Steering, Blockbusting, Redlining and Fair Housing Ads

Unlawful Market Practices: Steering, Blockbusting, and Redlining

Steering is the illegal practice of directing prospective home buyers or renters toward or away from specific neighborhoods based on their protected class status. An agent engages in unlawful steering when they limit property options based on assumptions about a buyer's protected characteristics or the protected-class makeup of a neighborhood, rather than the buyer's nondiscriminatory housing criteria. Even if a client explicitly requests to view homes only in neighborhoods of a particular racial or ethnic makeup, complying with that request violates the federal Fair Housing Act. Licensees must provide market-based property choices that reflect the buyer's stated housing criteria, geographic preferences, and price budget without applying demographic filters.

When prospective buyers ask questions concerning neighborhood crime rates or local school ratings, licensees must exercise caution. Agents should direct buyers to reliable, objective third-party sources rather than evaluating these matters themselves. Demographics must never be used to steer clients toward certain locations or assist them in excluding neighborhoods based on protected classes. Agents may refer buyers to objective third-party sources and may provide accurate, consistently offered information about safety or schools, but must not use those topics to steer buyers based on protected characteristics.

Blockbusting, also referred to as panic peddling, is the unlawful practice of inducing property owners to sell their homes by suggesting that individuals of a protected class are moving into the neighborhood. Blockbusting involves, for profit, inducing or attempting to induce someone to sell or rent a dwelling through representations about people of a protected class entering or potentially entering the neighborhood; fear of declining values is a common tactic. For instance, soliciting listings by implying that the entry of a protected class will raise local crime rates or decrease school quality constitutes illegal blockbusting.

Redlining is the discriminatory refusal or restriction of lending or insurance services in specific geographic areas based on the protected-class characteristics of the residents, rather than legitimate financial risk factors. The term originates from the historical practice of drawing literal red lines on maps around minority neighborhoods to mark them as high-risk zones. Lenders violate fair housing laws when they refuse loans or charge higher interest rates because of a neighborhood's racial composition. Similarly, appraisers engage in illegal discrimination if they consider the racial, religious, or ethnic composition of an area when determining property value.