White Economic Advantage + Black Economic Suppression = Modern Vectors of Economic Racism
"For the (racial wealth) gap to be closed, America must undergo a vast social transformation produced by the adoption of bold national policies, policies that will forge a way forward by addressing, finally, the long-standing consequences of slavery, the Jim Crow years that followed, and ongoing racism and discrimination that exist in our society today."
W. Darity, D. Hamilton, M. Paul, A Aja, A. Price, A. Moore, and C. Chiopris
Learn about each modern vector of economic racism below:
Reckoning with an Unjust Past: a Spoken Word Series by Veronica Wylie
Summary
A VERY BRIEF HISTORY OF HOUSING POLICY AND RACIAL DISCRIMINATION (R.B. Drew)
Pre-20th Century Land and Housing Policies
Land ownership has always been restricted in the United States, even before it was an independent nation. Early European colonists claimed land from Native tribes and forced Native populations to live in designated districts separate from colonial settlements. As these settlements grew, colonial governments appropriated more territory from Native populations and limited their rights to own and sell property. In 1763 the British government offered some protection to Native lands west of the Appalachian Mountains, though following the American Revolution the new U.S. government invalidated the prior agreement and seized lands from Native tribes that had fought against the colonists.
Through the first half of the 19th century, as the United States continued its westward expansion and appropriation of even more Native lands, additional restrictions were placed on who could own property. Discrimination by race, as well as by religion and country of origin, was rampant, permitted by policies that either actively encouraged or did little to prevent it. In some states, free Black men were forbidden from purchasing land, and courts routinely invalidated gifts and other transfers of property to Black people. Even outside of slave-holding jurisdictions, opportunities for land ownership were often limited, either by direct law or the failure to regulate discriminatory practices against people of color.
Policies in the post-Civil War period continued to limit BIPOC property ownership. Prohibitions on Black land acquisitions increased following Emancipation in former slave-holding states, while exploitive practices like sharecropping entrenched existing racial power inequities. Elsewhere, socially, economically, and legally enforced residential segregation further prevented BIPOC from accessing housing and wealth-building opportunities. For example, Asian laborers brought to the U.S. in the late 19th century were often forced to live in ethnic enclaves and could not acquire property outside these designated districts, some of which evolved into the iconic Chinatown neighborhoods popular with tourists today.
A Very Brief History of Housing Policy and Racial Discrimination | Enterprise Community Partners
Personal Narratives
In 1954, Andrew Wade – an African American electrical contractor and Korean War veteran – wanted to purchase a house. A friend…suggested he look at a middle-class white neighborhood. The Wades found a property in Shively, an all-white suburb.
When the Wades and their child were moving in, a crowd gathered in front and a cross was burned on an empty lot next door. On the first evening…a rock crashed through the front window with a message tied to it: “Nigger Get Out,” and later that night ten rifle shots were fired through the glass of the kitchen door.
Under the watch of a police guard, demonstrations continued for a month until the house was dynamited.
"Remembering the Wades, the Bradens and the Struggle for Racial Integration in Louisville," (R. Howlett)
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“In predominantly African American neighborhoods, where prospective homeowners struggled to obtain financing, Blair sold homes he had acquired via tax deeds on contract. This, in turn, allowed Blair to defraud another class of victims, extracting a substantial down payment from a buyer and then moving to have them evicted, and pocketing the contract buyer’s investment. This is what happened to Rufus Thomas, who purchased a house from Blair on contract in 1965. Shortly thereafter, Thomas received several citations for building code violations, which, as stipulated in the contract, he was required to correct. Contract sellers often sold homes that were in violation of numerous building codes, which the buyer was legally obligated to repair. This, as the historian Beryl Satter notes, often led contract buyers to miss payments and allowed sellers to repossess their homes) An unskilled laborer, Thomas drained his savings in an attempt to complete the repairs. When he failed to do so, he was hauled back into court and fined $2000. Prior to the hearing, Blair— acting as Thomas’s counsel—duped him into signing an affidavit stating that he was the sole owner of the property, which absolved Blair’s corporation of any liability. Unable to pay the fine, Thomas was sentenced to six months in jail.110 Upon sentencing, Blair served Thomas with a notice of forfeiture on his contract and moved to repossess the home.111 “In my dream, I’m caught in quicksand,” Thomas told a reporter. “I have my hands raised for help, but no help ever comes.”
"Unconscionable: Tax Delinquency Sales as a Form of Dignity-Taking" (A.W. Kahrl)
Methods of Discrimination
Deed Covenants
During the twentieth century, racially-restrictive deeds were a ubiquitous part of real estate transactions. Covenants were embedded in property deeds all over the country to keep people who were not white from buying or even occupying land; their popularity has been well documented in St. Louis; Seattle; Chicago; Hartford, Connecticut; Kansas City and Washington D.C. [5]
HOA Bylaws
After Shelley v. Kraemer, neighborhoods around the country, including in California, continued to bar African Americans and other racial minorities from purchasing property in their neighborhoods by creating community associations in which potential buyers would have to become members before purchasing property in the area. The white homeowners’ associations were often created by real estate developers.149 Because the bylaws of these associations restricted membership to whites only, they functioned to prevent African Americans from buying in those neighborhoods.[5]
Developer Loan Covenants
The government had an explicit policy of not insuring suburban mortgages for African Americans. In suburban Nassau County, just east of Queens, for example, Levittown was built in 1947: 17,500 mass-produced two-bedroom houses, requiring nothing down and monthly payments of about only $60.[3] (This was less than the approximately $75 unsubsidized charge in Woodside Houses for apartments of comparable size.[4]) At the FHA's insistence, developer William Levitt did not sell homes to blacks, and each deed included a prohibition of such resales in the future.[5][10]
Redlining
In the 1960s, sociologist John McKnight coined the term "redlining" to describe the discriminatory practice of fencing off areas where banks would avoid investments based on community demographics. During the heyday of redlining, the areas most frequently discriminated against were black inner-city neighborhoods. [11]
Physical intimidation – lynching, arson, complicity of law enforcement
History professor Andrew Kahrl in his book This Land Was Ours: How Black Beaches Became White Wealth found that local officials in the Coastal South routinely assessed Black property owners at highly inflated rates in an effort to tax them off the land[2].
At the federal level, comparatively higher property taxes, along with federally standardized appraisal guidelines placed a lower value on property in Black or integrated neighborhoods, depressed the market value of Black-owned homes and severely limited the ability of African American families to build wealth through homeownership[3], [6].
Property Taxes/ Selective Reassessment
When Black people fought back, sudden and capricious hikes in property taxes via selective reassessment served as an effective, and ostensibly legal, form of intimidation [3]
Tax Liens
Tax liens were used to buy defaulted black properties for pennies on the dollar.
Blockbusting
Blockbusting is a business process of U.S. real estate agents and building developers to convince white property owners to sell their house at low prices, which they do by promoting fear in those house owners that racial minorities will soon be moving into the neighborhood. The agents then sell those same houses at much higher prices to black families desperate to escape the overcrowded ghettos. Blockbusting became possible after the legislative and judicial dismantling of legally protected racially segregated real estate practices after World War II. By the 1980s it largely disappeared as a business practice, after changes in law and the real estate market.[4}
Timelines of Disparity
Full timeline of racial disparities in housing
1934
Federal Housing Administration (FHA) is created to boost home ownership during The Great Depression. The FHA insures home mortgages, but only for houses in white neighborhoods. This leads to the industry standard practice of redlining, which systematically withholds credit from homebuyers in black neighborhoods.
1938
Congress creates the Federal National Mortgage Association (Fannie Mae) to boost homeownership levels by making low-cost loans widely available. Only two percent of the $120 billion in new housing subsidized by the federal government between 1934 and 1962 goes to nonwhites.
1945
Though the GI Bill guaranteed low-interest mortgages and other loans, they were not administered by the VA itself. Thus, the VA could cosign, but not actually guarantee the loans. This gave white-run financial institutions free reign to refuse mortgages and loans to Black military members.
1968
Senators Walter Mondale (MN) and Edward Brooke (MA), then the only African-American member of the Senate, submit the Fair Housing Act of 1968 (S. 1358) for inclusion as an amendment within the Civil Rights Act of 1968 (H.R. 2516) a larger civil rights bill to protect civil rights workers.
2007
The subprime crisis reaches a peak. An epidemic of irresponsible mortgage lending driven by the high demand for mortgage-backed securities by institutional investors leads to a severe nationwide recession and nearly 10 million Americans losing their homes. Latinos and blacks experience nearly three times more foreclosure than whites, and decades of progress in their rate of homeownership is wiped out.
Metrics
- Breaking Down the Black-White Homeownership Gap | Urban Institute
- Income differences: 31% of the gap
- Differences in marital status: 27% of the gap
- Credit score differences: 22% of the gap
- Differences in educational attainment do not contribute to the gap
- 17% of the gap remains unexplained
Articles
[10] Public Housing: Government-Sponsored Segregation - The American Prospect
[11] Redlining was banned 50 years ago. It’s still hurting minorities today. - The Washington Post
Breaking Down the Black-White Homeownership Gap | Urban Institute
Blockbusting and racial turnover in midcentury DC on JSTOR
A Very Brief History of Housing Policy and Racial Discrimination | Enterprise Community Partners
Documenting Racially Restrictive Covenants in 20th Century Philadelphia on JSTOR
How the Real Estate Boom Left Black Neighborhoods Behind - The New York Times (nytimes.com)
Racial Disparities in Home Appreciation (M. Zonta)
New Evidence on Redlining by Federal Housing Programs in the 1930s | NBER
Home Appraisals More Likely To Be Lower in Black, Latino Areas Than White Ones : NPR
Detroit overtaxed homeowners $600M. They're still seeking compensation (freep.com)
Historian Says Don't 'Sanitize' How Our Government Created Ghettos : NPR
The Assessment Gap: Racial Inequalities in Property Taxation - Equitable Growth
Black Homeowners Pay More Than 'Fair Share' in Property Taxes | The Pew Charitable Trusts
Study of property taxes nationwide finds racial inequalities
Racists Deeds and Covenants (N. Watt, J. Hannah)
Public Housing: Government-Sponsored Segregation (R. Rothstein)
How the GI Bill's Promise Was Denied to a Million Black WWII Veterans
Race for profit: Keeanga-Yamahtta Taylor on housing discrimination in America - Vox
Redlining: Mapping Inequality in Dayton & Springfield - ThinkTV
Books
1.Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Keeanga-Yamahtta Taylor)
2.The Color of Law (Richard Rothstein) [9]
3.Segregation by Design (Jessica Trounstine)
4.How the GI Bill's Promise Was Denied to a Million Black WWII Veterans
Not in My Neighborhood: How Bigotry Shaped a Great American City by Antero Pietila
Podcasts
VIDEO: Housing Segregation In Everything : Code Switch : NPR
Stuff You Should Know: How Housing Discrimination Works
Racial covenants, still on the books in virtually every state, are hard to erase : NPR
Websites
Film/Video
Race for Profit (Keeanga-Yamahtta Taylor)
The Color of Law (Richard Rothstein)
How Redlining Shaped Black America As We Know It | Unpack That
Redlining and Racial Covenants: Jim Crow of the North
GOOD WHITE PEOPLE: A Short Film About Gentrification
Questions for Research and Reflection:
Which myths based in white supremacy culture did you grow up with?
- If you just work hard enough, anyone can buy a house.
- Segregation just happened; it reflects people’s natural choices to be apart.
- Housing laws are applied fairly to everyone; racism can’t be a factor.
- Redlining happened in the past
- Black people just don’t want to live here, that’s all.
- Why do Black families default on their home loans? They’re just bad with money, I guess
Ask older relatives or research on your own:
- When did your family first acquire a home?
- How was it acquired? Where?
- How easy was it to get a loan?
- Did your family receive GI Bill veteran's benefits to buy a home?
- How many Black families lived in your neighborhood growing up?
- Research redlining practices in your hometown – how does your neighborhood rate?
- How does housing figure into your family’s net worth?
- Have ancestral homes been passed down through generations? What is the value of wealth that has been passed down?
- What zoning codes in your neighborhood affect whether people of color live there?
- Are their any Black families living on your block? How well do you know them?