Some realty sites describe neighborhoods’ racial and ethnic makeup; is that legal?
BY KENNETH R. HARNEY
June 20, 2014
When you shop online for a home, some Web sites let you specify the characteristics of the community where you want to live. Maybe you’re looking for excellent schools, low crime rates, affordable prices and low property taxes.
But should you also be able to search for a home based on the racial or ethnic composition of the neighborhood? Should real estate sites supply detailed information on the percentages of African Americans, Hispanics, Asians, Caucasians and people of mixed race in the immediate area?
Some civil rights advocates cite the Fair Housing Act and say absolutely not- Connecting racial data with home sale transactions is barred by federal law, they argue, whether it’s done by a real estate agent or posted on a Web site.
But companies whose sites offer neighborhood-level racial, ethnic, linguistic and similar demographic details strongly disagree. Much of their data, they say, come from government sources such as the Census Bureau. It’s all public information and already available to anyone who makes an effort to find it, so how could its dissemination in connection with property searches possibly violate federal law?
Controversy over all this bubbled up last week when the head of the National Fair Housing Alliance — an umbrella group that represents more than 200 state and local civil rights organizations — said the alliance is investigating the practices of online search firms that have real estate tie-ins, whether as brokerages or as referral-generating services for realty agents.
The alliance has played a leading role in recent years battling discrimination in housing and mortgage finance. Its complaints and litigation have resulted in significant settlements in some cases. Shanna L. Smith, president and chief executive of the alliance, told me in an interview that her group is “concerned” about Web sites that connect real estate offerings with data packages including racial and ethnic characteristics.
In 2009, lawyers for the alliance threatened Movoto, a realty brokerage site, with federal fair housing complaints to the Justice Department and the Department of Housing and Urban Development. The lawyers warned Movoto that the provision of racial statistics for the neighborhood surrounding a property listing “may have the effect of steering prospective home buyers away . . . and undermining the promotion of racial integration, one of the purposes of the Fair Housing Act.”
Supplying such information, the lawyers said, also violated the code of ethics of the National Association of Realtors, which prohibits the volunteering of “information regarding the racial, religious or ethnic composition of any neighborhood.”
Movoto subsequently agreed to remove pie-chart breakdowns of neighborhood racial characteristics that could be displayed in connection with individual listings. However, a check last week revealed that Movoto continues to provide community-level racial, linguistic and other data, including “unmarried partner households” and “birthplace for foreign-born population.”
In an e-mail, Randy Nelson, a spokesman for Movoto, said the firm has denied any violations of the Fair Housing Act and “stands firmly against housing discrimination.”
Smith said the alliance also is studying NeighborhoodScout, a demographics-laden site run by Location Inc. NeighborhoodScout offers searches on more than 360 characteristics at the micro-market level, including income trends, home appreciation rates, crime and schools, along with race, ethnicities of residents, languages spoken, age and marital status.
Andrew Schiller, chief executive of Location Inc., said critics misunderstand his site’s business model. Though the firm is a licensed real estate broker, “we don’t practice real estate — you can’t buy a house on the site,” he noted. Portions of NeighborhoodScout’s data are free, but for certain “advanced search” content such as “race and ethnicity,” home shoppers must subscribe- $39.99 for a month, $29.99 per month for three months, $15.99 per month for a year.
NeighborhoodScout also functions as a referral conduit to 134,000 local realty agents. When a shopper referred to an agent purchases a house, the agent shares a portion of the commission with the Web site. Buyers may qualify for rebates from Location Inc.’s commission split.
In an interview, Schiller said that the site helps shoppers search for ethnically and linguistically diverse neighborhoods and that most of the data that critics object to come from the census. “We are showing public data to the public,” he said.
All of which raises the core question- In a hyper-wired era where consumers can access just about any data they want online, should real estate search sites enable them to select home locations on racial or ethnic grounds?
There’s no definitive legal answer right now. But fair housing advocates appear likely to push for one sometime soon.