The National Fair Housing Alliance has filed a federal complaint against Redfin, 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 Alliance, a nonprofit organization founded to end racial discrimination in housing, investigated Redfin’s policies and practices for two years. The lawsuit, filed Oct. 28, says the company’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.
UB Law’s Audrey McFarlane, Associate Dean of Faculty Research & Development and Dean Julius Isaacson Professor of Law, explains how this alleged practice of Redfin’s perpetuates longstanding practices of racial discrimination in housing.
“This is a very important lawsuit against something we rarely question – how using market-based logic can end up being racially discriminatory. Redfin uses a minimum price policy to decide when to allow a property to display as an available property in a database search. If the home doesn’t meet a certain market-based minimum price, the home is not eligible for Redfin services and the home will not be marketed to potential homebuyers,” McFarlane says.
“Market-based criteria seems logical, but it’s not racially neutral. It reflects and reinforces a racial geography of dual housing markets that did not happen by accident. It happened through nearly a century of deliberate exclusion of Black people from white neighborhoods, and devaluation of and disinvestment from Black neighborhoods. This took place in Baltimore and cities like it across the United States.”
According to the Baltimore Sun, the complaint names Baltimore as one of 10 cities where Redfin is more likely to offer service in “Extremely White” ZIP codes — where 70 percent or more of the residents were white — and less likely to list homes in “Extremely Non-White” ZIP codes — where 70 percent or more of the residents were not white. The other cities named are Chicago, Detroit, Louisville, Memphis, Milwaukee and Philadelphia, as well as Kansas City, Missouri; Newark, New Jersey; and Long Island, New York.
The National Fair Housing Alliance 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, according to the Sun article. 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 policy, whether deliberately or not, disadvantages property owners in Black neighborhoods by perpetuating this historic discrimination and causing real disadvantaging harm by depriving property owners in Black neighborhoods from having access to the full range of buyers searching for homes,” says McFarlane. “Based on the allegations in the complaint, it seems this further devalues the property in Black neighborhoods and reinforces the disadvantages of segregation. The Fair Housing Act is intended to prevent the harms of both discrimination and segregation.”
Redfin CEO Glenn Kelman responded to the allegations on the company’s website, including this statement: “Our long-term commitment is to serve every person seeking a home, in every community, profitably. 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.”
UPDATES/University of Baltimore School of Law 