Racial Disparities in the Cleveland SuburbanHome Sales Market

2008-2012

Heights Community CongressCleveland Heights, Ohio

www.heightscongress.org

November 2013

Sources

• 2008-2012 audits by Heights Community Congress (130)

• 2012 HUD study: Discrimination against minorities in 28 metropolitan areas

• 1972 St. Ann's Audit of Cleveland eastern suburbs

About the HCC audit data

• Each audit is a paired test: one black, one white (130 pairs).

• Dataset is not a scientific random sample of Cleveland suburbs.

• Predominantly white suburbs are underrepresented.

Objectives

• Is there discrimination against blacks in the Cleveland suburban home sales market?

• If so, what forms of discrimination are most likely to occur?

Differential treatment of blacks occurs:

1. When accessing the marketa. Denial of serviceb. Number of phone callsc. Number of homes shown

2. During initial financial qualifyinga. Asked if pre-approved for loanb. Asked amount of down payment

Accessing the market

Black testers were 3.1% more likely to be denied service than white testers.

(HUD nationally 2.4%)

8 times white tester got service, black did not4 times black tester got service, white did not

4 = Net discrimination = 3.1% (4 / 130)

Accessing the market, cont.

Black testers made 5.1% more phone calls than white testers.

(HUD did not measure this)

Historically: 88% more phone calls(1972 St. Ann’s Audit)

Example: Repeated phone calls by black tester

DayBlacktester

Whitetester

1 Leaves message

2

3

4

5 Leaves message

6 Leaves message

7 Agent returns call

8 Leaves message Agent shows house

9 Leaves message

10 Agent calls, says is busy

11

12Different agent shows house

Accessing the market, cont.

Black testers shown 16.5% fewer homes than whites

(HUD nationally 13.4%)

Historically: 58% fewer homes(1972 St. Ann’s Audit)

Initial financial qualifying

Black testers 11.5% more likely to be asked if pre-approved than white testers.

(HUD nationally 5.7%)

Historically: 11.8% (1972 St. Ann's Audit. Two black testers were asked financial questions.)

Initial financial qualifying, cont.

Black testers 6.3% more likely to be asked amount of down payment than white testers.

(HUD did not track this)

Rarely asked.9 times black tester asked, white not2 times white tester asked, black not

7 = Net discrimination = 6.3% (7 / 111)

Is the price negotiable?

Results suggest whites are 7.3% more likely to be told this.

Caution: Needs further study.

15 times white tester told, black not 7 times black tester told, white not

8 = Net discrimination = 7.3% (8 / 110)

Treatments favoring black testers

• Agents 11.9% more likely to follow up with black testers by phone or email.

(HUD nationally favors whites, but not statistically significant.)

• Agents 24.1% more likely to be on time for black testers than white testers.

(HUD did not track this.)

Conclusions

• Measurable progress over 40 years,compared to 1972 St. Ann’s Audit.

• Yet disparities persist.

Recommendations

• Real estate industry:Renew commitment to fair housing

• Continue auditing

• Increase auditing in white suburbs

Why fair housing

is (still) important