Real Estate Industry Works to Change Its Ways

Earlier this summer, one day before the first ever Juneteenth federal holiday in the United States, Marcia Fudge, the secretary of the Department of Housing and Urban Development, stood at a podium in Cleveland and made a bold pledge: By 2030, there will be 3 million new Black homeowners in the United States.

The initiative, called 3by30, is a project of the Black Homeownership Collaborative, a coalition committed to transforming the real estate industry, which for decades has been complicit in redlining, housing discrimination, and racially-motivated discrepancies in appraisals.

It’s a gambit that has been more than a year in the making. In May 2020, spurred by the murder of George Floyd in Minneapolis, the United States erupted in the largest racial justice protests since the Civil Rights movement. The real estate industry was quick to show its solidarity. Amid the sea of black Instagram squares that filled our timelines for #Blackout Tuesday last summer, were pledges of reform from brokers, bankers, appraisers and property technology executives. But while some of those good intentions have now faded away, many in the real estate industry are rolling out projects to make good on their word.

According to American Community Survey estimates, there were about 6.45 million Black homeowners in 2019, with a homeownership rate of 42 percent, significantly lower than the 73 percent for whites. The Urban Institute has calculated that adding 3 million new Black homeowners by 2030 will bring the Black homeownership rate to 57.5 percent.

Last November, Charlie Oppler, president of the National Association of Realtors, issued a public apology for the many ways that the association had contributed to housing discrimination, including initially opposing the Fair Housing Act of 1968. The apology came less than a week after the association amended its code of ethics to ban hate speech, including racist social media posts by its agents. In the months that followed, they unveiled a new Fair Housing Action Plan and a number of diversity-focused grants. And in a bid to offer local agencies concrete steps for change, they also laid out a four-point road map that serves as an instruction manual of sorts for becoming more inclusive.

Bikel Frenelle, an Atlanta-based broker, was chairwoman of the national association’s Diversity Committee in 2020 and helped write that road map. “We don’t see it as training just for white people,” she said. “It’s training for all.”

Ms. Frenelle, 51, who is Black, says that much of the momentum now being felt in the real estate industry began with Mr. Oppler’s statement. “I get a little bit emotional when I talk about it, because I was so excited for N.A.R. to just say, ‘Hey, we hear you,’” she said.

Executives from the association also sit on the steering committee for the Black Homeownership Collaborative. They share that space with representatives from the Mortgage Bankers Association; the N.A.A.C.P.; National Fair Housing Alliance; National Housing Conference, National Urban League and the Urban Institute; and the National Association of Real Estate Brokers, a Black organization that was founded in 1947 because they were excluded from the N.A.R.

The National Association of Real Estate Brokers, which refers to itself as the oldest minority real estate trade association in the United States, has also partnered with Homelight, a San Francisco-based real estate referral company, on a separate project called the Black Real Estate Agent Program.

That program will provide 10 aspiring Black real estate professionals with a $5,000 stipend for licensing, classes and marketing, as well as a personal mentor from the association.

“It’s more likely that a Black Realtor is going to be able to advise and help those in their community to become homeowners,” said Sumant Sridharan, chief operating officer of Homelight. “The goal is to increase Black homeownership.”

To get there, said C. Renee Wilson, the association’s interim executive director, Black brokers need support. “Mentorship is a key component to recipients’ success in understanding and learning how to provide services that are germane and unique to the Black experience,” she wrote in an email. “Increasing Blacks in the real estate industry at every level is essential to eradicate systemic racism that has plagued the housing industry for years.”

Dave Jones, a Black broker in Tacoma, Wash., said the changes he has seen unfold over the past year make him “cautiously optimistic” that long-term reform is within reach.

“Last summer, it took the whole world stopping for us to even have a conversation,” he said. “But it’s going to take more than just Realtors to make this happen. It’s also going to take the lenders, the mortgage industry, the appraisers, and the relationship they all have with each other.”

In the past year, lenders and appraisers have introduced their own programs to combat racism.

JPMorgan Chase in October issued a $30 billion commitment to racial equity, including an expanded home buyer grant program for minority buyers, meant to help 40,000 Black or Latino families buy a home in the next five years. PeerStreet, an online marketplace for real estate investors, created the Evolving Neighborhood Uplift Fund, a donor-advised fund to provide property down payments for aspiring Black real estate investors.

“We have a huge network of expertise and an ability to aggregate capital, so let’s find some way to point this business to where it’s needed most,” said Brew Johnson, the chief executive of PeerStreet.

Within the appraisal industry, where nearly 97 percent of appraisers are white, leaders in the field initially refused to acknowledge bias following a series of damning reports in 2020 about racial discrimination in appraisals.

But the Appraisal Foundation, which sets national standards for real estate valuation, has since added its first Black member to its Appraisal Qualifications Board. They also began a number of new diversity initiatives.

One of those initiatives is PAREA, an acronym for Practical Applications of Real Estate Appraisal — a program that could potentially help aspiring appraisers sidestep the long-held requirement that trainee appraisers find a mentor to work with.

“The vast majority of appraisers are white men, so if you put people of color in the position of having to find a white man to train them, it’s really a barrier to entry for a lot of folks,” said James Park, executive director of the Appraisal Subcommittee, the independent federal agency created in 1989 to oversee appraiser regulation.

But despite PAREA being approved nine months ago, said Mr. Park, “there have yet to be any programs in place.”

David Bunton, president of the Appraisal Foundation, said in an email that the delay lay with state governments, which had to first adopt state guidelines before the program could begin. Mr. Bunton also pointed to a number of additional new diversity programs that the foundation has undertaken, including a review of fair housing guidance and a demographic survey of appraisers.

Whether those programs will move the needle remains to be seen. In October 2020, the Appraisal Subcommittee offered the Appraisal Foundation a grant of $3 million over three years that included support for diversity outreach, as well as a review of PAREA’s efficacy. The grant was rejected.

“We were disappointed,” Mr. Park said. “The foundation has accepted grants from the subcommittee for 30 years.” (Mr. Bunton said the grant was rejected because “we were in a financially stable position during the pandemic,” adding that the foundation asked for the funds to be directed to states that were struggling financially).

Regardless of how many new initiatives make their debut, many Black brokers say the real shift will not come until the racial gap in homeownership is closed.

“The solution lies in Black leadership and homeownership,” said Lori Pace, a broker in Denver. “Real estate ownership is a form of reparations, part of the 40 acres that were not delivered.”

For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate.

Next Post

The Rise and Fall of Home Design Trends

Fri Aug 20 , 2021
Take the omnipresent open floor plan. It seemed like a terrific and forward-looking idea—at least until everyone had to work or go to school in one room. And as many of us learned, while a once-popular chalkboard wall may be helpful for remote learning or for children to express their […]

You May Like