Racial Discrimination in US Housing: Evidence from the 2000 HUD Study

Racial discrimination is in the real estate market

Clearly, there is such discrimination.  But how do we know if the discrimination is due to race, or some other factor?  

The key is to isolate the racial factors from all other possibilities.  This can best be done through studies and experiments. 

The U.S. government periodically commissions the Housing and Urban Development (HUD) to conduct studies of rental and housing discrimination

Reports from HUD about housing discrimination in the 2010s

This post is a summary of the 2000 study, “Discrimination in Metropolitan Housing Markets: Phase 1,” describing their methods and what they found.

Methods of the HUD Study


In a paired test, two individuals— one minority and the other white— pose as otherwise identical home-seekers, and visit real estate or rental agents to inquire about the availability of advertised housing units. This methodology provides direct evidence of differences in the treatment minorities and whites experience when they search for housing.

Results of the HUD Study

Rental Sales

  • Whites were consistently favored over blacks in 21.6 percent of tests.
  • Whites were more likely to receive information about available housing units, and had more opportunities to inspect available units.
  • Hispanic renters nationwide also face significant levels of discrimination.  In contrast with Hispanics, Non-Hispanic whites were consistently favored in 25.7 percent of tests.

Patterns of Change

Discrimination against African American renters declined between 1989 and 2000, but was not eliminated. Discrimination against Hispanic renters appears to have remained essentially unchanged since 1989.

Home Sales

  • White homebuyers were consistently favored over blacks in 17.0 percent of tests.
  • White homebuyers were more likely to be able to inspect available homes and to be shown homes in more predominantly white neighborhoods than comparable blacks.
  • Hispanic homebuyers also face significant levels of discrimination.  In contrast with Hispanics, Non-Hispanic whites were consistently favored in 19.7 percent of tests. In particular, non-Hispanic whites were more likely to receive information and assistance with financing, and to be shown homes in non-Hispanic neighborhoods than comparable Hispanic homebuyers.

Patterns of Change

Discrimination against African American homebuyers declined quite substantially between 1989 and 2000, but was not eliminated. However, geographic steering rose, suggesting that whites and blacks are increasingly likely to be recommended and shown homes in different neighborhoods.  Discrimination against Hispanic homebuyers declined since 1989.

Notes

Its predecessors, the 1977 Housing Market Practices Study (HMPS) and the 1989 Housing Discrimination Study (HDS) found significant levels of racial and ethnic discrimination in both rental and sales markets of urban areas nationwide.

Since the 2000 HUD study, there have been many studies on redlining in the USA.

As The New York Times explains it:

“In recent years, the term ‘redlining’ has become shorthand for many types of historic race-based exclusionary tactics in real estate — from racial steering by real estate agents (directing Black home buyers and renters to certain neighborhoods or buildings and away from others) to racial covenants in many suburbs and developments (barring Black residents from buying homes). All of which contributed to the racial segregation that shaped the way America looks today.

The origins of the term come from government homeownership programs that were created as part of the 1930s-era New Deal. The programs offered government-insured mortgages for homeowners — a form of federal aid designed to stave off a massive wave of foreclosures in the wake of the Depression.

As these programs evolved, the government added parameters for appraising and vetting properties and homeowners who would qualify. They used color-coded maps ranking the loan worthiness of neighborhoods in more than 200 cities and towns across the United States.

Neighborhoods were ranked from least risky to most risky — or from “A” through “D.” The federal government deemed “D” areas as places where property values were most likely to go down and the areas were marked in red — a sign that these neighborhoods were not worthy of inclusion in homeownership and lending programs. Not coincidentally, most of the “D” areas were neighborhoods where Black residents lived.”

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