by Graham Ambrose, Kentucky Center for Investigative Reporting
November 10, 2020
Fair housing organizations are accusing the online real estate broker Redfin of systematic racial discrimination in Louisville after an investigation found non-white neighborhoods in the West End and South End received fewer Redfin services than white neighborhoods in the eastern parts of the county.
The results point to a modern-day practice of “digital redlining” reminiscent of the policies that racially segregated Louisville during the mid-twentieth century, according to the Lexington Fair Housing Council, a nonprofit that investigates allegations of housing discrimination in Kentucky and one of ten plaintiffs that filed the suit against Redfin in the U.S. District Court in Seattle.
“People should care because we know how much housing impacts everything,” said Arthur Crosby, executive director of the Lexington Fair Housing Council. “Your access to education, your access to the internet, your access to health, your access to lending, your access to credit, your access to safety — all those things just depend on where you live.”
The plaintiffs say their two-year nationwide investigation shows Redfin was less likely to offer services — including virtual tours and professional photos, online promos, and realtor services — for homes listed in neighborhoods with large numbers of racial minorities.
The Fair Housing Act, part of the Civil Rights Act of 1968, outlaws housing discrimination on the basis of race.
In addition to Louisville, the plaintiffs studied the metropolitan areas of Baltimore, Chicago, Detroit, Kansas City, Long Island, Memphis, Milwaukee, Newark and Philadelphia.
The investigation compared homes listed in “extremely non-white” neighborhoods to homes listed in “extremely white” neighborhoods and then evaluated differences in services offered by Redfin.
On a single day in November 2018, there were 108 homes listed in "extremely non-white" zip codes in Louisville. None were offered Redfin's "best available service" designation. By comparison, 61% of the more than 2,300 homes listed in "extremely white" zip codes were offered the site's best available service.
In a follow-up two years later, the results were virtually identical: no homes in "extremely non-white" zip codes were offered Redfin's best available service, whereas two-thirds of homes in "extremely white" zip codes were offered the best available service.
The investigation also calculated that homes in "extremely non-white" neighborhoods such as Russell and California were about six times more likely to be offered "no service" by Redfin than homes in "extremely white" neighborhoods such as Crescent Hill and Germantown.
“Buyers and sellers of homes in non-white areas are far less likely to be offered Redfin’s services and discounts than buyers and sellers of homes in white areas,” the lawsuit concludes.
In Louisville, the allegations of digital redlining closely track with the legacies of residential redlining, or the practice by which the government and companies denied services such as mortgages or insurance to residents of predominantly Black areas, starving whole neighborhoods or wealth and other resources.
Cathy Kuhn, executive director of the Metropolitan Housing Coalition in Louisville, said Redfin’s practices affect all Louisvillians by limiting residential options. “We want a community where people have real choice about where they want to live,” she said.
In a statement released last week, Redfin CEO Glenn Kelman denied the company is breaking the law.
“The challenge is that we don’t know how to sell the lowest-priced homes while paying our agents and other staff a living wage, with health insurance and other benefits,” Kelman wrote. “This is why Redfin agents aren’t always in low-priced neighborhoods. It’s why Redfin doesn’t serve many rural towns.
“Even though the suit is wrong about the law, the issues it raises are important to Redfin, to our society and to me. We have a long history of expanding into lower-priced communities; we want to expand faster,” Kelman added.
A main target of the lawsuit is Redfin’s “minimum price policy,” a price floor to qualify a home for Redfin services. The housing groups charge the policy is “arbitrary” because Redfin is guaranteed a minimum commission when serving as the seller's agent, regardless of the listing price of the home.
“In predominantly non-white areas, Redfin sometimes has not offered its brokerage services to buyers and sellers of homes that were listed above the minimum price threshold,” the lawsuit claims. “In predominantly white areas, on the other hand, Redfin engaged in less case-by-case evaluation and was more likely to offer its services to buyers and sellers so long as the home was listed above the minimum price threshold.”
For fair housing advocates like Crosby of the Lexington Fair Housing Council, the investigation brings attention to lingering consequences of discrimination.
“We need to be honest in our conversation that Louisville is not segregated just because it was always like that or because that’s where people wanted to live,” Crosby said. “Louisville is segregated for specific, systemic things we did in the past, and we just felt comfortable leaving them in place.”
Correction: The investigation alleged homes in "extremely non-white" neighborhoods such as Russell and California were about six times more likely to be offered "no service" by Redfin than homes in "extremely white" neighborhoods such as Crescent Hill and Germantown. The neighborhood descriptions were inverted in a previous version.