How to Help Protect LGBTQ+ Clients From Housing Discrimination

LGBTQ+ people have long faced housing discrimination of the subtle and not-so-subtle kind. The price of that discrimination, in terms of where they live, how much they pay for housing and the difficulties they face buying a home, is spelled out in new Zillow research.

An analysis of data from the Zillow Group Consumer Housing Trends Report in 2020 and 2019 shows that, compared to their cisgender, heterosexual peers:

• LGBTQ+ home buyers are more likely to be denied a mortgage at least once before they’re approved for a home loan.
• They’re more likely to make sacrifices to purchase their home — and pay more for it.
• LGBTQ+ renters are more likely to have at least a portion of their deposits withheld.
• They’re also more likely to pay application fees and experience higher rent increases.

LGBTQ+ buyers and renters of color are most likely to face the most significant hurdles, according to the analysis.

Housing is more challenging at every step for LGBTQ+ people

Many states, counties and cities have recognized the additional challenges faced by LGBT*  people and have passed laws to protect them from discrimination in housing and public accommodation. Federal civil rights laws offer protections based on race, color, national origin, and — in most cases — sex, disability and religion. Explicit protections against housing discrimination do not exist at the federal level, and vary significantly based on local jurisdictions. 

The state protections that do exist often come with a hefty price tag: Zillow research shows that LGBT buyers can expect to pay $127,000 more to purchase a typical home in a locale that offers protections against discrimination, compared to a typical home in a housing market without those protections.

The higher price of homes in locales with anti-discrimination laws may help explain why LGBTQ+ buyers are more likely to gravitate to more affordable housing options.

LGBTQ+ buyers are nearly twice as likely to purchase a townhome, rowhouse, condo, duplex or triplex compared to cisgender, heterosexual buyers (32% versus 17%). Those home types are especially attractive to LGBTQ+ buyers of color, nearly half (47%) of whom choose to buy them.

Finding an affordable home usually leads to the next challenge: getting a mortgage to buy it. One-third (33%) of LGBTQ+ buyers who use a mortgage to buy their home — and 42% of LGBTQ+ buyers of color — are denied financing at least once before they’re approved for a mortgage. That compares to 19% of cisgender heterosexual buyers who finance their purchase with a mortgage. 

The combination of more expensive homes and more obstacles to finance the purchase may explain why more than two-thirds (70%) of LGBTQ+ buyers say they made at least one sacrifice to stay at or below budget. 

The sacrifices include buying a home that is in worse condition than they expected, foregoing desired finishes and/or buying a home that is smaller than what they initially planned for.

For LGBTQ+ buyers of color, sacrifice is also more common: 78% say they make at least one sacrifice to buy a home, compared to 55% of white, cisgender, heterosexual buyers that report doing so.

LGBTQ+ renters also face disproportionate hardships

The disproportionate hardships are not the sole preserve of homeowners. LGBTQ+ renters take more financial hits at many stages of the rental process.

Fewer than a third (31%) of LGBTQ+ renters get their full deposit back compared to 40% of cisgender and heterosexual renters. 

For LGBTQ+ renters of color, the picture is even more stark: Only 25% get their deposit fully refunded compared to 44% of white, cisgender, heterosexual renters. Those same renters of color are significantly more likely to experience a rent hike than other groups, and the rent increases are more likely to be larger than for the LGBTQ+ renter community overall.

LGBTQ+ renters experienced average rent increases that are $81 higher each month than those charged to cisgender heterosexual renters. For LGBTQ+ renters of color, the average rent increase is $194 a month higher than for white, cisgender, heterosexual renters who experienced an increase.

Among the inequities documented in the research, LGBTQ+ renters:

• Pay higher rent (on average)
• Pay more in upfront costs before moving in
• Are more likely to pay an application fee (LGBTQ+ renters of color pay more than twice on average the amount in application fees than those paid for by white, cisgender, heterosexual renters ($334 versus $139)

Takeaways

• Become familiar with anti-discrimination laws. Currently, there are no statewide legal protections from housing discrimination for the LGBT community in 28 states and the nation as a whole. Knowing how to access information on which states, counties and cities do have such protections can help you better serve your LGBTQ+ clients.
  
  As of June 2020, all property listings on Zillow, regardless of whether they are currently for sale, include information about the local laws that protect residents in that jurisdiction.
• Keep affordability top of mind. Housing is likely to be more expensive in areas where LGBTQ people are generally searching. Be sure to cast a wide net that includes more affordable options, including townhomes, rowhouses, condos, duplexes or triplexes.
• Get clients pre-approved and develop relationships with mortgage brokers. The data shows that mortgage financing is a trouble spot for LGBTQ+ buyers. You can help them succeed in obtaining financing the first time by providing education and referrals to trusted lenders who can pre-approve them for a mortgage.
• Be sensitive to the fact that LGBTQ+ people face more obstacles. Discrimination exacts an emotional price as well as a financial one. According to the Zillow Consumer Housing Trends Report, LGBTQ+ buyers and renters are less likely to feel accepted by those around them where they live. Helping people find homes where they feel safe and accepted and can thrive is its own reward.
• Be an ally. Don’t let discrimination go unchallenged. Call it out. 

* LGBTQ+ stands for lesbian, gay, bisexual, transexual and queer or questioning. At Zillow, we try to use the broadest possible terms. Some anti-discrimination laws are focused on a more narrow subset of people (LGBT), and we use that term when referring to those laws.