Federal lawsuit says real estate firm ‘redlines’ home listings in the Kansas City area
The sales practices of national real estate firm Redfin exacerbate housing segregation in cities like Kansas City, according to a federal lawsuit filed this week.
The lawsuit, led by the nonprofit National Fair Housing Alliance, accuses the company of disproportionately offering its real estate services in predominantly white neighborhoods, “perpetuating the stark patterns of housing segregation that continue to plague our nation.”
Seattle-based Redfin has denied the legal claim in a statement, but acknowledged it raised important issues. Agents with Redfin, which was founded by technology experts in 2006, work with both buyers and sellers in dozens of U.S. markets.
In each market, the company sets a minimum price point for homes. It will only provide brokerage services for properties above that floor. The lawsuit alleges that “Redfin redlines communities of color in this digital age by setting minimum homelisting prices.”
“Redfin’s policies and practices operate as a discriminatory stranglehold on communities of color, often the very communities that have been battered by over a century of residential segregation, systemic racism, and disinvestment,” the suit states.
The group accuses Redfin of perpetuating separate and unequal housing markets by offering different levels of services in different neighborhoods. For some homes, the company offers no services. For others, its “best available service” makes agents available to buyers and sellers and for some properties, it redirects people to partner agents at other brokerages.
Like online listing site Zillow, Redfin helps buyers browse available home inventory, comparing prices and paging through photos. But it’s also a brokerage: the site earns a commission when customers make an offer on the site, though the company says it saves customers by charging a lower rate than most brokerages.
In Kansas City, the National Fair Housing Alliance examined thousands of home listings in Jackson, Clay and Platte counties in Missouri and Wyandotte, Johnson and Leavenworth in Kansas.
In June of this year, about 53% of the 4,550 homes listed in predominantly white ZIP codes were offered Redfin’s best available service. Of the 218 homes located in nonwhite ZIP codes, only 16 — about 7% — were offered that service.
Likewise, the review found that Redfin was much more likely to offer no services for homes listed in Kansas City’s nonwhite ZIP codes
More than 58% of the homes listed in nonwhite ZIP codes received no services because they failed to meet the company’s minimum price for the market. In the region’s white ZIP codes, 649 — about 14% — of the 4,500 listings failed to meet that threshold.
A map included in the suit shows familiar fault lines in Kansas City: the company’s best available service was widely offered in Johnson County and the parts of Kansas City west of Troost Avenue. But many homes listed in Kansas City, Kansas, and the parts of Kansas City, Missouri, east of Troost were offered no services.
In a message sent to all employees and posted online, Redfin CEO Glenn Kelman denied that the company had broken the law. He said the company complies with the Fair Housing Act, “which clearly supports a business’s decisions to set the customers and areas it serves based on legitimate business reasons such as price.”
“Even though the suit is wrong about the law, the issues it raises are important to Redfin, to our society and to me,” Kelman wrote. “We have a long history of expanding into lower-priced communities; we want to expand faster.”
He said the company’s desire to pay agents and other staff a living wage with benefits has kept it out of low-priced neighborhoods and rural communities, where sales prices won’t generate enough commission. But it’s not a matter of greed, he said, noting the company has never recorded an annual profit.
“It’s just hard to pay employees a living wage, while giving good prices to consumers,” the CEO wrote.
Like many cities, Kansas City’s neighborhoods were largely segregated by race for generations. Racially restrictive covenants were routinely recorded in plats and deeds, specifically banning Blacks, Jews and other ethnic groups from certain areas. While long ago outlawed, the legacy of those actions persist with many Black residents still living in low-income neighborhoods east of Troost, the city’s historical racial dividing line.
“Redlining, and the residential segregation it causes, represents America’s oldest racist and discriminatory real estate policy,” Lisa Rice, president and CEO of the National Fair Housing Alliance, said in a news release. “The fact that these actions are still occurring, let alone by a major corporation, demonstrates why we need strong civil rights protections now more than ever.”
This story was originally published October 30, 2020 at 5:00 AM.
