A nonprofit organization founded to end racial discrimination in housing filed a federal complaint against a national real estate firm, alleging the company’s online listing services unlawfully favor white consumers and neighborhoods compared to their nonwhite counterparts in Baltimore and nine other cities.
The National Fair Housing Alliance’s complaint, filed Wednesday, said Seattle-based Redfin’s policies “operate as a discriminatory stranglehold on communities of color,” arguing that its minimum home listing price guidelines violate the Fair Housing Act by denying service to customers in largely segregated communities.
“Redfin redlines communities of color in this digital age by setting minimum home listing prices in each housing market on its website under which it will not offer any real estate brokerage services to buyers or sellers,” reads the complaint, adding that Redfin conducts much of its services online and has few in-person offices. “By disproportionately withholding its services to homebuyers and sellers in these communities, Redfin disincentivizes homebuying within these communities, reduces housing demand and values, and perpetuates residential segregation.”
In an email sent to employees and posted on its website, Redfin CEO Glenn Kelman emphasized that the company had not broken the law, saying, “The suit is wrong.” Yet, he said, “the issues it raises are important to Redfin, to our society and to me.”
“Our long-term commitment is to serve every person seeking a home, in every community, profitably,” Kelman said. “The challenge is that we don’t know how to sell the lowest-priced homes while paying our agents and other staff a living wage, with health insurance and other benefits. This is why Redfin agents aren’t always in low-priced neighborhoods. It’s why Redfin doesn’t serve many rural towns."
Kelman also said the company has not had time to review all of the lawsuit’s claims.
“What we know now is that Redfin complies with the Fair Housing Act, which clearly supports a business’s decisions to set the customers and areas it serves based on legitimate business reasons such as price," he added.
The complaint names Baltimore as one of 10 cities where Redfin is more likely to offer service in “Extremely White” ZIP codes — where 70% or more of the residents were white — and less likely to list homes in “Extremely Non-White” ZIP codes — where 70% or more of the residents were not white. The other cities named are Philadelphia, Chicago, Detroit, Louisville, Milwaukee and Memphis, as well as Kansas City, Missouri; Newark, New Jersey; and Long Island, New York.
The National Fair Housing Alliances alleges that Redfin is more than five times as likely to not offer services in Black neighborhoods in Baltimore, and more than six times as likely to offer its “Best Available Service” in white neighborhoods. The term “Best Available Service” refers to the most comprehensive level of service offered by the company, which connects buyers and sellers to Redfin agents and offers perks such as reduced listing commission fees and refunds.
“Redfin’s policies further exacerbate the racial wealth and homeownership gaps we have been working so hard to eliminate,” said Lisa Rice, president and CEO of the National Fair Housing Alliance, in a statement. "We will use every tool we can to guarantee the Fair Housing Act’s promise of ensuring that every community has the full range of housing opportunities they deserve.”
The plaintiffs reviewed homes for sale posted on Redfin’s website in the Baltimore region in November 2018 and June 2020. They allege that of the 1,916 homes listed in “Extremely Non-White” ZIP codes that November, less than 7% received Redfin’s premium services, while more than half the 1,333 in “Extremely White” ZIP codes received those perks.
They also maintain that far fewer homes located in the nonwhite ZIP codes qualified for listing at all. Of the 1,916 in the nonwhite neighborhoods, more than 40% did not meet Refin’s minimum price requirements, compared to fewer than 5% of homes in the predominantly white areas.
Similar figures were reported for June 2020 as well: Of the 1,159 homes for sale in predominantly nonwhite neighborhoods, slightly more than 8% qualified for premium services, compared to more than 58% of the 822 homes for sale in mostly white ZIP codes. More than a third of the homes in the nonwhite neighborhoods did not meet the minimum price requirements, compared to 7.66% of homes in mostly white areas.
Maps included with the complaint further illustrate the basis of their argument: Homes concentrated in Baltimore’s “White L” as well as outside the city borders received the best services available, while homes clustered in Baltimore’s east and west sides did not receive those services.
In a statement, City Council President Brandon Scott, a Democrat favored to take over as Baltimore’s next mayor due to the party’s major registration advantage, called Redfin’s policies “unacceptable.”
“On behalf of the residents of Baltimore City, I call on Redfin to immediately eliminate its discriminatory minimum home price policy,” Scott said in a statement. “We cannot equivocate when it comes to harmful policies — particularly given Baltimore’s legacy as the birthplace of racially-restrictive zoning laws. Whether Redfin intends harm, the result is clear and should be addressed at once.”
According to the complaint, the National Fair Housing Alliance seeks relief under federal civil rights laws and hopes to end the “discriminatory housing practice” under the Fair Housing Act provisions.
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