Zillow discovers a racial gap in private housing supply in the Chicago metro
Zillow identified majority white areas through data Urbanity and the 2019-2023 census American Community Five-year estimates from the study of the number of housing units by race of householder.
Race, not price, influences private listings, says Zillow
Of the homes in the higher price ranges, 8.9% were privately listed in predominantly white areas, compared to 5.1% in predominantly non-white areas. Zillow claims that racial composition, not price, is the most notable influence on more private listings. According to Zillow, limiting who can view a property by placing it in a private advertising network could reinforce existing patterns of segregation, especially in markets with a history of racial segregation.
Zillow claims the findings highlight “how private listing systems can unintentionally reinforce racial segregation and limit access to housing opportunities.” The report warns that if the use of private listing networks increases in certain areas, it could “strengthen inequality.”
“Chicago shows what can happen when parts of the housing market are left in the shadows,” Orphe Divounguy, a senior economist at Zillow, said in a statement. “Private marketing may sound attractive, but it risks deepening segregation and limiting opportunity, moving us further away from the fair and open housing market that consumers deserve. The data shows clear disparities, and good intentions are no longer an excuse for expanding digital redlining.”
While Zillow acknowledged that some agents and brokers like to use private listing networks to test their sales pricing strategy and limit the number of days a property spends on the open market, the company wrote that if agents “focus on ‘exclusive access’ as a business strategy,” it could risk reducing fairness and transparency in the housing market.
Zillow is currently in court
It’s important to note that Zillow is currently in court to defend its policy on listing access standards.
The policy, which went into effect June 30, prohibits listings from the site that have been publicly marketed more than one business day before the listing is available for display on Zillow. Compass filed a lawsuit against Zillow in mid-June, just before the enforcement deadline, claiming the policy stifles competition and causes irreparable harm to Compass.
Homebuyers deserve to see all the homes on the list
“Fifty-seven years after the Fair Housing Act promised an end to housing segregation, we are still waiting for that promise to be fulfilled,” Michael Chavarria, executive director of the HOPE Fair Housing Center, which works to eliminate housing discrimination in much of Illinois, said in a statement. “Homebuyers deserve the right to see all the available homes in an area – not to have those choices quietly made for them.”
The report quotes a study by Elizabeth Korver-Glenn, a professor at the University of North Carolina at Chapel Hill, who found that private mentions reinforce racial segregation even without explicit or intentional bias.
In the report, Korver-Glenn wrote that she found that since real estate agents generate sales primarily through their social networks, this means that “white agents end up working primarily with white home buyers and sellers, while Black and Latino agents deal with more diverse clients.” As a result, Korver-Glenn says Asian, Black and Latino consumers are disproportionately excluded from information about private homes in predominantly white areas.
She adds that private listings are “a good example of a practice that lawmakers are using [who are] committed to disrupting the stubbornly persistent racial segregation in the housing market can and should focus on that.”
MRED did not return a request for comment.
Earlier this month, news of a brewing dispute between Zillow and MRED surfaced, as Zillow attempted to begin enforcing its Listing Access Standards policy, which bans listings from its site if they have been publicly marketed for more than one business day before being available for viewing on Zillow via syndication or IDX or VOW data feeds. Zillow began rolling out enforcement of the policy nationwide in late June. By early November, the policy was live in more than 500 MLSs across the country.
If the policy is enforced under current conditions within the MRED service area, listings appearing on the MLS’s private listing network may be subject to exclusion from Zillow.
MRED launched its private listing network about a decade ago after surveys of subscribers showed many were frustrated with the number of small listings and sales. MRED’s policy required a property to be listed on the MLS within 24 hours of being publicly marketed, but agents and sellers had the option of posting it on an MRED’s private network, which allowed other MLS subscribers to see the listing, but it did not syndicate it, giving the seller more control over how the listing was marketed.
