Six Facts About Racism and Housing

Image: Fair Housing Protest 1964, Seattle Municipal Archives

This post originally appeared in Fran Quigley’s blog Housing Is A Human Right.

Most semesters of our law school clinic, after the students have been to court several times, I ask them to guess the racial composition of the township where we do most of our work. Their responses usually range from 70% to 90% Black. That is a reasonable estimate, since it matches the population of the tenants who sign in and take their seats on gray metal folding chairs outside the courtroom.

But the Black population of the area is only 37%.

The scenes in our courts are certainly not unique to our community. Across the country, Black families are far more likely to be evicted than whites, with Black women with children the most likely of all to be losing their home. Although less than 20% of renters in this country are Black, over half of all eviction filings target Black residents. Nearly one in five Black or Hispanic children have experienced eviction by age 15. Black people are significantly overrepresented among our country’s homeless population and are at proportionately greater risk of returning to homelessness when they do get housed.

As we discussed in this newsletter previously, homeownership in the U.S. often provides a basketful of tangible financial benefits. These include significant tax breaks and growing equity—the average U.S. home gained almost $150,000 in value over the past ten years. Homeownership also provides the advantages of predictable monthly payments and living-space autonomy that are denied most renters. While 74 percent of white American households reap those benefits due to owning their own home, only 46% of Black households do. 

In recent years, that gap has only grown wider. Even when Black Americans do own their own home, lower home valuations and predatory lending practices in minority neighborhoods contribute to Black homeowners having much less equity in their homes compared to the average white homeowner.

This is a big deal. Most Americans hold the majority of our wealth in the value of our homes.  That means the homeownership and equity gap has implications far beyond the status of the roof over the family’s head: the average net wealth for white households is almost eight times the wealth for Black households.

In 2022, while researching an article for Waging Nonviolence, I spoke with Apryl Lewis, an organizer for Action NC. Lewis’s work focuses on housing justice, a topic she knows all too well: as a single mom, she had to scramble on multiple occasions to keep from being evicted, despite working two and sometimes three jobs. Lewis and Action NC organize in support of eviction moratoriums, tenants’ rights, more affordable housing development, and rent control. But those reforms alone would not fully reach the root of the crisis, Lewis says.  “A lot of the problems with housing have not improved since the Jim Crow era,” she says. “To address housing we have to address the racism.”

Many others have written more and better on this topic than I could ever aspire to. Richard Rothstein’s book, Color of Law: A Forgotten History of How Our Government Segregated America, is legendary. Keeanga-Yamahtta Taylor’s Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership deserves to be. A strong one-stop summary of our multi-century legacy of U.S. racism in housing and other core facets of daily life is provided in the first 14 pages of U.S. Supreme Court Justice Ketanji Brown-Jackson’s dissenting opinion in the 2023 affirmative action decision, Students for Fair Admissions, Inc. v. President and Fellows of Harvard College.

I recommend those sources for a deeper dive into this critical topic. For those of us who have spent our lives walking around with a protective coating of white privilege, racism’s role in our housing crisis is likely far more impactful than we realize. So, over the course of a few newsletter posts, I would like to summarize our nation’s housing-racism problems in six facts:

1.    The Systemic Theft of Black Labor Has Created Housing Disparities

2.    Our Government Housing Policy Has Benefitted Whites and Excluded Blacks

3.    Predatory Housing Practices Disproportionately Harm Black Americans

4.    Urban “Development” Disproportionately Harms Black Americans

5.    Public Housing’s Struggles are Rooted in Racism

6.    We Can Make Things Right, If We Want To

1.    The Systemic Theft of Black Labor Has Created Housing Disparities

Of course, the theft of labor was the impetus for the seismic suffering inflicted on generations of Black Americans via slavery. For well over 200 years, Black people in this country were forced to build wealth for white slaveholders and the nation at large. They succeeded in spectacular fashion. By the middle of the 19th century, cotton picked in slave states was not only the number one export product in the United States, it exceeded all other exports combined. The Mississippi River Valley had more millionaires per capita than any other region in the nation. Yet Blacks gained nothing from their contribution to this bonanza, while whites built wealth that continues to benefit their families today.

The end of the Civil War was not the end of exploitation of Black labor. In the communities where freed Blacks had been living, land was the critical source of income and wealth. But white Southerners would largely refuse to sell land to Blacks, and sometimes were legally prohibited from doing so by the so-called Black Codes that predated Jim Crow laws.

For the few formerly enslaved Black people who were able to purchase rural land in the South, that land was often taken from them by a combination of violence, swindling, and corruption. “A war waged by deed of title has dispossessed 98 percent of Black agricultural landowners in America,” Vann R. Newkirk II wrote in a 2019 Atlantic article entitled “The Great Land Robbery.” Newkirk described how that theft was aided by the federal government, which allowed racist and corrupt local officials to control the much-needed federal money from through the U.S. Department of Agriculture, despite those officials being elected in areas where Black people were blocked from voting.

Without land of their own to farm, Blacks found their subsistence options to be limited. Black Code laws blocked Blacks from pursuing many occupations and sentenced them to chain gangs if they did not fulfill onerous labor contracts with whites. For many Blacks, the only remaining path to survival was to again work for the same whites who once enslaved them, this time as a sharecropper. It was an arrangement where fraudulent bookkeeping regularly left the working Blacks owing more to the white farmer than their wages would cover.  As Justice Jackson wrote in her Students for Fair Admissions dissent, sharecropping was “de facto reenslavement.”

Some Black people managed to escape sharecropping for wage employment, largely in the northern states. But they found they had not escaped government-created discrimination in the workplace. In the 1930’s, Congress and the Roosevelt administration passed into law revolutionary New Deal protections for workers, including a minimum wage guarantee, Social Security old-age insurance, the right to organize into unions, and unemployment compensation. But those laws exempted agricultural workers, domestic workers, and tipped workers, professions that were disproportionately filled by persons of color. At the time of its passage, nearly two-thirds of Black workers were ineligible for these new benefits.

As National Employment Law Project executive director Rebecca Dixon told Congress in 2021, “These exclusions did not accidentally deny Black people and other workers of color the rights and protections given to white workers. Congress intentionally excluded whole categories of workers from vital protections in order to deny Black people the opportunity for economic and social freedom and to preserve a system where employers could profit off of racist exploitation.”

Many of those workplace protection exclusions remain, as does their disproportionate negative effect on the income of workers of color. Less formal discrimination in the workplace continues as well: one in four Black workers report having been treated unfairly due to their race in the past year in hiring, pay, or promotion.

The impact of generations of employment racism is that Black workers in the U.S. on average earn 25% less than whites in hourly earnings—a gap that has increased in the past 40 years. Gaps in educational level—themselves deeply impacted by racism in schooling and opportunities—contribute to the wage difference. But they don’t explain all of it. College-educated Black men still earn only 80% of the wages of college-educated white men.

There is a clear connection between these generations of theft and undervaluing of Black labor and housing insecurity. Obviously, it is imperative for any household to earn enough money each month to pay rent. Lower incomes also mean less opportunity to accumulate the savings needed to put a down payment on a home. Many of our clients pay far more each month in rent than they would for a comparable home’s mortgage payment. But they lack the down payment needed to qualify for a mortgage—and the many benefits that our government provides to homeowners.

2.    Our Government Housing Policy Has Benefitted Whites and Excluded Blacks

As with employment, our government has long used its housing laws and dollars to favor the prospects of whites while actively suppressing the aspirations of persons of color, particular Black people.

Our current housing crisis should not obscure the fact that the U.S. has achieved massive successes with government housing programs. Starting in the mid-19th century, the Homestead Acts gave away hundreds of millions of acres of public land, nearly 10% of all the land in U.S. “The Homestead Acts were unquestionably the most extensive, radical, redistributive governmental policy in US history,” concludes historian Keri Leigh Merritt. Merritt estimates that a quarter of the U.S. population are descendants of Homestead Act recipients, and thus the beneficiaries of the wealth built through this government program.

During the Great Depression, the U.S. created the Home Owners Loan Corporation (HOLC) and the Federal Housing Administration (FHA). These agencies purchased, insured, and issued mortgages to protect at-risk homeowners and provided others with opportunities to buy houses through significantly lower down payments and interest rates. After World War II, the Veterans Administration guaranteed mortgages for tens of millions of returning veterans.

This government support set the stage for U.S. homeowners to enjoy the predictability of a 30-year, fixed-rate mortgage, an advantage unheard of in other nations. As the New York Times has pointed out, these favorable mortgages and the tax advantages that come along with them means “everyone who has a mortgage lives in subsidized housing.” Recognizing the core role that home equity plays in U.S. family asset-building, this mid-20th century era of huge government support for home ownership is widely acknowledged to be the greatest mass opportunity for wealth accumulation in the nation’s history.

But that opportunity was not provided to everyone.

These programs both de facto and de jure operated with a “Whites Only” sign on their entrance. Only a few thousand of the 1.6 million families who received land through the Acts were Black. To guide its loan decisions, the HOLC created and the FHA later adopted color-coded maps of neighborhoods. On those maps, the color red indicated neighborhoods where Black people lived—and thus an allegedly risky mortgage investment. “Redlining” led to decades of these federal agencies refusing to provide the same support for Black homeownership as whites enjoyed. By so doing, our government dramatically widened the wealth gap already created by slavery, the Black Codes, and Jim Crow.

Often, the federal government’s discrimination was couched in terms of concerns, however unjustified, about default on the home loans. Other times, no one bothered to disguise the racism. In Color of Law, Rothstein writes about a 1941 plan to sell suburban New Jersey property to a dozen middle-class Black families with good credit ratings. The FHA refused to sign off, stating flatly, “No loans will be given to colored developments.”

Under the federal government’s redlining practices, a single Black household could taint the entire neighborhood as unworthy of investment. This incentivized even non-racist whites to block Black people from living in their communities. One white homeowner in mid-century Levittown, Pennsylvania said that a new Black neighbor was “probably a nice guy, but every time I look at him I see $2,000 drop off the value of my house.”

The favored neighborhoods typically avoided any risk of red/Black designation by adopting restrictive covenants that blocked the sale or renting of homes to Black persons. These covenants were routinely supported and enforced by state and local governments, were deemed legal by the U.S. Supreme Court in 1926, and were endorsed by the FHA in the form of higher mortgage approvals for communities that adopted the racist covenants.

The results of our government’s housing racism are quantifiable: between 1934 and 1962, of the hundreds of millions of dollars in family-transforming FHA loans, 98% went to whites. In New York and northern New Jersey, of the 67,000 VA-insured mortgages, less than 100 went to non-whites. In many communities across the South, the  percentage of loans to non-whites was even lower.

In 1948, in the case of Shelley v. Kraemer, the U.S. Supreme Court finally ruled that states could not enforce racially-restrictive housing covenants. The pervasive impact of those covenants was memorably demonstrated by three of the nine Supreme Court justices being forced to recuse themselves from the Shelley case: each of them owned property that was subject to restrictive covenants.

Still, massive segregation did not stop. Many communities simply substituted their overtly racist covenants with rules that limited neighborhoods to single-family homes with large lot sizes and parking restrictions. These exclusionary zoning rules have the same effect as the racist covenants they replaced: most persons of color were barred from the communities. Sociologist Matthew Desmond calls exclusionary zoning “our politer, quieter means of promoting segregation.” And it is fully legal in most areas of the country.