February is Black History Month, an important time for us to commemorate and celebrate the lives of civil-rights pioneers throughout history. Great men and women like W.E.B. Du Bois, Jackie Robinson, Booker T. Washington, Rosa Parks, Martin Luther King, Jr., and so many others made invaluable sacrifices to advance our rights and freedoms.
Started by Carter G. Woodsen in 1921 as only a week, this Black History commemoration was set in February because it marked the birthdays of both Frederick Douglass and Abraham Lincoln and later expanded to a full month in 1970. It’s since become a respected and important annual event in the United States, Canada, Germany, and the United Kingdom. (For more information about Black History Month check out AfricanAmericanHistory.gov.)
However, to recognize Black History Month, the media often just highlights a few well-known civil rights icons and leave it at that. But we’d like to go in a little more in-depth today, examining institutional discrimination and racism in real estate and housing throughout U.S. history, showing why civil-rights efforts and advocacy were (and still are) so needed for African-Americans and others.
To frame our conversation about the struggle to achieve equality in homeownership and real estate practices for African Americans, we need to look back to Jim Crow laws in the early 1900s. Once the Emancipation Proclamation deemed slavery illegal at the end of the Civil War, overtly racist practices were widespread. They aimed to discouraged or prohibited African Americans from voting, getting good jobs, doing business with whites, using the same restaurants, beaches, schools, etc. as whites, as well as preventing blacks from living in certain neighborhoods. These practices still existed in real estate well into the mid 21st century, even as society reformed in other ways.
The effect of housing discrimination on African-Americans
The cumulative financial toll of discriminatory real estate practices for African American families over the generations has been devastating. Research shows that mortgage payments for black homeowners have been an average 54% higher than for their white counterparts over modern U.S. history, costing them an additional $4,000 a year in payments in today’s dollars. It’s estimated that black homeowners have paid more than $10.5 billion in extra home payments due to these practices, which have kept large numbers of middle-class blacks from parlaying home ownership into economic advancement and generational wealth, essentially shutting them out of the American Dream.
The two most common ways racism manifested in housing were through the practices of redlining and blockbusting, which we’ll look at in depth today.
Redlining
Redlining is the intentional discriminatory practice of steering certain minorities – particularly African Americans – into lower-income and blighted neighborhoods in order to keep white neighborhoods segregated. Redlining started not on the streets or with Realtors but in private banking with the Home Owners Loan Corporation (HOLC). During the Post-War housing boom in the U.S., HOLC devised a system of rating neighborhoods based on desirability and other economic factors. There were four ratings: green, which was the most affluent and homogenous white areas, blue, yellow, or red, which was primarily inhabited by minorities and in lower-income and distressed neighborhoods.
Following suit, real estate agents, property managers, insurers, banks, new homebuilders, underwriters, and lenders steered African Americans away from the green areas and to the red areas, which was called red-lining. Often this was done overtly, but there were subtle ways of keeping blacks out, like increasing the price of services or financial products, or just not showing homes. In those areas, banks refused to lend because they deemed those neighborhoods high risk. But at the same time, blue and green neighborhoods received the brunt of economic assistance, new business incentives, and redevelopment funds, so it was a vicious cycle of housing discrimination that was almost impossible for black families to escape.
It’s shocking to realize that redlining was federal policy at one time, although unpublicized. In fact, in 1934, the New Deal brought about sweeping changes to stimulate the economy, and one of them was the formation of the Federal Housing Administration, FHA, to promote widespread home ownership through the Housing Act.
The FHA, although a governmental organization, adopted the practice of creating “residential security maps” in 239 cities. These maps were supposed to gauge lending risk but really served to segregate white homeowners and neighborhoods from parts of the city where African Americans and minorities were allowed and encouraged to buy. But FHA underwriters were under strict orders to adhere to these neighborhood maps as primary criteria in their loan approval process. Redlining through FHA standards officially ended in 1950 but private banks and lenders, as well as real estate professionals, went on well into the 1970s and 1980s.
Blockbusting
Equally heinous, unscrupulous real estate speculators used race as a tool to artificially manipulate property values in certain neighborhoods to benefit financially, even as recent as the 1960s. When some developers wanted to buy up all the property in a certain middle class or working class white neighborhood, they would purposely sell a certain number of homes to African American families, then play up the false narrative of “neighborhood decline” to exploit fears of declining home prices.
Using these manufactured fear tactics, they would convince enough white families to sell their homes and create an outright panic. Soon, everyone was selling their homes, even if they were racially tolerant, because of the impending real estate crash in their neighborhood. Of course, the speculators who started the fear mongering would buy up these properties, often for pennies on a dollar. They would then turn single-family homes into multifamily units and apartments and cram them full with tenants without providing proper maintenance or safe, livable conditions.
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Redlining and blockbusting are just two of the practices used to discriminate against African Americans in our recent history but, unfortunately, there are many more. The FHA, HUD, the Supreme Court, the Community Redevelopment Act, and the Fair Housing Act enacted blatantly racist policies that manifested in white flight to the suburbs and urban decay around primarily black neighborhoods.
During Black History Month, it’s important we not only honor the brave men and women that have fought so hard for our civil rights, but understand why their sacrifices were so important – and what we still need to do in order to ensure a fee and just society for all.