12.1: Part I- Bias

Bias refers to a systematic and often unconscious inclination, preference, or prejudice toward or against something, someone, or a group of people. It influences perceptions, judgments, and decisions in ways that might be unfair. Bias can stem from various sources, including personal experiences, cultural influences, societal stereotypes, and cognitive shortcuts that our brains use to process information efficiently.

Implicit or Unconscious Bias

Implicit bias refers to the attitudes or stereotypes that affect our understanding, actions, and decisions without our being conscious of them. These biases, which include both favorable and unfavorable assessments, operate without an individual’s awareness or intentional control. Residing in the subconscious, these are different from the biases that individuals may choose to conceal for purposes of social and/or political correctness.

The associations in our subconscious cause us to have feelings and attitudes about other people based on characteristics such as race, ethnicity, age, and appearance. These associations develop over the course of a lifetime, beginning at a very early age through exposure to direct and indirect messages. In addition to early life experiences, the media and news programming are often cited as origins of implicit associations.

Explicit or Conscious Bias

Explicit bias refers to deliberate and conscious beliefs or attitudes that an individual holds about particular groups of people. These biases are overt and easily identifiable; they involve intentional thoughts, actions, or expressions that favor or discriminate against a specific group based on the group’s characteristics such as race, ethnicity, gender, or other factors.

In real estate, an example of explicit bias could be a property owner or landlord openly stating a preference for renting or selling a house to individuals of a certain race or ethnicity while excluding others based on these racial or ethnic preferences.

Systemic or institutional bias

Systemic or institutional bias refers to ingrained and often unconscious biases within systems, institutions, or organizations that are consistently disadvantageous to certain groups while benefiting others. These biases are embedded in policies, practices, and norms, perpetuating unequal outcomes or opportunities for different segments of society.

In real estate, systemic bias can be seen in the discriminatory lending practices by financial institutions that historically denied loans or mortgages to individuals from specific racial or ethnic backgrounds. This practice contributed to housing segregation and disparities in homeownership rates. We see another example in zoning laws that were designed to segregate neighborhoods based on race. Such zoning continues to have long-lasting effects, limiting access to resources and opportunities for certain communities due to their location. These biases persist and continue to contribute to inequality.

Affinity Bias

Affinity bias is the unconscious tendency to show preference for people similar to oneself. This bias often shows up in the hiring process when decision makers search for candidates that “fit” the culture of the company or department. An example of affinity bias in real estate would be a landlord’s preference to rent her property to people of her own racial, ethnic, or religious background.

Confirmation Bias

Confirmation bias occurs when we make a judgment or assumption about another person and unconsciously look for evidence to back up our views. These judgments and assumptions are often fueled by stereotypes. In confirmation bias, we want to find evidence to confirm our own opinions because we want to believe we are right.

Stereotypes

A stereotype is an exaggerated belief, image or distorted truth about a person or group—a generalization that allows for few or no individual differences or social variation. Stereotypes are based on images in mass media or on stories and perceptions about other groups passed on by parents, peers, and other members of society. Stereotypes can be positive or negative.

Practice Zone

Imagine a real estate agent showing a young couple, Tom and Sarah, various properties in a suburban neighborhood. The agent consistently directs them to houses with large yards, emphasizing space for children to play and schools in the area. Despite Tom and Sarah expressing their preference for a more modern, urban-style condo closer to their workplaces, the agent continues to focus on the suburban houses, assuming that as a young couple, Tom and Sarah will soon start a family and therefore should prioritize space and schools over convenience and style. Identify the stereotypes present in this story. How do the stereotypes influence real estate interactions and impact decision-making processes?

Bias in Real Estate

Before 1970, many homeowners considered racial and religious discrimination in housing to be socially beneficial because it perpetuated the traditional concept of neighborhoods with members sharing a common ancestry, religion, values, and often the same economic class. In cooperation with the government, real estate and lending professionals worked to keep neighborhoods homogeneous, resulting in overt (visible) and covert (hidden) forms of discrimination. Overt forms of discrimination are illegal and are evident in various forms, such as racial zoning, redlining, blockbusting, and restrictive covenants. Covert discrimination, such as steering, may have been innocent and unintentional, but discrimination is illegal in all its forms.

Steering

Steering is the discriminatory practice of directing a client to a specific geographic area, community, neighborhood, or housing development, based on the client’s characteristics or protected class (see more about protected classes in the next section). Steering reinforces segregation, perpetuates housing disparities, and limits individuals’ choices.

For example, if an agent were to show an Arabic- or Hebrew-speaking buyer only neighborhoods with predominantly Arabic- or Hebrew-speaking residents, the agent would be guilty of steering. However, if the agent asked what neighborhoods the buyer might consider, and the buyer requests certain neighborhood geographic locations they prefer, that would not be in violation of the law, and it would be permissible to show houses based on the clients’ request. Even though a buyer requesting to see only properties in Arabic- or Hebrew-speaking neighborhoods does result in what is considered discriminatory steering, it would not be a violation of the law for the agent to show those homes.

To improve agent compliance with the fair housing law, agents should allow prospective buyers to select their own neighborhoods and should not attempt to steer buyers or tenants to specific areas. If the buyers are new to the area and unfamiliar with the neighborhoods, provide them with links to online sites that provide information so they can select some based on their own criteria.

Another form of racial steering can take place when a broker or agent gives an unsubstantiated (without evidence) opinion about schools or school districts. Agents should recommend that buyers and tenants visit schools in person or check school data online.
Source: National Fair Housing Alliance (NFHA)

Practice Zone

Jennie Smith, a real estate agent in a large city, showed Sue Lee several condos in Chinatown, an area of the city with primarily Chinese residents. She did not show Sue any condos in other parts of town. When her broker questioned her about it, Jennie replied that she could see that Sue was Chinese and believed that she would be happier living in a predominantly Chinese area of town. Answer the following: Imagine you are Jennie’s broker. What will you tell her? What will you ask her to do? Why?

Blockbusting

Blockbusting is another discriminatory action that tends to decrease the value of homes in a neighborhood and is strictly prohibited. Blockbusting occurs when agents (or others) working in a homogeneous neighborhood begin rumors that property values are about to decrease because members of another race are moving in. This can cause a financial panic in the neighborhood and can result in homeowners hurrying to sell quickly and below value. In the past, unethical investors have encouraged the practice so that they could buy the homes at reduced prices and then later sell those homes, which they purchased at reduced rates, at inflated prices.

A provocative example of the concept on a popular TV series entitled "All in the Family.” The segment called “The Blockbuster” (Season 2 Episode 8) originally aired on November 13, 1971, portraying an unethical real estate agent attempting to cash in on the blockbusting concept to make a speedy profit. Link to this episode: https://www.facebook.com/watch/?v=287282672763553

Practice Zone

Watch the episode of All in the Family that is linked above. Write a review of the depiction of blockbusting.

Redlining

Redlining, an historic, systemic, and illegal practice in real estate, has inflicted a lasting and unequal impact on housing values and availability. This discriminatory practice, prevalent in the mid-20th century, involved drawing red lines on maps to designate certain neighborhoods as high-risk for investment, based primarily on racial composition. In other words, redlining is a lenders’ practice of denying loans to potential residents, usually racial minorities, within a geographic area–even if they are creditworthy. Individuals wishing to purchase property in these redlined areas, whether as investments or for their own residences, are denied access to loans, insurance, or other financial services, stifling economic growth and denying homeownership opportunities.

The lasting effects of redlining are evident today. Historically marginalized neighborhoods continue to face diminishing investments, limited resources, and restricted access to fair housing options. In short, redlining maintains disparities in wealth, property values, and community development, demonstrating the long-lasting influence of prejudice in housing.

Practice Zone

Answer the following: Describe the difference between steering and redlining. How are they the same?

Racially Biased Zoning

Local governments determine how land can be used by classifying areas into zones, such as single-family residential, multi-family residential, commercial, and industrial. Zoning has a significant impact on neighborhoods because it dictates what kind of activities or developments can occur in specific areas.

Racially biased zoning implements discrimination by creating or enforcing zoning laws or regulations that are biased against particular groups, resulting in segregated communities based on race or ethnicity, religion, or other characteristics. Such segregation limits where certain people can live, work, or access resources, such as those in education, healthcare, employment, economic opportunities, and overall quality of life.

We see biased zoning today when cities implement zoning regulations that disproportionately or unfairly restrict development of affordable housing in neighborhoods with predominantly minority populations versus those with predominantly white populations. Such practices result in limiting housing options and sustaining economic disparities.

Racial zoning laws were declared unconstitutional in 1917 (Buchanan v. Warley, 1917) when the U.S. Supreme Court declared that these laws interfered with rights of owners to sell or lease their property to whomever they wished. Nonetheless, agents and others found other ways to implement racial zoning. Real estate organizations continued to adopt policies, often unwritten, of refusing to rent or sell to non-Christians in Christian neighborhoods or to non-caucasians in caucasian neighborhoods.
See 1917: Buchanan v. Warley.

https://www.bostonfairhousing.org/timeline/1917-Buchanan-v.Warley.html#:~:text=In%20its%20unanimous%20decision%2C%20the,sales%20between%20whites%20and%20blacks.

Restrictive Covenants

A covenant is an agreement. Covenants commonly appear in real estate transaction documents such as leases and deeds. Restrictive covenants are agreements intended to prohibit or limit certain actions, ranging from how many tenants can live in a building to the color of a house. We see them most commonly in areas with homeowner associations.

Not all covenants are discriminatory. A restrictive covenant in a property deed, however, that prohibits the owner from selling or leasing the property to individuals of a specific race, ethnicity, or religion is a classic example of discrimination. In the past, deed restrictions could explicitly state that the property could not be sold to anyone of African, Asian, or Hispanic descent, which clearly deprived them of free choice in housing. Indeed, the Federal Housing Authority (FHA) and the Veterans Administration (VA) actually required participating lending institutions, builders, and real estate brokers to maintain segregated housing patterns. The FHA even furnished builders with a restrictive covenant template with space left for the builder to fill in the prohibited races and religions.

Discriminatory restrictive covenants are now illegal. Such covenants, which were legally enforceable in the past, have been deemed unconstitutional and unenforceable under U.S. law since the mid-20th century, particularly after the landmark case of Shelley v. Kraemer in 1948.
See: https://www.law.cornell.edu/wex/shelley_v_kraemer_(1948)

What about old deeds that still include discriminatory covenants? These covenants are void and unenforceable by law. Anyone who now provides property documents must also provide a notice stating that any discriminatory restrictive covenant in the documents are void.

Source: https://rossmoor.com/wp-content/uploads/48-M-Covenants-Conditions-Restrictions.pd