auditors had higher percentages of black residents, on average, than those shown to white auditors. White auditors rarely were shown houses in racially mixed areas unless they requested them. Even then, after the requested home was shown the bulk of subsequent showings were located in predominantly white areas. This pattern of showings was buttressed by numerous favorable comments by agents about such predominantly white areas and school districts . . . comments that were rarely given to black auditors. The evidence was fully consistent with only one hypothesis about why real estate agents steer. They steer so as to perpetuate two segregated housing markets buffered by a zone of racially transitional neighborhoods, thereby maximizing housing turnover and agents’ commissions.

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    We consider here only those audits during whichboth teammates were shown at least one home. Thus, unlike Newburger (1981), the refusal to show minorities any homes is not considered a form of steering.

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    By contrast, Newburger (1981), uses only the second criterion for assessing whether an audit evidenced steering.

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    Newburger (1981); Wienk et al. (1979).

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    “Community” was defined as either suburban municipality of multi-tract “community areas” within the city of Cincinnati.

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    Yinger (1985, 1986).

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    By comparison, Newburger (1981) estimated a 20-24 percent incidence of steering nationwide based on 1097 audits conducted in 40 metropolitan areas in 1977 wherein both teammates were shown homes. The estimates are not strictly comparable because of differences in defining incidence, in number of metropolitan areas analyzed, and in the fact that firms were not randomly selected in the present analysis.

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    A caveat must be mentioned here: 1980 Census data may not be an accurate reflection of the racial composition of areas in 1983–85 in Cincinnati and 1985–87 in Memphis. Many racially mixed areas in 1980 may have become predominantly black by the middle of the decade, for instance.

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    Pearce (1979); Housing Opportunities Made Equal,Racial Steering by Racial Sales Agents in Metropolitan Richmond (Richmond, VA: HOPE, 1980).

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    These results are virtually identical to those obtained in the 1978–79 audits in Richmond, VA., Housing Opportunities Made Equal (1980); Pearce (1979).

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    All the showings in tract 215.05 occurred during one audit where no steering occurred, clearly. Even the blocks shown with this tract varied greatly by racial composition.

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    The motivation was a finding in the caseU.S. v. Real Estate One, 433 F. Supp. 1140 (E.D. Michigan 1977).

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    Evidence in Yinger (1986) and Newburger (1989) does not allow them to reject this “customer prejudice” hypothesis.

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    Note that a strategy of introducing thefirst black homeseekers into an erstwhile all-white area may not generate added turnover in and of itself if the percentage of blacks remains below the “tolerance threshold” of whites; see Richard Taub, Garth Taylor and Jan Dunham,Paths of Neighborhood Change (Chicago: University of Chicago Press, 1984: ch. 7) and George Galster, “White Flight From Racially Mixed Neighborhoods,”Urban Studies, Volume 27 (1990), pp. 385-399. Reticence for introducing the first black would be compounded, of course, if “customer prejudice” were also operative. Clearly, the potential discriminator gains most by steering blacks to and whites from areas that already are racially mixed (perhaps as a result of the nondiscriminatory behavior of other agents in the market).

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Galster, G. Racial steering by real estate agents: Mechanisms and motives. Rev Black Polit Econ 19, 39 (1990).

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  • Real Estate
  • Census Tract
  • Housing Market
  • White Area
  • Racial Composition