The History of Steering in Real Estate

5 Min Read
Published May 8, 2023
Agent shakes hands with diverse couple in an empty home.
Written By
Reviewed By

Steering is a form of housing discrimination that occurs when a prospective buyer is guided toward or away from purchasing a home in certain neighborhoods because of their race or ethnicity. Steering is far from a new practice, and even though it’s illegal, it persists today.

Here’s a crash course on the history of steering.

Origins of Steering

These days, steering usually occurs in subtle ways, such as when a real estate agent only shows Black homebuyers listings in predominantly Black neighborhoods under the assumption that this is what the buyers prefer.

In the past, steering was more explicit, with real estate agents refusing to show Black buyers homes in white neighborhoods.

Following the Civil War and the abolition of slavery, state and local governments passed Jim Crow laws that enforced segregation for Black Americans. In addition to segregating restaurants, buses, and trains, these laws prohibited Black Americans from living in white neighborhoods.

In response to the Great Depression and a crushing housing shortage, the U.S. government created the Federal Housing Administration and Home Owners’ Loan Corp. in 1934 to help people get home loans or refinance their mortgages. This assistance was made available only to white homeowners, as the FHA refused to insure mortgages in Black neighborhoods.

This policy was known as redlining because these federal organizations printed maps of urban areas and color-coded the neighborhoods where it was supposedly riskier to insure mortgages. The areas shaded red were predominantly Black neighborhoods, which made it difficult for Black families to get home loans. Even if they were able to get approved for a mortgage, the interest rate would be sky-high — which became another barrier to homeownership.

Before there were laws to prevent housing discrimination, the government, mortgage lenders, and real estate agents used steering and redlining to maintain segregation. For example, highways often were built right through minority neighborhoods or used as barriers to separate Black neighborhoods from white neighborhoods. Generations of nonwhite Americans struggled to get a mortgage, and when they could get a loan, they could only buy homes in neighborhoods that had been designated for their race.

As recently as the 1960s, the FHA would not allow Black families to buy homes in the suburbs, claiming that it would reduce property values in those areas. In reality, property values in white neighborhoods often increased when Black families moved in because those buyers were willing to pay more since their options already had been limited.

Impact of Steering

Steering has hurt homebuyers and families from various racial and ethnic backgrounds for decades. Here’s a look at some of the consequences of steering:

  • Minority homebuyers have had fewer housing options.
  • Minority groups often have been entirely excluded from moving to certain areas.
  • It’s been more challenging for minority buyers to afford a mortgage and find a home.
  • Homes in Black neighborhoods appraise for less and appreciate slower.
  • Schools and neighborhoods remain segregated.
  • Upward mobility is hindered for minority groups.
  • Minority homebuyers are steered toward neighborhoods with more pollution.

Fair Housing Act of 1968

Steering was made illegal by the Fair Housing Act of 1968. Passed by Congress and signed by President Lyndon B. Johnson, the Fair Housing Act prohibited housing discrimination on the basis of race, color, national origin, religion, familial status, or disability.

The Fair Housing Act has been amended a few times since it originally passed. In 1974, the act was amended to protect against housing discrimination on the basis of sex, which now includes sexual orientation and gender identity. In 1988, Congress passed the Fair Housing Amendments Act, which expanded the scope of the original legislation and added protection against discrimination based on familial status and disabilities.

Steering Today

While the Fair Housing Act prohibits explicit housing discrimination, it can be difficult to spot steering and enforce violations. Because steering can manifest in subtle ways, it often goes unnoticed or unreported. As a result, towns and cities in the U.S. are still almost as segregated as they were over five decades ago when the Fair Housing Act was signed.

A recent report by Newsday looked into the prevalence of steering in communities on Long Island in New York. The study found that real estate agents guided white homebuyers to different areas than nonwhite homebuyers 24% of the time.

The newspaper also reported evidence of unequal treatment from real estate agents:

  • 19% of the time against Asian homebuyers.
  • 39% of the time against Hispanic homebuyers.
  • 49% of the time against Black homebuyers.


Here are answers to some frequently asked questions about the history of steering.


Ready for more learning?

Here’s some other helpful articles

Related Articles

**itsHome, a LMB Mortgage Services, Inc. company, is not acting as a lender or broker. The information provided by you to itsHome is not an application for a mortgage loan, nor is it used to pre-qualify you with any lender. If you are contacted by a lender or broker advertising within our network, your quoted rate may be higher depending on your property location, credit score, loan-to-value ratio, debt-to-income ratio, and/or other factors. itsHome does not offer its matching services in all states. This loan may not be available for all credit types, and not all service providers in the itsHome network offer this or other products with interest-only options. The information that we provide is from companies which itsHome and its partners may receive compensation. This compensation may influence the selection, appearance, and order of appearance on this site. The information provided by itsHome does not include all financial services companies or all of their available product and service offerings. We use cookies to track data and provide you with the best possible experience. By proceeding you consent to the use of these cookies. For more information, see our Privacy Policy.

itsHome, a LMB Mortgage Services, Inc. company NMLS #167283,