Homes in majority-white neighborhoods in Chicago are more than twice as likely to be listed privately than homes in majority-non-white neighborhoods, according to an analysis published by Zillow on Thursday.
Zillow researchers examined over 40,000 residential listings active on Oct. 21, in the Midwest Real Estate Database (MRED) platform and distributed via MLS GRID. Through this analysis, Zillow found that as of Oct. 21, 7.9% of homes for sale in majority-white areas of the Chicago metro were listed privately, compared to 3.4% in the majority-non-white areas. According to the analysis, this gap persists regardless of home price, type, location and broker activity.
Zillow determined that the areas where majority white through data from Urbanicity and the Census’s 2019-2023 American Community Study’s 5-year estimates of housing unit counts by race of householder.
Race, not price, influence private listings, says Zillow
For homes listed in the upper price tiers, 8.9% were listed privately in majority-white areas, compared to 5.1% in majority-non-white areas. Zillow claims that racial composition, not price, is the more salient influence for more private listings. According to Zillow, limiting who can view a property by listing it in a private listing network can reinforce existing patterns of segregation, especially in markets with a history of racial segregation.
Zillow claims that the findings highlight “how private listing systems can unintentionally reinforce racial segregation and restrict access to housing opportunities.” The report warns that if the usage of private listing networks increases in certain areas it could “amplify inequities.”
“Chicago shows what can happen when parts of the housing market move into the shadows,” Orphe Divounguy, a senior economist at Zillow, said in a statement. “Private marketing might sound appealing, but it risks deepening segregation and limiting opportunity, moving us further from the fair and open housing market consumers deserve. The data show clear disparities, and good intentions are no longer an excuse for expanding digital redlining.”
While Zillow acknowledged that some brokerages and agents like to use private listing networks to test their sales price strategy and limit the number of days a property spends on the open market, the firm wrote that if brokerages “lean into ‘exclusive access’ as a business strategy,” it could risk decreasing fairness and transparency across the housing market.
Zillow currently in court
It’s important to note that Zillow is currently in court defending its listing access standards policy.
The policy, which went into effect on June 30, bans listings from its site that have been publicly marketed for more than one business day prior to the listing being available for display on Zillow. Compass filed its lawsuit against Zillow in mid-June, just prior to the enforcement deadline, claiming that the policy stifles competition and causes irreparable harm to Compass.
Homebuyers deserve to see all homes listed
“Fifty-seven years after the Fair Housing Act promised an end to housing segregation, we are still waiting for that promise to be fulfilled,” Michael Chavarria, the executive director of the HOPE Fair Housing Center, which works to eliminate discrimination in housing across much of Illinois, said in a statement. “Homebuyers deserve the right to see all the homes available in an area — not to have those choices quietly made for them.”
The report cites a study by Elizabeth Korver-Glenn, a professor at the University of North Carolina at Chapel Hill, which found that private listings reinforce racial segregation, even without explicit or intentional bias.
In the report Korver-Glenn wrote that she learned that since real estate agents primarily generate business from their social networks, this means that “white real estate agents end up working primarily with white home buyers and sellers, while Black and Latino agents deal with more diverse sets of clients.” Due to this, Korver-Glenn says that Asian, Black and Latino consumers are disproportionately excluded from finding out about privately listed homes in majority-white areas.
She adds that private listings are “a prime example of a practice that legislators [who are] committed to interrupting stubbornly persistent racial segregation in housing markets can and should target.”
MRED did not return a request for comment.
Earlier this month, news of a brewing dispute between Zillow and MRED surfaced, as Zillow looked to begin enforcing its listing access standards policy, which bans listing from its site if they have been publicly marketed for more than one business day prior to being available for display on Zillow via syndication or IDX or VOW data feeds. Zillow began rolling out the enforcement of the policy nationwide in late June. As of early November, the policy was live in over 500 MLSs across the country.
If the policy is enforced under the current conditions within the MRED service area, listings that appear on the MLS’s private listing network would potentially be banned from Zillow.
MRED launched its private listing network roughly a decade ago after survey feedback from subscribers found that many were frustrated by the number of pocket listings and sales occurring. Under MRED’s policies, a property had to be listed on the MLS within 24 hours of it being publicly marketed, but agents and sellers had the option to put it on a MRED’s private network, which allows other MLS subscribers to see the listing, but it does not syndicate it, allowing the seller more control over how the listing is marketed.
