The Hard Stuff: Systemic Racism and Real Estate

This is the followup to the first post, in which I asked whether the real estate industry was serious about race and racial issues. I am choosing to believe that we are, and that the various leaders speaking out about the need to do something are serious about that.

If so, we should see more and more companies and organizations take the simple — yet difficult — step of getting rid of agents who have engaged in racist behavior, such as treating customers differently based on race, or engaging in racial steering, and being more transparent about their own organization’s demographics.

Now comes the really hard part.

Systemic Racism: Housing is the Cause

As a former race activist, I happen to know quite a bit about systemic racism, or at least theories of systemic racism. I suppose those theories have been updated since I studied them in college and law school, but at its heart, the theory goes something like this:

Systemic racism means that even if individuals are not themselves racist or acting out of racial animus, the system itself is racist by disadvantaging one person over another on the basis of race.

The Wikipedia reference to systemic racism quotes Stokely Carmichael and Charles Hamilton from their book, Black Power: The Politics of Liberation:

When white terrorists bomb a black church and kill five black children, that is an act of individual racism, widely deplored by most segments of the society. But when in that same city – Birmingham, Alabama – five hundred black babies die each year because of the lack of proper food, shelter and medical facilities, and thousands more are destroyed and maimed physically, emotionally and intellectually because of conditions of poverty and discrimination in the black community, that is a function of institutional racism. When a black family moves into a home in a white neighborhood and is stoned, burned or routed out, they are victims of an overt act of individual racism which most people will condemn. But it is institutional racism that keeps black people locked in dilapidated slum tenements, subject to the daily prey of exploitative slumlords, merchants, loan sharks and discriminatory real estate agents.

The society either pretends it does not know of this latter situation, or is in fact incapable of doing anything meaningful about it.

Most of the protests today — and some of the responses to them — are protests against systemic or institutional racism. The protests aren’t about one bad cop: it’s about disparities in treatment of Black people by police everywhere.

Terms like “white privilege” are attacking not a particular white person’s actual privilege, since quite a few of my white friends grew up in environments that could be called anything but privileged, but the entire system that sets up whites for success and non-whites for failure.

Let’s be honest about this: systemic racism is one of the most divisive socio-political theories in America today. There are millions of well-intentioned people who believe it fervently, and there are millions of well-intentioned people who dispute it just as fervently.

Thing is… whether systemic racism exists or not in policing, in politics, in employment, in healthcare, in education, etc. can actually be debated. But it can’t really be debated in housing. There is no doubt that systemic racism exists in housing in the United States.

Furthermore, to the extent that systemic racism exists in other areas, it exists because of systemic racism in housing.

To put it differently, the cause of systemic racism and inequality in this country is because of housing policies whose racist past has never been fully rejected that continue to haunt us to this day.

Housing’s Fundamental Impact on Life Outcomes

As real estate professionals, we all know how important the home is. Buying a house is truly a life-altering event.

This 2016 paper by NAR lays out some of the social benefits of homeownership, and concludes:

The positive social benefits from homeownership and stable housing are compelling. As this paper has shown, there is evidence from numerous studies that attest to the benefits accruing to many segments of society. Even after considering the effect of the recent housing downturn, many studies found that homeownership still provides a variety of social benefits. Homeownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency.

I’m not going to dwell on this, because just about everyone reading this agrees: homeownership is fundamental to living the good life.

What does bear some further examination is how past racist policies in housing continues to impact the country to this day. The best explanation comes from Nate Bowling, 2016 Washington State Teacher of the Year and National Teacher of the Year Finalist, Co-Founder of Teachers United, and host of the Nerd Farmer Podcast. I heard about this presentation he gave at Genuine Hustle Tacoma from Sunny, who was living in Washington at the time and attended it. (She is sitting off-camera to the left in the video below.) I’m so glad that Anne Jones recorded and uploaded this very important presentation.

Watch the whole thing:

Past racist policies have created intergenerational poverty or wealth, which then impacted education, impacted employment, impacted criminality (which then impacts police response), impacted health, impacted everything.

Again, I urge you to watch the entire presentation before continuing on.

Furthermore, in case you need more evidence, there are some pretty compelling academic studies that suggest that almost all of the wealth gap between the rich and poor in the United States is from housing.

You can go google the topic yourself, but I doubt you will unless you’re an academic in the area (or a nerd like me). But let me set you on a path if you’re interested.

Start with this easily accessible article from CityLab:

The rise in housing inequality brings us face to face with a central paradox of today’s increasingly urbanized form of capitalism. The clustering of talent, industry, investment, and other economic assets in small parts of cities and metropolitan areas is at once the main engine of economic growth and the biggest driver of inequality. The ability to buy and own housing, much more than income or any other source of wealth, is a significant factor in the growing divides between the economy’s winners and losers.

There are references to the Rognlie study there. Dive in, if you want. Then you can look at things like this NBER study: The Housing Wealth Effect: The Crucial Roles of Demographics, Wealth Distribution and Wealth Shares.

There is even a whole book written on the subject: The Color of Law.

The industry is fully aware of the fact of systemic racism in housing. I know this because of a wonderful article by Bobbie Howe, the President of the Kansas City Regional Association of REALTORS, in which she mentions The Color of Law, recounts the sad history of racist housing policies, then says:

People of color living in rented apartments and prohibited from moving to the suburbs gained none of that appreciation. The result is that today, nationwide, black incomes are on average about 60% of white incomes, but black wealth is only about 5%-7% of white wealth. That enormous difference is almost entirely attributable to unconstitutional federal housing policy practiced in the mid-20th century. This is only one of the many facets of local, state and national policies and laws featured in the book that lead us to where we are today.

It is our duty as REALTORS® to actively fight systemic racism in our industry every day. I highly encourage each and every one of you to do even more to educate yourself on the true facts of our nation’s history. Another great read is The People’s History of the United States by Howard Zinn.

It is time we work together for profound change in our country. Let our voices be heard and be the change you want to see. Don’t let the pain that our country is feeling right now be for naught.

Bobbi knows the deal; you know the deal. If you didn’t know the deal, read The Color of Law, read some of the research I’ve cited, and learn the deal. And I agree with Bobbi: it is our duty to actively fight systemic racism.

But refer to the Carmichael and Hamilton quote above: fighting overt individual racism, like racial steering and redlining, is easy and everyone does it. Fighting systemic racism means fighting those things that are not so obvious as kneeling on a man’s neck or sending black buyers to black neighborhoods.

Which makes it hard.

Because if the real estate industry is truly serious about working together for profound change, about having its voices be heard, and becoming the change we want to see… then it has to deal with two core issues of the present day: zoning and schools.

The Real Estate Industry Must Oppose Zoning

If we are serious about tackling systemic racism, then we as an industry need to come out firmly against zoning and anti-growth environmental laws and regulations. It’s not enough to talk about the legacy of redlining and racial steering back in the bad old days. We already know that, and we’ve already corrected those problems. Redlining is already illegal. Racial steering is already illegal, although it continues to happen as we so sadly know (see, Long Island Divided). Racist covenants are already invalid and illegal.

What remains today that reinforces the systemic racism of the past is zoning, whose stated purpose was to keep black and brown people out of areas where rich white people live, except when they come to work as housekeepers, gardeners, and servants. REALTORS cannot support zoning or even tolerate it and still talk about equal access to housing and opportunity for all. For the record, many of the anti-growth environmental laws and regulations serve the same purpose.

That zoning laws have a racist origin is not exactly a secret. Here’s an article from Foundation for Economic Education, which says:

In 1910, Baltimore adopted the first zoning laws that were openly drawn to keep African Americans and whites separated by law. In 1910, Baltimore Mayor Mahool said,

Blacks…should be quarantined in isolated slums in order to reduce the incidents of civil disturbance, to prevent the spread of communicable disease into the nearby White neighborhoods, and to protect property values among the White majority.

Many other cities soon followed.

Furthermore, zoning laws we have today using “economic concerns” and “property values” as excuses have a clearly racist past:

As African Americans began to leave the South in response to the need for workers during WWI, more cities outside of the South adopted zoning laws that were written with racist intentions.With economic concerns as a source of control, it became easy to set standards that kept African Americans out of certain areas. Even if the Supreme Court had ruled that cities could not specifically target African Americans, cities—especially in the South—did everything they could to corral African Americans to specific areas.

Then, in a 1926 case, the issue became one of economic interest when the Supreme Court handed down the famous Euclid v. Ambler decision, which is used to permit zoning today. When Justice Sutherland wrote the decision, he referred to a planned apartment complex as “a mere parasite” on the neighborhood and how it would affect neighborhood property values.

While most of the public tends to think that the design of their metropolis is unique, in reality, a small group of city planning consultants has had a hand in designing many of the nation’s cities. Since the early 1920s, keeping the races segregated has been a major goal in many urban plans.

Bartholomew [an influential urban planner] focused on slum clearance in an effort at urban renewal that was intended to make the city more efficient and designed for the automobile, which was a rapidly growing source of urban transit.

Sources quote him as denigrating African Americans and suggesting that the races be separated to protect “…neighborhood property values.” He saw blacks as a burden on society, and while he knew the law prohibited outright segregation, he worked to find a way around it. Eventually, in St. Louis, 70,000 blacks would be relocated. Only a fraction would be adequately compensated. They not only lost financially but also left behind family and friends, which added to the strains their families endured.

Get that? Zoning laws were created as a way around outright segregation and racist covenants. They were created as a dodge for civil rights, using the excuse of “neighborhood property values” to enforce segregation.

For more on the racist origins of zoning, of urban planning, and the impact of that systemic racism, watch this:

And in case you want to argue that zoning may have been racist in the past, but it’s not racist today, helps keep property values high, and doesn’t cause problems anymore…

Here is a study from 2013 by Jonathan T. Rothwell of Brookings Institution and Douglas S. Massey of Princeton University that concludes:

Metropolitan areas with suburbs that restrict the density of residential construction are more segregated on the basis of income than those with more permissive density zoning regimes. This arrangement perpetuates and exacerbates racial and class inequality in the United States.

Go look at the richest zip codes in America, then look up the demographics. Kenilworth, IL is 91.6% white. Medina, WA where Jeff Bezos lives is 83.5% white and 11.7% Asian and only 0.3% black. And on and on it goes. As real estate people, we all know what the “Best Neighborhoods” in our areas actually look like, don’t we? We don’t talk about it, but we know.

Does the industry want to go beyond posturing and social justice virtue signaling? Does NAR really want to be “committed to leading the way on policies that address racial injustice and that build safe and inclusive communities?” Start by lobbying the local, state and federal governments to eliminate zoning laws, and the 21st century equivalent, environmental regulations on housing.

Zoning that restricts density perpetuates the legacy of redlining, of racist zoning policies, and continues to drive massive inequality between the rich and the poor, which has a racial element because of the intergenerational wealth effects of housing as Nate Bowling so clearly laid out.

This will not be easy. NIMBYism is extraordinarily powerful. All of those progressives and liberals who are out marching for racial equality, posting #BlackLivesMatters on their profiles, and donating to all kinds of black organizations will throw an absolute fit if someone proposes to build low-income multifamily development in their towns. REALTORS opposing that NIMBY fanaticism are going to have to do some real delicate educating to convince them to do the right thing.

It will require leadership, not pandering. But if we’re serious about solving systemic racism in real estate, then REALTORS are going to have to step up and lead local communities.

Eliminate School Districts and Local Levy Funding

It is hardly a secret for us in the industry that property values are directly connected to the quality of schools. And every American knows that education is the key to success. We know that poor communities, with low property values, have worse schools, and those poor communities are the ones locked in a vicious cycle of poverty and violence and oppression. They’re also heavily Black and Latino.

If the real estate industry is serious about doing something about systemic racism, then we have to do away with local schools based on arbitrary school district lines and local property taxes.

Once again, I refer you to the Nate Bowling presentation that so clearly connects local levy funding to educational inequality, which then drives so much of the other inequality.

Maybe the answer is vouchers that lets poor families send their kids to good schools across town: if it’s important to them, they’ll find a way for their kids to attend. Maybe the answer is to fund schools at the state level, equally. I don’t know the answer, but I do know what the answer is NOT: the status quo, where rich neighborhoods with zoning laws designed to keep out Blacks perpetuate the inequality by ensuring that their schools are top-notch while the schools in poorer neighborhoods are no better than juvenile detention centers, complete with metal detectors at the door. I’ve attended both types of schools: ones with metal detectors at the door, and the suburban havens of learning. So let me tell you some stories….

Personal Storytime

My desperately poor immigrant parents could only afford to live in a housing project in Hempstead, Long Island. We attended the Hempstead public schools, which was almost entirely Black and Latino. Even today, Hempstead High School is 99% minority, and 67% economically disadvantaged.

Somehow, my parents found the money to send me and my brother to private Catholic school. This was after they found out that I was getting bullied and picked on at lunch every day, because I was the only Asian kid in an entirely Black and Latino school. They found out because they found the knife I was keeping in my backpack. In sixth grade.

There was no school bus, because… private school. My parents couldn’t drive us every morning or pick us up; they didn’t own a car. My brother and I, aged 9 and 11 respectively, took a public bus every day to go to school. Obviously, this would not be allowed today, and my parents would be up on child neglect charges or something, but it’s what we did back in the 80s.

Meanwhile, across Meadow St., Garden City had wonderful schools. My brother and I could have walked to those schools. But instead, we took public buses to our parochial school, taking 40 minutes each way.

Poor families can sometimes find a way. If that’s taking public buses to another town, that’s what it takes. But you know, we really ought to remove the barriers in their path.

Years later, my brother was attending high school at one of the top school districts in Long Island — Jericho High School. He was at the top of his class there, and loving it. Big beautiful modern campus, excellent teachers, after school activities for the rich (he was on the fencing team and the tennis team), and guidance counselors who cared deeply about colleges.

Here is a picture of Jericho High School, oft-ranked #1 in Long Island, and top 30 in the nation:

Turns out, our apartment was just across the arbitrary school district line that nobody knew about when my parents signed the lease. They were told that the apartment was in Jericho school district; turns out, it was 50 feet from that line (the line literally ran through the middle of the building), and was actually in Hicksville school district.

Here is Hicksville High School:

Those aren’t even the same type of institutions. They might both be high schools, but they’re not even in the same universe.

My brother obviously could not keep fencing or playing tennis because Hicksville did not have a fencing team or even a tennis team. His guidance counselor at Jericho was encouraging him to look at Harvard and Yale and MIT, while his guidance counselor at Hicksville was telling him to be realistic. “No one from this school has gotten into an Ivy League school in 20 years,” is what she told him, from my recollection.

The teachers and administrators at Hicksville did the best they could with the resources they had, but over time, they get beat down by reality. That sometimes — too often — translates into trying to protect their students from disappointment, rather than encouraging them to reach for the stars. That’s the reality for Black, brown, Asian and poor white kids today. Because of 50 feet from one school district line to another.

The tyranny of low expectations indeed.

School Districts and Home Values

Here’s Jericho school district today on

And here’s Hicksville school district on

The average price of a house in Jericho, NY is $830,232; the average price in Hicksville, NY is $504,866.

  • Jericho, NY is 86.36% White, 1.42% African American, 0.03% Native American, 10.69% Asian, 0.01% Pacific Islander, 0.51% from other races, and 0.98% from two or more races. Hispanic or Latino of any race were 2.44%.
  • Hicksville, NY is 69.3% White, 2.2% African American, 0.3% Native American, 20.7% Asian, 4.8% from other races, and 2.7% from two or more races. Hispanic or Latino of any race were 14.5% of the population.

And Jericho is a mere 2.2 miles from Hicksville. It’s a 7 minute drive. But they might as well be two different worlds. Why? School districts, funded by property taxes, is why. Since this is Long Island, maybe it’s also because of racial steering by real estate agents, not in 1950s or 1960s, but today, as I write this.

Jericho has expensive houses, which means more money for its schools, which drives home values, which generates more money for the schools… and the virtuous cycle takes off. The opposite is true for Hicksville: less expensive houses means less money for its schools, which depresses home values, which means less money for the schools… and the cycle of poverty takes off.

We in real estate love to talk about how important affordable housing is, and lobby the government for more access to mortgages and more affordable inventory.

But if we do not eliminate the linkage between home values and school funding, all we’re doing is setting up future Hicksvilles and Hempsteads and trapping young people of all races — but again, let’s be honest here, and admit that it will be disproportionately Black and Latino young people — into institutions where the tyranny of low expectations reign, all of the bad social effects of poverty rear their ugly heads, and continue to drive inequality which then drives systemic racism.

So creating more affordable housing is great; but when the schools in those neighborhoods become pits of despair, all we’re doing is creating more inequality and more division. We must create affordable housing, but not link schools to home values, and not link the child’s educational opportunities to where their parents happen to live.

Once again, let’s face facts: if NIMBYism over housing is powerful, it pales in comparison to NIMBYism around education. Suburban parents who paid through the nose to have top quality schools for their children are not exactly going to roll over and play dead if their precious children’s education is tweaked even a tiny bit. Otherwise apolitical people will certainly discover their inner activist to stop any changes to their top notch schools.

So again, if we’re going to tackle this, it’s going to require both leadership and a united front from real estate, particularly from the political wing of the industry: REALTORS.

Are we ready? Are we serious about change?

This is the Hard Stuff

What I recommended in the first post — at least policing our own bad apples, and being transparent about diversity in real estate — is difficult to do for large companies, but that’s really the easy stuff.

This is the hard stuff. This is the change that the country needs. And it won’t come easy, and it won’t come cheap.

NAR is the most powerful housing lobby in the country. It is routinely a top ten, often a top-five, power player in Washington DC. In many of our states, the State REALTOR Association is immensely powerful and influential. Collectively, the real estate industry spends tens of millions of dollars every year on advocacy and government affairs.

If the political power of REALTORS are brought to bear on the twin problems of zoning and local school funding, we have a real shot at making those reforms happen and breaking the cycle of poverty, lack of opportunity, and inequality. If it remains on the sideline, or even takes the side of rich mostly-white homeowners, then there is no chance at all.

Today, based on conversations I’m hearing, webinars I’m attending, posts I’m reading, the industry is ready to take on more education. But such education is narrowly focused on training REALTORS to do the right thing. I’m sorry, but that’s an awfully low bar: racial steering is already illegal. Discrimination is already illegal. That we have to expend so much energy to train real estate agents not to break the law is some kind of a statement on ethics… and it’s not a great one.

The great education campaign that the industry must take on, if it is serious about race and housing, is to educate the public, to educate the wealthy, privileged homeowner class about the need for them to make some sacrifices for the good of society, for the good of the country. REALTORS themselves who are homeowners can lead the way in their local communities, by educating their fellow homeowners about the origins and continuing impact of zoning and local levy funding. NAR, the state REALTOR Associations, and local Associations can start educating the public on the need for real fundamental change.

Or… we all can post on social media, tut-tut the bad old pre-civil rights past, focus our efforts on training REALTORS with their Code of Ethics not to break the law, and talk about how we’re committed to raising non-racist white children… who are all attending suburban paradises of learning far, far away from the reality of some of their Black, Latino, Asian and white peers.

The choice is ours. And not making a choice is a choice in and of itself.

I am choosing to believe that the industry is serious about becoming the change our country needs. I am choosing to believe that leaders and members of various REALTOR Associations are serious about doing something. I am choosing to believe that the many companies that have declared race and real estate to be an important issue are serious about their intentions. I have faith in us all.

And I don’t care if we win or not. It won’t bother me if we as an industry give it our best, but lose the fight against NIMBYism and NotMyChildsSchoolism. It is enough that we actually tried, that REALTORS actually tried to live up to, in Bobbi Howe’s words, their duty to actively fight systemic racism. Because future generations may pick up the baton and succeed where we tried and failed, with a roadmap we drew out for them and a dream we planted for them.

But as always, I will judge us all not by words, but by actions. So will future generations.

Choose accordingly.


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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3 thoughts on “The Hard Stuff: Systemic Racism and Real Estate”

  1. Rob,

    I’m an agent at Keller Williams in Atlanta and am currently talking about the CHANGE we want to see in the real estate industry within our organization. We are talking about reforming how we educate and conduct business as realtors. This article was monumental to help delineate the root of the problem and the change we’d like to see happen. I am currently looking for a consultant to partner with in pushing change within the organization and ultimately to help influence how NAR impacts policy. Wondering in all the research you’ve done, do you have any recommendations of individuals that are leading change with organizations today?

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