The real estate industry is trying to change its habits

Earlier this summer, a day before the very first federal holiday of June 17 in the United States, Marcia Fudge, the secretary of the Department of Housing and Urban Development, stood at a rostrum in Cleveland and made a pledge. Bold: 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 valuation gaps.

It’s a bet that has lasted for over a year. In May 2020, spurred on by the murder of George Floyd in Minneapolis, the United States erupted in the biggest racial justice protests since the civil rights movement. The real estate sector was quick to show its solidarity. Amid the sea of ​​black Instagram squares that filled our calendars for #Blackout Tuesday last summer were promises of reform from brokers, bankers, appraisers and real estate tech executives. But while some of those good intentions have now faded, many players in the real estate industry are rolling out plans to keep their word.

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

Last November, Charlie Oppler, president of the National Association of Realtors, issued a public apology for the many ways the association had contributed to housing discrimination, including initially opposing the housing law Fair 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 grants. And in an effort to offer local agencies concrete steps for change, they have also established a four-point roadmap that serves as a sort of instruction manual for becoming more inclusive.

Bikel Frenelle, an Atlanta-based broker, served as chair of the national association’s diversity committee in 2020 and helped write this roadmap. “We don’t see this as white only training,” she said. “It’s training for everyone.

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

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

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

This program will provide 10 future black real estate professionals with a stipend of $ 5,000 for licensing, tuition and marketing, as well as a personal mentor from the association.

“A black real estate agent is more likely to be able to advise and help members of their community to become homeowners,” said Sumant Sridharan, COO of Homelight. “The goal is to increase home ownership among blacks. “

To get there, said C. Renee Wilson, the association’s interim executive director, black brokers need support. “Mentoring is a key component for beneficiaries to successfully understand and learn how to provide services that are relevant and unique to the black experience,” she wrote in an email. “Increasing the number of blacks in the real estate industry at all levels is critical to eradicating the systemic racism that has plagued the housing industry for years. “

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

“Last summer it took the whole world to stop for us to even have a conversation,” he said. “But it will take more than real estate agents to make this happen. It will also require lenders, the mortgage industry, appraisers and the relationship they all have with one another.

Over the past year, lenders and appraisers have introduced their own anti-racism programs.

JPMorgan Chase in October released a $ 30 billion racial equity pledge, including an expanded homebuyer’s grant program for minority buyers, to help 40,000 black or Latin American families buy a house within the next five years. PeerStreet, an online marketplace for real estate investors, created the Evolving Neighborhood Uplift Fund, a donor-advised fund to provide real estate down payments to aspiring black real estate investors.

“We have a vast network of expertise and an ability to aggregate capital, so let’s find a way to get this business where it’s needed most,” said Brew Johnson, CEO of PeerStreet.

In the evaluation industry, where nearly 97% of reviewers are white, field leaders initially refused to acknowledge bias following a series of damning reports in 2020 on racial discrimination in reviews .

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 have also launched a number of new diversity initiatives.

One such initiative is PAREA, an acronym for Practical Applications of Real Estate Appraisal – a program that could potentially help aspiring appraisers bypass the long-standing requirement that trainee appraisers find a mentor to work with.

“The vast majority of assessors are white males, so if you put people of color in the position of having to find a white man to train them, that’s really a barrier to entry for a lot of people,” said James Park, Executive Director. of the Evaluation Sub-Committee, the independent federal agency created in 1989 to oversee the regulation of evaluators.

But despite PAREA’s approval nine months ago, Park said, “there are no programs in place yet.”

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

It remains to be seen whether these programs will move the needle. In October 2020, the Evaluation Sub-Committee offered the Evaluation Foundation a $ 3 million grant over three years that included support for diversity awareness, as well as a review of the effectiveness of the PAREA. The grant was rejected.

“We were disappointed,” Mr. Park said. “The foundation has been accepting sub-committee grants 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 requested that the funds be directed to states in financial difficulty).

No matter how many new initiatives make their debut, many black brokers say the real change won’t happen until the racial gap in homeownership is closed.

“The solution lies in black leadership and home ownership,” said Lori Pace, a broker in Denver. “Real estate is a form of repairs, part of the 40 acres that have not been delivered.”

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