Notes on Housing Discrimination in America

History of Race and Land Ownership in America

There is a long history of housing discrimination in America, which has led to a significant wealth gap and other consequences.
Currently, only 45 percent of Black householders own their homes, compared with nearly 74 percent of whites.
For every $100 in wealth held by a white family, a Black family has closer to $13.
The median white family has a net worth of around $188,000, and the median Black family has just over $24,000.
Housing discrimination affects quality of life through property taxes, leading to better schools, teachers, and resources in wealthier neighborhoods.

In the early 20th century, the real estate industry grew, and white people moved to codify the distance between them and Black people.
Racial covenants were bylaws written into deeds or neighborhood regulations forbidding the sale of a house to a non-white person.
These covenants were widespread and are still technically on the books in some places.

In the 1930s, the New Deal established the Federal Housing Administration (FHA) and the Home Owner's Loan Corporation (HOLC).
The idea was to make it easier for people to buy and retain houses during the Great Depression.
The pitch was the government would ensure your loan so that banks would accept a significantly smaller down payment, lower interest rates and give decades to pay it off.
HOLC developed maps that color-coded areas based on their credit worthiness.
A neighborhood could earn a red color or be redlined if any African Americans lived in it at all, at which point the area would essentially be ineligible for any mortgages.
The FHA refused to give mortgage insurance to new developments so policies alone had a devastating effect on Black communities, significantly expanding and locking in segregation.
In Detroit, a developer built a six-foot tall wall to separate a Black community from an emerging white community to get FHA loans.

After World War II, the GI Bill gave returning service members access to home loans with as little as no down payment.
The vast majority of financial institutions still refused to approve loans for African Americans.
Black service members were shut out of home ownership in the rapidly expanding suburbs, such as Levittown on Long Island.
Homes in Levittown sold for around $8,000 in 1948 (about $75,000 in today's money) and currently sell for $350,000 or more.
Families who bought homes in 1948 gained more than $200,000 in wealth.
Exclusion of Black people from federal programs was nearly absolute.
A survey of 13 cities in Mississippi in 1947 found that of the more than 3,200 loans given to returning veterans under the GI Bill, only two went to African Americans.
Nationwide, in just the first quarter century of the Federal Housing Administration, the government insured over $40 billion in loans, the equivalent of nearly $400 billion today, but some estimates indicate that 98 percent of them went to white Americans.

Speculators took advantage of the link between the racial makeup of a neighborhood and the value of homes through a practice called blockbusting.
They would go to a white neighborhood to make it seem like Black people were moving in to panic white homeowners into selling their homes at a loss.
Some white homeowners stood firm, refusing to sell their homes.

By the late 60s, fair housing had become a core issue for the civil rights movement.
Martin Luther King's efforts to combat housing discrimination in Chicago were met with fierce resistance.
LBJ and Congressional leaders passed the Civil Rights Act of 1968, with Sections Eight and Nine being the Fair Housing Act.
The Fair Housing Act made housing discrimination illegal and required the government to affirmatively further fair housing.
Nixon's housing secretary, George Romney, tried to withhold federal grants from communities that refused to integrate, but Nixon called it off.
Nixon made it clear that the federal government would not step in to integrate neighborhoods.

Even though overt discrimination was now illegal, there were and still are many ways for neighborhoods to keep themselves white.
Sometimes, it's through zoning like requiring minimum lot sizes or banning multifamily homes.
Sometimes, it comes in the form of realtors steering buyers away from certain neighborhoods on a racial basis.
Black home buyers face discrimination at every step of the process.
The simple act of having a home appraised can still be tainted by discrimination.

The myth of white Americans postwar prosperity powered by ingenuity and self-reliance leaves a lot out.
There are many white people who are unwilling to acknowledge this or are unsure what to do with the information.
Even if every facet of housing discrimination were stopped going forward, the damage that has been done would not be undone.
Home prices have risen much more than wages in the last 50 years, so buying a home today doesn't carry the same economic promise as it did when the FHA started.
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