What is Steering in fair housing?

Steering is a form of discrimination in fair housing in which the real estate agent, landlord, or lender will either guide or direct prospective buyers or tenants towards or away from a neighborhood because of their race, ethnicity, religion, or any other characteristics. This is prohibited under the Fair Housing Act since it requires that equal opportunity in housing should be afforded to everyone.

Steering real estate definition

• Steering occurs when real estate professionals direct clients to specific areas based on their perceived demographic characteristics.
• It can happen subtly, such as through selective recommendations, or overtly, by outright refusal to show properties in certain areas.
• This practice contributes to housing segregation and limits opportunities for fair housing.

Steering fair lending examples

Steering in lending occurs when financial institutions influence borrowers’ decisions in a discriminatory manner, violating the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).

Common examples:

1. Offering different loan terms based on race or neighborhood
   • Higher interest rates or stricter requirements for minorities, even if they have good credit.
   • Example: A Black borrower with a strong credit history receives a higher interest rate than a white borrower with the same profile.
2. Discouraging loan applications from certain ethnic groups with stricter requirements
   • Requiring higher credit scores or additional documentation only from certain applicants.
   • Example: A bank asks a Latino applicant for more proof of income than a white applicant with the same job and salary.
3. Lack of outreach to diverse communities
   • Promoting loans and financial resources only in predominantly white or high-income neighborhoods.
   • Example: A bank hosts home-buying workshops only in wealthy areas, excluding diverse communities.

Impact and consequences

• Increases economic inequality and limits social mobility.
• Reinforces segregation and lack of housing access.
• Violates fair lending and housing laws.

Affected individuals can file complaints with the CFPB, HUD, or FTC to seek financial justice.

State fair housing laws and their role

While the federal Fair Housing Act prohibits steering, individual states have their own fair housing laws that often expand protections. These laws:

• Provide additional penalties for violations.
• Extend protections to more groups beyond those covered by federal law.
• Offer state-level enforcement agencies to address complaints and ensure compliance.

According to the Fair Housing Act, what is steering?

The Fair Housing Act (FHA) is a landmark civil rights law in the United States that prohibits discrimination in housing-related transactions. One of the discriminatory practices addressed by the FHA is steering, a form of housing discrimination that influences where individuals or families live based on protected characteristics such as race, color, national origin, religion, sex, disability, or familial status. Steering can occur in various ways, often subtly, and has long-term consequences for housing equity, segregation, and economic opportunities.

Forms of Steering and their impact

1. Encouraging or discouraging individuals based on protected characteristics
   • Real estate agents or landlords may guide prospective buyers or renters toward certain neighborhoods based on their race, ethnicity, or family status. For example, an agent might direct a Black family toward a predominantly Black neighborhood rather than showing them homes in diverse or predominantly white areas.
   • This practice reinforces racial and economic segregation, limiting housing choices and access to better schools, jobs, and public services.

2. Providing misleading or selective information about property availability

• Some housing providers or real estate agents may withhold listings in certain areas or falsely claim that a property is unavailable to discourage a buyer or renter from moving into a particular neighborhood.
• By doing this, they manipulate housing decisions and prevent individuals from freely choosing their desired location.

3. Using coded language or subtle suggestions

• Real estate professionals sometimes use neutral-sounding phrases that imply a preference for certain groups. For example:
  • “This neighborhood has a lot of great churches” (which may suggest a religious preference).
  • “This area is very family-friendly” (which may discourage single or elderly individuals).
  • “You might not feel comfortable here” (which subtly discourages someone based on race or background).
• While such language might seem innocent, it can significantly influence a person’s housing choices and contribute to systemic housing discrimination.

Why Steering is harmful

1. Perpetuates residential segregation
   • Steering maintains racial and socioeconomic divides, making it harder for communities to integrate. Historically, steering has reinforced patterns of redlining, limiting minority communities’ access to wealth-building opportunities through homeownership.
2. Limits economic and educational opportunities
   • Since housing location is closely tied to access to quality schools, healthcare, jobs, and public services, steering can significantly impact future economic mobility and life outcomes.
3. Reduces housing market fairness
   • Steering restricts fair competition in the housing market by denying potential buyers or renters the right to make their own informed choices.

Legal consequences of Steering

The steering of clients is against the law and involves legal actions, fines, and other penalties against real estate professionals, landlords, or housing providers found guilty in court. Agencies like the U.S. Department of Housing and Urban Development investigate complaints, and people who feel they have been steered can file complaints in pursuit of justice.

The impact of steering in housing

Steering has long-lasting impacts that adversely affect the person and society. This practice contributes to:

• Perpetuating segregation: Directories perpetuate the racial and economic segregations since they lead people to specific areas.
• Limiting opportunities: Families that have been pointed toward certain neighborhoods can lose out on better schools, job markets, and community resources.
• Limiting housing options: Steering reduces choices that could be made by individuals to choose homes based on personal preferences rather than external influences.

How to recognize and prevent steering

Both consumers and real estate professionals can play a role in identifying and stopping steering practices.

For homebuyers and renters:

• Be aware of language that suggests certain neighborhoods are “better” or “safer” based on subjective opinions.
• Ask for a broad selection of listings instead of relying solely on recommendations.
• Report any instances where housing options are seemingly limited based on race or background.

For real estate professionals:

• Provide all clients with impartial information about housing options.
• Avoid assuming certain preferences of any client based on race or any other attribute.
• Perform fair housing training and follow guidelines to ensure federal and state laws are followed.

Summary

Steering in fair housing is a serious issue that undermines equal access to housing. Buyers, renters, and real estate professionals have to be especially aware of how to recognize and avoid discriminatory practices that assure fair housing for all.

Lexawise has all the resources and guidance you need to navigate the waters of fair housing laws with confidence. With our knowledge, you will be confident to study for real estate and lending exams about knowing your fair housing. Sign up today with Lexawise, and begin your journey to becoming a knowledgeable and ethical professional in real estate.