John Jones, Nareit vice president of government relations, participated in a webinar hosted by Scout, Tuesday, June 23, 2020, with a panel made up of real estate executives, media personalities, and academics discussing the history of segregation and inequality in the real estate industry.
The panel began with an overview of historically problematic and racist policies that have existed in the real estate industry with a discussion led by moderator, Karen Chapple, professor and chair of city & regional planning at the University of California Berkeley. Chapple touched on the policies of redlining, exclusionary zoning, public housing, white flight, and several other topics, then the panelists shared their experiences in real estate as people of color, addressed current problems facing racial minorities in real estate, and proposed suggestions on what the industry can do or policies the industry can support to help rectify the damage done.
Diversity in Corporate Real Estate
Nareit’s Jones spoke about creating opportunities for greater diversity in executive levels of the real estate industry, and all panelists agreed that support for increased African American representation on corporate boards and in c-suite positions from within the industry is essential going forward.
Jones talked about needed additional policy steps, including Nareit-supported H.R. 5084, the Improving Corporate Governance Through Diversity Act of 2019.
On November 18, 2019, the U.S. House of Representatives passed H.R. 5084, a bill that would have public companies annually disclose the gender, race, ethnicity, and veteran status of their board of directors, nominees, and senior executive officers.
Combatting Segregation in Real Estate and Finance
The conversation also covered segregation in real estate and finance, with Jermaine Miller, Founder of MiLL Real Estate and CEO of Jermain Miller Consulting, discussing his experience working as a real estate agent in New York City and how de facto segregation has often kept Black agents out of the most expensive neighborhoods.
After ten years in the industry, Miller was tired of seeing agents of color having to struggle to build their networks and not get the support they needed from the larger brokerages, inspiring him to start his real estate and consulting firms in New York City with the aim of helping African American agents reach their dreams by providing them with that crucial networking support in historically segregated areas.
Nely Galán, founder of The Adelante Movement and the first Latina President of a U.S. television network (Telemundo), has been holding webinars during the COVID-19 crisis for multicultural small business owners on how to apply for SBA and PPP loans.
“The banking industry has become extremely low touch…and we need high touch,” said Galán. She talked about how difficult and overwhelming it can be to be a person of color walking into a bank to ask for help from people who do not look like you. She mentioned the importance of working with a Latina banker when she started her business and its impact her level of trust.
“We come from communities where we don’t feel like we are part of this system…We need to be able to walk into a bank and see someone who looks like us, so we feel comfortable.”
The Legacy of Redlining
When addressing the history of redlining in U.S. communities, Joshua Pollard, a real estate investment expert, asset manager, and owner of mission-driven real estate investment firm Omicelo, spoke about the importance of real estate as a financial saving grace for many families, but that the legacy of redlining still impacts property values. In communities of color, this means that many of these homes are worth the same or less than the purchase price. He pointed to the need for reform in the appraisal industry as a potential solution.
“You have an appraisal industry, unfortunately, at this time is still allowing some of these softer lines - now that they are not explicit in maps - to really define which neighborhoods have sufficient, for lack of a better word, institutional capital to grow… I think some of the things we can do about what redlining has meant is to be a little bit more aggressive in terms of some of those industries that actually continue to hold those back.”
Technology and Real Estate
In addition to addressing policy moves to support diversity in corporate real estate, Jones also discussed his time working on Capitol Hill and how it led him to understand the importance of technology and finance when it comes to racial minorities in real estate.
“When I became a chief of staff for a congressman from Kansas City – Congressman Emmanuel Cleaver, former chairman of the Congressional Black Caucus – he empowered me a great deal to focus on the issues I was interested in, which were banking and real estate and how that intersected with emerging technology. Specifically, how those industries and applications were impacted by existing racial biases in the world, in particular for African Americans.”
Jones commented that there are many benefits emerging in property technology (PropTech) -the application of information technology, big data, and platform economics with the goal of making real estate transactions quicker and more efficient.
“Within the context of real estate fintech, we can’t let an algorithm become a predetermined solution because one thing this new technology can’t measure is the ingenuity of an idea and the work ethic and grit the business owner brings to their business. If we are going to predetermine lending based on a zip code or where someone happens to reside, and we are going to factor that information into the interest rate on the loan they are applying for, that is problematic,” said Jones. “It all comes down to improving how this technology is used moving forward.”
Jones made the point that if innovation doesn’t go hand in hand with protection for minority entrepreneurs, then that’s not true innovation, because true innovation creates value and saves energy, time, and resources.
A replay of the webinar can be found here.