Join industry visionaries Pete Flint, Spencer Rascoff, Ryan Serhant and more at Inman Connect New York, Jan. 24-26. Punch your ticket to the future by joining the smartest people in real estate at this must-attend event. Register here.
At a news conference Wednesday, Minnesota’s largest local Realtor association apologized for its role in creating a real estate system that has denied people of color equal access to housing based on their race.
Minneapolis Area Realtors, which serves more than 9,000 agents, brokers and appraisers across five counties in the Twin Cities metro area, also announced four initial policy changes that the trade group hopes will help reduce racial disparities in homeownership.
“[W]e must acknowledge and apologize for the hand the Minneapolis Area Realtors Association had in creating one of the most significant racial disparities in housing gaps in the nation — particularly for Black Minnesotans,” reads the apology, which the trade group said was created by a task force that worked for nearly two years and whose text was approved unanimously by MAR’s board of directors.
“We know we’ve benefited from a system that was set up to effectively lock folks out of opportunity based on race, for generations. Decades later, that system works largely as intended, and we are ashamed of our part in it. We were on the wrong side of history.”
“Minneapolis Area Realtors apologizes to all members of the community who have been burdened, denied service, or ignored by our actions,” MAR added in a position paper accompanying the apology.
MAR’s apology follows others made by the National Association of Realtors, the Atlanta Realtors Association and the Chicago Association of Realtors. But MAR believes it is the first to release its apology in tandem with policy changes.
“We are the first [Realtor association] to our knowledge that has accompanied the apology with corrective policy action,” said MAR CEO Carrie Chang at the news conference.
“That was important to us. The time that it took for this task force to get together was not to draft an apology statement. It really was to decide and discern what does that mean to us, and what therefore should we do. So bringing along a little more of the ‘we are understanding our role in it and now we want to create change.'”
MAR’s 2022 president Denise Mazone read the apology at the conference, which was streamed live on Facebook. Mazone, named earlier this year, is the first Black president in the trade group’s 135-year history.
“Our apology and efforts to engage in policy change are overdue and are important steps for us because of the deep and lasting impact our actions have had on people of color in Minnesota, especially Black Minnesotans,” Mazone said in a statement.
“We have one of the largest homeownership gaps in the country. Not only do we regret the industry’s role in that, but we also know we must do something to change that.”
During the news conference, Mazone acknowledged that she got “emotional” as she was reading the apology.
“I was thinking about just my upbringing in general, how my parents would be very happy that I’m taking this step in a really brave way to talk about this,” she said. “A lot of people think it could be controversial or whatever, but, you know, I think this is the time. It’s long overdue.”
In its position paper, MAR noted that the white homeownership rate in Minnesota is 76.9 percent compared to 43.6 percent for people of color in the state. For Black Minnesotans, the homeownership rate is even lower: 25.3 percent — a more than 51-point gap from the white homeownership rate and down from a peak of 46.2 percent in the 1950s. The federal Fair Housing Act, which NAR initially opposed, was passed in 1968.
“It has been well documented that Realtors directly contributed to residential racial segregation throughout the United States,” MAR’s position paper states.
“Additionally, Twin Cities Realtors perpetuated the legitimacy of racially restrictive and religiously restrictive deeds, commonly known as ‘racial covenants’ which almost universally excluded Black people from purchasing white-owned homes in predominantly white neighborhoods.
“Although explicit housing discrimination of people of protected classes is now unlawful, the impact of these historic actions continues to cause barriers to their homeownership today.”
MAR acknowledged that “discrimination against Minnesotans of color continues through the present day” and Jackie Berry, MAR board director; chair of the task force; and chair of the Diversity, Equity, and Inclusion Committee that was part of the task force; pointed to both systematic and individual instances of discrimination.
“If you look at some of the appraisals that have been done in homeownership and the disparity there when having to prepare homeowners of color to potentially take down their own family pictures [and] make changes in their home, so that they have a fair appraisal coming through,” Berry, who is Black, said at the conference.
“Can you imagine having to do that to your own home, to go through and make changes just so that you get the same chance at value as others have had?”
She has also experienced being confirmed for a showing and being denied that showing when she arrives with buyer clients of color.
“That’s devastating to have to turn to my clients and say, ‘I’m sorry, guys. We’re not welcome here.'”
The policy changes
MAR released a policy position paper on the four policy changes it is making, which the trade group said will only be the “first step” in a series of proposals the association will bring forward with the aim of closing the racial homeownership gap.
- Minneapolis Area Realtors recommends adoption by NAR of public policy supporting development of a Federal Down Payment Assistance Program aimed at first-time and first-generation homebuyers
“Multiple down payment assistance programs exist at the local and state level in Minnesota and throughout the country,” the paper states. “Minneapolis Area Realtors Board of Directors believes this is not enough to address the persistent disparities we see today.”
According to MAR, on Sept. 15, its board approved this policy and sent a letter to NAR and its leadership making the recommendation.
“NAR policy setting committees are likely to take up the issue of down payment assistance at our annual meeting in November,” a NAR spokesperson told Inman in an emailed statement.
Simultaneously with its apology in 2020, NAR announced the release of an interactive training platform called Fairhaven, designed to help fight discrimination in the housing market. The trade group also released a 50-minute video on implicit bias. But at NAR’s annual conference last year, then-NAR President Charlie Oppler said, “[w]e’ve got work to do,” noting that, of 1.5 million Realtors nationwide, only 30,000 members had completed the Fairhaven training and 28,000 had watched the implicit bias video.
- Minneapolis Area Realtors will widely inform its members of the significant racial equity impacts of the change to the 2022 purchase agreements.
According to MAR, earlier this year, the Forms Committee of the state Realtor association, Minnesota Realtors, removed language from its purchase agreement form that previously required homebuyers to disclose to the seller if they were using any grant, bond or other down payment assistance program in order to purchase a home.
“This successful effort was led by members of Minneapolis Area Realtors (MAR) who understood that Minnesotans of color are far more likely to seek out financial assistance in the form of grants, bonds, and public loans,” the paper states.
“They also understood that disclosing these resources encouraged additional scrutiny of the buyer without any evidence to believe that these funds would meaningfully hinder the buyer’s ability to close on a home.”
The trade group said it would ensure that all of its members are aware that this requirement has been removed from the purchase agreement form and that it held its first class calling out the change last month.
- Minneapolis Area Realtors commits to expanding financial support of the Pathway to Achievement program.
Minnesota Realtors’ Pathway to Achievement program is open to Realtors starting out who are “outside of Minnesota’s racial majority and demonstrate a commitment to becoming a successful real estate salesperson.” The scholarships cover recipients’ Realtor association dues for the first year; up to six months of multiple listing service (MLS) and lockbox fees; and specific educational, mentoring, and networking opportunities, to the tune of up to $1,600 total.
The program aims to increase diversity in the real estate profession. MAR notes that 17 percent of Minnesotans are people of color, but only 2 percent of the state’s Realtors are.
“Realtors often work and serve clients in the communities within which they are active, so it follows that many prospective homebuyers in some communities may not have the same access to a Realtor,” MAR’s paper states.
MAR committed to expanding the number of scholarships it will financially support from four to six beginning in 2023.
- Minneapolis Area Realtors will incorporate education intended to reduce racial disparities in homeownership into required New Member Orientation.
According to MAR, by November 2022 the trade group will incorporate three main themes into its required New Member Orientation program:
- A succinct history of racism in the real estate industry through the present day. We will specifically acknowledge the role Realtors had in perpetuating racial segregation and the disinvestment in communities of color.
- The current racial disparities in homeownership throughout the Twin Cities. We will describe the impacts of these disparities, and how MAR considers this an unacceptable reality which our association will work to eliminate.
- MAR’s current efforts to close the racial homeownership gap. We will review our intentions to lead the industry in eliminating racism in real estate, and how all Realtors can contribute to a more equitable industry.
MAR said it would also widely distribute information on the three themes to existing Realtors during months focused on fair housing and homeownership and collaborate with other industry partners such as NAR and Minnesota Realtors to do so.
“Many involved in the real estate industry are not fully aware of the extent to which Minnesotans of color are disadvantaged in home buying opportunities,” MAR’s paper states.
“Realtors have an obligation to be informed of the history of racism in real estate, our association’s responsibility to work toward an equitable housing market, and the actions Minneapolis Area Realtors (MAR) has taken to lead the real estate industry in this effort.”
The Twin Cities chapters of the National Association of Real Estate Brokers (NAREB), National Association of Hispanic Real Estate Professionals (NAHREP) and the Asian Real Estate Association of America (AREAA) reviewed and supported MAR’s apology, according to MAR.
MAR has provided a form on its website for brokers who wish to add their names to a list of supporters of the apology.
Teresa Boardman, an Inman contributor and a broker who belongs to the St. Paul Area Association of Realtors, told Inman MAR’s apology is “a great move.”
“Because doing something is better than doing nothing and if an organization is going to claim responsibility for doing something wrong and people were/are harmed by that an apology is in order,” she said via email.
She doesn’t know if the policy changes announced will lessen the racial homeownership gap, however.
“Right now there isn’t a way to measure how the actions of Realtors impact the homeownership gap,” she said.
“If we were solely responsible for it then it would be easier to measure the impact. I suppose if the homeownership gap gets smaller we could say it is because Realtors changed some policies and apologized.”
Editor’s note: This story has been updated with comments from NAR and Twin Cities real estate broker Teresa Boardman.