LGBTQ+ discrimination in homeownership still bars the path to wealth creation. Here's how it looks and what you can do about it.
Despite the progress the LGBTQ+ community has made in securing rights and visibility over the past several decades, discrimination in homeownership remains pervasive.
Just 49% of LGBTQ+ people own their homes versus nearly 66% of the population overall, according to a recent survey by the LGBTQ+ Real Estate Alliance and Realtor.com. And 17% of all respondents said they had experienced discrimination when either buying or renting a home.
That number more than doubled among members of the transgender community. 44% of trans respondents saying they had experienced discrimination or felt that perhaps they had.
Even as Pride Month celebrations ring out, LGBTQ+ discrimination remains in the housing industry.
LGBTQ+ discrimination not only means that members of this community don’t get to realize their dreams of homeownership. They are also denied the financial benefits of owning a home.
Buying a house offers emotional and social benefits, including putting down roots in a community and the sense of long-term stability that comes with having a place to call your own.
Economically, home ownership can provide tax advantages and opportunities to build wealth — including generational wealth — through home equity.
Yet 17% percent of the respondents to the LGBTQ+ Real Estate Alliance and Realtor.com survey indicated they had been discriminated against when looking for a home to buy or rent. An additional 12% thought they had experienced discrimination, but couldn’t be positive.
More than two-thirds thought the discrimination had occurred because of their LGBTQ+ orientation. An additional one-quarter indicated the discrimination was due to their gender or gender identity.
A fear or expectation of discrimination can stop prospective LGBTQ+ homebuyers before they even start the homebuying process. A 2019 report from the National Association of Gay and Lesbian Real Estate Professionals and Freddie Mac revealed that 58% of members believe that fears of discrimination prevented LGBTQ+ clients from pursuing homeownership.
In a 2020 report, “LGBT People and Housing Affordability, Discrimination, and Homelessness,” the Williams Institute at the UCLA School of Law reported that when LGBTQ+ residents do buy a home, they face the risk of discrimination from real estate professionals, landlords, and members of the local community.
“Throughout their lives, LGBT adults face the prospect of being denied a lease or a home sale, charged a higher rent or sales price, denied timely repairs by a landlord, evicted from a rental unit, or other forms of housing discrimination,” the report said. “Some LGBT people also experience violence, harassment, and being made to feel unwelcome by neighbors and landlords.”
The report also indicated that there is evidence of discrimination in mortgage lending. Same-sex borrowers had a 3-8% lower approval rate and often received higher interest rates than different-sex borrowers. This despite there being no evidence that they were higher-risk clients.
Given this environment, it is perhaps unsurprising that only 49% of LBGTQ+ folks own their home. Far less than 66% for the overall population. Homeownership rates are even lower for Latinx, Black, and transgender LGBTQ+ community members.
Overall population66%LGBTQ+ community49%Latinx members of the LGBTQ+ community41%Black members of the LGBTQ+ community29%Transgender members of the LGBTQ+ community35%
Home ownership is one of the largest building blocks of wealth in the U.S. The net worth of homeowners is 80 times more than that of renters, according to the U.S. Census Bureau. If LGBTQ+ people encounter barriers to home ownership, they don’t have access to that wealth creation.
Not only that, but they are more vulnerable to rental hikes that can impact overall economic stability. Payments on a fixed-rate mortgage, by contrast, remain the same over the life of the loan, which can make it easier to plan and save long-term.
Part of the challenge the LGBTQ+ community faces in homebuying is that the strategy of legal challenges — which led to progress in same-sex marriage and workplace rights — has been difficult to mount for housing. Neither sexual orientation nor gender identity are included in one of the primary Federal housing discrimination laws, the Fair Housing Act of 1968.
Currently, 27 states — and the 3 million total people living in them — have no legal protections in housing that cover the LBGTQ+ community. That’s one of the reasons many in the community support the Equality Act, which would make LGBTQ+ discrimination in housing and credit illegal.
Despite the lack of firm legal protection, many in the housing and real estate community are optimistic. Nearly 70% of LGBTQ+ Real Estate Alliance members surveyed earlier this year believed that recent moves from the Biden Administration will exert a positive influence on LGBTQ+ homeownership — a market that represents an estimated $1 trillion in buying power.
The Biden Administration issued an Executive Order on Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation in January 2021. As a result, the Department of Housing and Urban Development (HUD) announced plans to include the LGBTQ+ community under the Fair Housing Act.
The Consumer Financial Protection Bureau also affirmed that LGBTQ+ discrimination in credit and lending is illegal. They also announced plans to enforce the Equal Credit Opportunity Act on behalf of the LGBTQ+ community.
Nearly 70% of LGBTQ+ Real Estate Alliance members surveyed earlier this year believed that recent moves from the Biden Administration will exert a positive influence on LGBTQ+ homeownership
While legal protections are an important step toward protecting the LGBTQ+ community, they’re not a catch-all. That's because discrimination during the homebuying process may not be readily identifiable. A seller may simply choose another potential buyer’s offer and pass over a same-sex couple’s bid for the home. There may be no ostensible discrimination in the decision, but that doesn’t mean it doesn’t exist.
LGBTQ+ discrimination also wears many guises. It exists on a continuum from overt (like using disparaging terms or an explicit denial of housing opportunities because of one’s identity or orientation) to much more subtle (like slowness in returning e-mails or not showing same-sex couples as many available properties). As a result, gay people may face hurdles and discomfort about multiple aspects of the homebuying process, even though there may not be any direct acts of discrimination. That can drive LGBTQ+ homebuyers to modify their behaviors to avoid missing out on opportunities.
“LGBTQ+ people may not be quoted the same mortgage rates as others,” said Ryan A. H. Weyandt, the Chief Executive Officer of the LGBTQ+ Real Estate Alliance. “We've seen examples of a home suddenly being unavailable when it becomes clear the buyer is LGBTQ+. We may not attend open houses with our partners for fear that we won't get equal access to the home or be judged — or feel like we are being judged.”
In addition, LGBTQ+ homebuyers may not be offered options or protections routinely offered heteronormative homebuyers. First-time homebuyers especially may not even know these exist, or what to ask for.
One participant in How Discrimination Impacts LGBTQ on the Journey to Homeownership and Beyond, a report sponsored by the LGBTQ+ Real Estate Alliance and Freddie Mac Single-Family, said that a queer couple was not told of the option of taking title to their home as a joint tenancy with full right of survivorship, which was usually offered to homebuyers as a matter of course.
Transgender people can face issues with documentation. Weyandt notes that important papers such as purchase agreement, title, mortgage deed, and escrow documentation often don’t match the identity of a transgender person.
“The lender or title company will make assumptions based on how a state-issued ID presents, when the reality is that for transgender folks, the ID may not be updated, or match the way the individual identifies,” he said.
“We've seen examples of a home suddenly being unavailable when it becomes clear the buyer is LGBTQ+. We may not attend open houses with our partners for fear that we won't get equal access to the home or be judged — or feel like we are being judged.”
As a result of discrimination, many in the LGBTQ+ community have chosen areas to live on the basis of acceptance, friendliness, and an existing like-minded community. Seventy percent of survey respondents indicated that the area they currently live in is "somewhat" to "very LGBTQ-friendly."
Roughly half of the respondents to the LGBTQ+ Real Estate Alliance and Realtor.com survey reside in a large or medium-sized city. Twenty-five percent call the suburbs home, while 13% live in either small towns or rural areas.
But LGBTQ people may want to branch out in the future. While large cities are still popular, with 40% of respondents including them in hypothetical 10-year plans, less urban areas are drawing increased interest as well.
Suburban and rural areas across the country are becoming more attractive due to high real estate prices in many major coastal cities and people’s desire to live in less dense areas as they get older. The LGBTQ+ community tracks with these trends.
When asked where they’d consider moving within the next decade, 50% mentioned medium-sized cities, and 32% mentioned the suburbs. Small towns won the votes of 26% and rural areas were popular with 17%.
The top reasons queer folks want to move to less-dense areas? The lower cost of living topped the list for a whopping 72%. Fifty-nine percent cited a desire for more outdoor space and yards, and 55% mentioned an overall higher quality of life.
No matter where they currently live or where they plan to live 10 years from now, LGBTQ+ folks have very clear ideas about what is important to them in a neighborhood.
Number one is a friendly, open, and accepting-of-the-LBGTQ+-community feel, mentioned by 76% of respondents. Number two is racial and ethnic diversity, mentioned by 66%. And Number 3? Specific anti-discrimination laws that cover the LGBTQ+ community in the locality, which 65% said is a key consideration.
New York and San Francisco have long been the go-to cities if you’re looking for an area that is supportive and inclusive of LGBTQ+ residents. But they’re also among the most expensive places to live in the U.S.
Fortunately, a number of other areas have emerged as great options for LGBTQ+ homebuyers:
In addition to Minneapolis and Madison, other Midwest cities such as Toledo, Ohio, St. Louis, Mo., and Bloomington, Ind. have also made circulating lists of top places for LGBTQ+ folks to consider calling home.
That’s good news for homebuyers on a budget because in many parts of the Midwest, home prices are lower than in more competitive coastal markets, which means you can get a lot more house for less.
As a result of discrimination, many in the LGBTQ+ community have chosen areas to live on the basis of acceptance, friendliness, and an existing like-minded community.
The harsh reality is that discrimination still exists for LGBTQ+ homebuyers. But there are ways you can identify and potentially avoid discriminatory practices.
The first and most important step is to work with LGBTQ+-supportive agents and lenders. Many are out there! Agents and lenders know the situation on the ground. They can be invaluable in giving you tips and pointers that can help you avoid discrimination, minimize any effects, and optimize the homebuying experience.
Both the LGBTQ+ Real Estate Alliance and the National Association of Gay and Lesbian Real Estate Professionals (NAGLREP) maintain searchable lists of LGBTQ-friendly real estate agents and other homebuying professionals (such as appraisers and lawyers).
The LGBTQ+ Real Estate Alliance list also includes LGBTQ+-friendly lenders.
Networking with friends and acquaintances can provide robust insight into the process.
Ask for suggestions about which real estate professionals and neighborhoods they would recommend based on their experiences. Encourage them to be candid about their bad experiences, too, so you know which real estate agents or lenders to avoid.
When you’re ready to buy, call and get rate quotes from several different lenders. That gives you a sense of what a fair interest rate and overall cost will be. Then, you’ll be able to compare multiple quotes and see if any are exceptionally high.
Know your rights under HUD’s regulations and the Fair Housing Act. If you think you’ve been discriminated against and want to pursue legal action, contact your local ACLU office.
Discrimination against the LGBTQ+ community during the homebuying process can take many forms. Unfortunately, it’s led to lower rates of homeownership than the overall population.
But you don’t have to give up on the dream — and the financial opportunities — of home ownership. By working with LGBTQ+-friendly real estate professionals and mortgage lenders, you can achieve your goals and begin building long-term wealth and stability.
Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.
