Racial Steering by Real Estate Agents: Mechanisms and Motives

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Abstract
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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