Who decides what our neighborhoods look like? And who profits from these projects? The answer is a combination of real estate developers, brokers, investors, agents and property owners — the overwhelming majority of whom are white. For generations, real estate ownership in the U.S. by people of color was either impossible or severely restricted. And these legacies of racism persist.
According to the Federal Reserve, whites — who make up almost 60% of the U.S. population — own more than $30 trillion in residential, commercial, industrial and agricultural property. Blacks and Latinos — who together account for more than 30% of the population — own just over $5 trillion. Nearly three-quarters of white Americans own their own home, compared to 48% of Latinos and 44% of Blacks. In rural areas of the U.S., whites own an astonishing 98% of the land.
More wealth is created and transferred across generations through real estate than almost any other asset. When marginalized communities don’t own property, they don’t have control over their physical space or the wealth it creates, and they cannot pass it down to future generations. They struggle to influence decisions about their own communities. Value is removed from the community via the payment of rent. Neighborhoods are subject to the choices of developers, municipal governments and other outside groups.
Minorities in real estate
We need more people of color in the real estate industry who can shape where we live, work, socialize, shop and worship. Currently, 75% of real estate agents and 97% of property appraisers in the U.S. are white. White professionals also dominate the commercial real estate sector.
Real estate is a particularly insular and relationship-driven business. Without connections or family in the industry — and without professionals who look like you — the barriers to entry are high. To expand the pipeline that leads people of color into real estate, an entire culture needs to change.
This starts with greater awareness and education. Concepts like getting a mortgage, taking out a line of credit, buying and selling a property and becoming a landlord are rarely part of classroom discussions or dinner-table conversations, unless your family happens to be in real estate.
The picture presented in popular culture doesn’t help. Shows like Selling Sunset and Million Dollar Listing are dominated by white cast members and offer a skewed view of what it means to be in the business. Selling houses, especially high-end homes, is only one sliver of the real estate world and its impact.
Young people must learn how real estate works and how it affects our lives. That education should come from professionals, not celebrities. In fact, we could all benefit from understanding the power that real estate has in our society and learning how to better navigate it.
Addressing the problems
One program that can help is UrbanPlan, an initiative by the nonprofit Urban Land Institute that offers educational, experiential programming for high schools, universities and community groups. Hundreds of trained real estate professionals volunteer to teach participants about urban development, land use, the housing market and non-market forces that shape their communities.
Universities also have a crucial role to play. Many public colleges — including historically black colleges and universities (HBCU) and other minority-serving institutions — offer very few real estate courses. Arizona State University’s W.P. Carey School of Business has partnered with the HBCU Grambling State University to help Black students acquire the skills they need to navigate the world of real estate, whether as a career path or simply as homebuyers. ASU professors offer live, online classes to Grambling students who otherwise wouldn’t be able to access them.
Educational efforts like these can help people of color learn about available opportunities in real estate. Given the economic vulnerability of many communities of color in the U.S., academically-inclined minority youth are often pushed towards professions that are seen as “safe bets,” like medicine, engineering, accounting and law. A fear of failure, especially when you don’t have the financial safety net of more well-established white families, can keep people from considering a career in real estate. Students whose understanding of the profession is limited to selling houses may not realize that their interests in fields like law, finance or engineering can translate into success in real estate.
Beyond getting the job
People of color also need support once they enter the field. Whether you’re renovating homes or selling skyscrapers, real estate requires networking and patience. It’s a competitive business built on relationships. And it can take three to five years just to get established. Black and Latino hires in the sector won’t make progress if they’re pushed out before they have a chance to succeed. Partnerships between professional associations like NAIOP and ICSC, nonprofits, industry leaders and universities that aim to increase representation should also focus on mentorship and support, so that people of color can get a foothold in the industry. All of this starts with properly preparing young people to step through the door.
Real estate isn’t simply a business. It is the physical manifestation of a community. Ownership and control of property offers communities security, power and long-term prosperity. To change the field, we need to address every part of the pipeline, starting with exposing young people to the impact real estate has on our world. Only then can we help ensure that everyone has a hand in shaping what our communities look like.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
Mark Stapp is the Director of Real Estate Programs at Arizona State University’s W.P. Carey School of Business. Murphy Cheatham is the Diversity, Equity, and Inclusion Program Manager at the commercial real estate firm CBRE.
To contact the editor responsible for this story: Sarah Wheeler at [email protected]