One of the most common ways to build wealth in the United States is through homeownership.
Unfortunately, communities of color, and Black families in particular, have been systemically prevented from buying homes in cities around the country. For decades, practices like redlining, racial steering, and racially restrictive covenants gave institutions and social networks the legal basis to discriminate against groups of potential homebuyers.
HOLC and Redlining
In response to the Great Depression, Franklin D. Roosevelt signed into law the New Deal.
Through this package of legislation, the Home Owners Loan Corporation (HOLC) was launched to help homeowners who’d defaulted on their mortgages. This is the era that brought the 30-year mortgage and low fixed interest rates that are still common today.
In its first two years, borrowers received more than $3 billion in loans from HOLC. By 1937, HOLC owned more than 200,000 homes.
While these policies helped many Americans keep their homes, embedded racism has had lasting effects on BIPOC communities.
Because borrowers were people who’d already defaulted on loans once, HOLC needed a way to ensure their reliability. In 1935, it launched the “City Survey Program.”.
In collaboration with the federal government, lenders and real estate agents evaluated neighborhoods and documented their findings into color-coded maps based on perceived creditworthiness. In a dissertation, historian Andrew R. Highsmith explains:
- Green neighborhoods were the best and mostly housed business people.
- Blue neighborhoods were seen as good and primarily housed white-collar workers.
- Yellow neighborhoods were seen as declining, usually due to a shifting of the makeup of the population.
- Red neighborhoods had what the program called “detrimental influences.” This referred to housing conditions, proximity to environmental hazards and “infiltrations of lower grade population or different racial groups.” This is what we refer to as “redlining” today.
Each neighborhood got an area description that included common professions, conditions of the neighborhood, racial and ethnic makeup, and trends of “infiltration” or ways the area was “shifting” in terms of population makeup.
Phrases like “racial hazards” and “subversive racial and social elements” were often used to describe communities of color. Even though redlining started in the 1930s, its effects are still pervasive today. The gap between white and Black homeownership is bigger now than it was when race-based discrimination against homebuyers was legal, according to the Urban Institute.
Federal Housing Administration
One year after HOLC launched, the Federal Housing Administration (FHA) was created.
Through private lenders, the FHA helped make affordable, long-term mortgage loans available for home construction and sale. If a borrower defaulted on their loan, the FHA would pay the bank, relieving the lender of any loan risks. Between 1934 and 1962, the FHA and the later-formed Veterans Administration backed more than $120 billion worth of loans.
This was a great way for people to get into homes — but it didn’t work for everyone.
The FHA included “racial provisions” in its underwriting manual to “protect” neighborhoods from the “infiltration” of business and industrial uses, lower-class occupancy and “inharmonious racial groups.”For almost 30 years, 98% of FHA loans were handed to white borrowers.
Blockbusting and white flight
Alongside the lack of access to home loans through the government, BIPOC homebuyers were discriminated against in the private sector.
In a practice called blockbusting, real estate agents convinced white homeowners to sell their homes for well below their value, warning that Black families were moving into the neighborhood. They’d turn around and sell those properties to Black families for a higher price.
Often all an agent or property developer needed to do to instill fear in white homeowners was hire a Black woman to push a stroller around the neighborhood — the mere idea that Black families were living in the neighborhood pushed white homeowners to sell at decreased property values.
The practice, along with laws and Supreme Court rulings that outlawed racial segregation in housing, provoked an era of “white flight” in the mid-20th century. White families moved in droves from the cities into almost all white suburbs, creating the de facto segregation we still experience today.
Racial steering and racially restrictive covenants
Another tactic that furthered this divide was racial steering. Real estate agents guided prospective homebuyers toward or away from neighborhoods based on their race.
This kept neighborhoods — and accompanying resources — segregated.
Before legal segregation practices were dismantled, many homes in white neighborhoods included racially restrictive covenants in their deeds. These clauses prevented homeowners from selling homes to Black buyers.
After the riots following the assassination of Martin Luther King, Jr., the Congress passed the FAIR Housing Act of 1968 and outlawed racial discrimination in housing. But studies show steering still happens today, based on ostensibly legally protected classes of people, including race, skin color, gender and disability.
A 2017 study by the Urban Institute found that agents showed fewer available rental units to trans people and men in same-sex relationships than to straight men and cis people. (Women in same-sex relationships were treated the same as straight women.
Impact on the LGBTQ community
To this day, only 22 states and Washington, D.C., explicitly prohibit housing discrimination based on sexual orientation and gender identity, 21 states and D.C. prohibit discrimination in public accommodations, and 15 states protect against credit discrimination.
While those who fight for LGBTQ rights are hopeful that the Supreme Court’s June 2020 decision in Bostock v. Clayton County sets the precedent to ban legal discrimination in housing as it did in employment, we can see from history that simply making discrimination illegal isn’t enough to stop it entirely — or turn around its detrimental economic effects.
As Audre Lorde once said, “There is no such thing as a single-issue struggle because we do not live single-issue lives.” It’s important that we all understand the systems that affect the queer/trans BIPOC community and how these systems impact the ability to build wealth over generations.
We must work together to ensure our collective freedom, which starts with understanding how we got to the place we’re in now.
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