We are at a critical juncture in the evolution of Washington residential real estate. Innovation, equity and a realignment of ideals are taking shape.
Notably, 2024 marks the start of a transformative journey as the state addresses – like no other time in history – racial inequities within the housing sector. From untangling historical injustices to pioneering financial support, Washington is rewriting the important narrative of homeownership.
There is no better time to chart a more inclusive future as we celebrate the January birth of great civil-rights leader Dr. Martin Luther King Jr. and prepare to mark Black History Month in February. Today, two crucial threads weave together an optimistic path of justice for all.
Even before this year, the state began to confront race-based covenants embedded in property deeds, a haunting remnant of discriminatory practices of decades past. As covered before on this blog, documents – from deeds to covenants and community bylaws – could include language that prevented certain classes of people from living in the same area as white residents. These acts were deemed legal by the Supreme Court until 1948 and by Congress until it enacted the Fair Housing Act (Title VIII of the Civil Rights Act of 1968).
Tens of thousands of documents with language against protected classes of people still exist in our state even as they no longer hold legal standing. Using innovation and a lot of hard work by dedicated organizations and individuals, efforts are now well underway to expunge these harmful words – without whitewashing history – and pave the way for a more equitable future.
John L. Scott Real Estate was among the first to help address the issue. The third-generation, family owned company collaborated with Amazon Web Services by using AI to find race-based language in state and county property documents. John L. Scott offers a website for homeowners to better understand what’s at stake and allow them to take steps toward redacting the words within their property’s collection of recorded documents – usually without the need for an attorney.
“This is a do-good project, not a strategic enterprise for us,” said Phil McBride, executive VP of strategic initiatives for John L. Scott. “As an industry, we owe it to the country to right the wrong.”
In speaking with ZDNET, McBride said there is national interest in the project, and the company is using open-source code for this initiative to expand across the country.
Additionally, a groundbreaking law offers financial assistance through the Covenant Homeownership Program (CHP) to those who have endured housing discrimination. While a small number of states have been at the forefront of erasing the housing wrongs of yesterday, none appear to be as forward-thinking as Washington to fund a course of remediation.
This law, which went into effect Jan. 1., includes a $100 increase in fees for each document registered with a county’s Recording Department. The fee is collected as an assessment to fund the CHP. The program calls for our state’s Department of Commerce to partner with the Washington Housing & Finance Commission to develop, implement and evaluate credit schemes aimed at reducing racial disparities in homeownership. The monies can be used, for example, to provide financial assistance on down payments and/or closing costs to those who qualify.
The $100 is in addition to fees currently collected to record most documents. The assessment boosts recording fees now to $303.50 for the first page plus $1 for each additional page. The program is expected to raise an estimated $75M per year for homeownership.
The funds will generally be made available to first-time home buyers who 1) were Washington residents before the 1968 Fair Housing Act was enacted, 2) can show they were prevented from homeownership based on covenants against property, or 3) are the descendants of those who would have qualified under the first two requirements.
“For many decades, restrictive covenants inserted into deeds and mortgage documents codified exclusion, divided communities and locked many Americans out of the benefits of property ownership,” said the National Association of Realtors®. The nation’s largest trade association added that it is “committed to confronting the legacy of historic discrimination, closing the racial homeownership gap, and building vibrant, thriving communities where everyone can flourish.”
Racial inequity in housing dates back nearly a century when in 1938 the U.S. government created the Federal National Mortgage Association. Better known now as Fannie Mae, it began buying mortgages from banks and freeing up financial institutions to dramatically boost their lending power. However, lending guidelines established by the Federal Housing Administration (FHA) severely limited Blacks access to those mortgages.
Essentially, the government helped to institutionalize discrimination within the lending system. This systemic bias was even prevalent among military servicemen and women, in which white soldiers received preferential treatment on VA home loans while non-whites were often denied similar benefits. This helped to create a racial homeownership gap that, sadly, has widened over the decades.
Equitable access to housing plays a critical role in promoting social justice and reducing racial disparities. Barriers to fair housing still infiltrate aspects of real estate. That’s why everyone in our industry must remain steadfast and uphold the spirit of a law that was enacted one week after the 1968 assassination of Dr. King.
Let us hope and pray that the broader strokes of these groundbreaking endeavors – erasing the poisonous race-based covenants and financing home-buyer assistance to those affected – are poised to reshape the very foundations of residential real estate across the Evergreen State.
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I am proud to share that all Washington-based brokers, including John L. Scott Real Estate colleagues, have taken state-mandated training called Fair Housing for Real Estate Brokers and Managing Brokers as part of their biennial real estate license renewals. Since mid-2022, the 6-hour course must be completed before a broker’s license is renewed. In addition, beginning in 2025, all members of the National Association of Realtors® – myself included – will be required to take two hours of fair housing training every three years.
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RESOURCES AND RELATED STORIES
History of Racial Restrictive Covenants in Seattle
Racial Restrictions Found in King County Communities
Driving Change – Restrictive Covenants Modifications
The Importance of Fair Housing in Our Society and for Seattle
A Call to Erase an Ugly Part of Our Local History and Move Forward as One
Investing Time, Technology to Correct Decades of Real Estate Wrongs
Seattle’s Connection to Dr. Martin Luther King Jr.
Martin Luther King Jr., Housing Inequality and the ‘Missing Middle’