Homeownership and Racial Inequality

Dianne Feeley

Race for Profit
How Banks and the Real Estate Industry Undermined Black Homeownership
By Keeanga-Yamahtta Taylor
Chapel Hill: University of North Carolina Press, 2019, 368 pages,
$30 hardback, eBook $22.99.

WHERE YOU LIVE predicts the path of your family’s future. A hundred years ago those who gave their address as Back of the Yards, then the south side heavily Irish neighborhood in Chicago, couldn’t get hired for a job in sales or offices.

One’s address determines, to a large extent, where one’s children attend school. It can limit or extend transportation routes to jobs, shopping and entertainment. People in some zip codes have higher rates of asthma and lead poisoning. And if you own your house, it is the potential source of wealth for most working-class people — unless you are African American.

By the 1960s, at the height of the postwar economic boom, most U.S. families owned their own home. Black homeownership was lower but nonetheless rising, and at a faster rate than white homeownership. But African Americans had a smaller market to choose from and less access to conventional financing.

That is, Black residents whether renting or owning paid more and got less for their housing than whites. A 1961 Urban League report cited a “race tax” of $157 million in the Chicago housing market alone over just a seven-year period. (49) Additionally, almost a million urban whites had moved to the suburbs and the cities’ tax base declined.

Race for Profit is one of the latest and excellent books showing how housing is a commodity that reinforces inequality in late capitalism. Keeanga-Yamahtta Taylor, assistant professor of African American studies at Princeton University, describes and analyses the federal government housing policies between the urban rebellions of 1967-68 and the Nixon-Ford era.

Saving the Cities

The era begins as the Kerner Com­mission identifies substandard, segregated and sparse housing of the Black community as a root cause of the urban rebellions. As the committee issued its final report, President Lyndon B. Johnson urged passage of the Housing and Urban Development Act of 1968 in order to build or rehabilitate 26 million units of housing, including six million low-income units, within a decade. Its parallel legislation, the Civil Rights Act of 1968 (known as the Fair Housing Act) was to ensure that the new program would be implemented equitably.

Under pressure to respond to the urban rebellions, Johnson increased domestic spending even while the cost of the Vietnam war ballooned. To carry out the scale of rebuilding, in the words of his special assistant Joseph Califano, it had to be a “creative revolution” of public-private partnership. This worked because saving the cities provided new opportunities for mortgage banks, insurance companies and the real estate industry.

More than 300 insurance companies stepped up to form an urban investment program to create low-income housing and inner-city jobs. Taylor notes that it was not a central pool of money or a decision-making body to allocate funds. Each company “retained its autonomy and made business decisions based on what was in its own best interests.” (67)

These of course were the very same companies that had previously built segregated housing complexes such as Stuyvesant Town in Manhattan, Parkchester in the Bronx and the all-Black Riverton Houses in Harlem. By the spring of 1969 the companies claimed to have spent $631 million in financing 63,000 units of low-income housing. In exchange for this infusion of cash, Taylor maintains that the federal government relinquished control of anti-discrimination regulations. (76)

If the goal was to rebuild the cities at the very time when two million whites left for the suburbs and two and a half million African Americans moved to the cities, combining that with ending discrimination in housing would require not just a law, but regulation and inspection.

Looming ahead was the 1968 presidential election, in which Richard Nixon disparaged Johnson’s social programs. But once elected, he appointed George Romney, who had a record of opposing segregated housing, as secretary of Housing and Urban Development (HUD).

Initially Romney outlined a program of expanding affordable housing units by 200,000-300,000 a year while at the same time reversing the divide between suburbs and cities. He employed a carrot and stick method to set up subsidized housing in several overwhelmingly white suburbs. If city officials refused to cooperate, HUD would withhold infrastructural aid.

But Romney found suburban officials, white majorities, the courts and the president against enforcing the Fair Housing Act. For Nixon, racial segregation was the result of “the free choice of individuals and families in both the majority and minority communities.” (125)

Zoning ordinances, and arguments that low-rent apartments would “flood” the neighborhood and overwhelm the schools, were “colorblind” devices used to circumvent the law.

Fair Housing Thwarted

The book’s Chapters 3 and 4 document how the initial programs that came in response to the civil rights movement and urban rebellions were contained, first by thwarting low- and middle-income developments in suburban areas, then by expanding federal mortgages to dilapidated city housing not brought up to code.

Taylor outlines the various ways that developers, mortgage companies and real estate agents conspired with HUD and its financial arm. As a result, while capital covered a program that supposedly rehabilitated 1.7 million homes in three years, Black families moved into housing that was segregated and substandard.

Of course, when the corruption came to light, the program — not the players — was labeled corrupt. Romney did not seize the moment to raise the issue of how, without money for effectively managing the program, staff morale plummeted and the agency became subservient to the real estate industry. Instead he made his peace with the Nixon agenda.

These two chapters set up the way African Americans, particularly Black mothers, were blamed for the failure of the program. Chapter 5, “Unsophisticated Buyers” begins by noting rising mortgage foreclosures that began in 1972.

Many women, displaced by various urban redevelopment programs, were steered into buying rather than renting. Given the precariousness of their income, the reality that their new homes needed expensive repairs and maintenance, and high property taxes, they were unable to hold onto them.

Taylor sprinkles this chapter with compelling stories of women who struggled to maintain their homes. In fact, they were often advised by legal aid lawyers to stop making payments on homes with furnaces that didn’t work, windows that didn’t open and defective plumbing. But these women, desperate for a home for their family, were then labeled as irresponsible buyers who really didn’t “deserve” to own a home.

Romney and his staff described the women as having poor “homemaking skills.” The agency even put out a “Simplified Housekeeping Directions for Homemakers,” two pages of which the book reproduces. These included directions with illustrations on how to clean appliances and dust the furniture.

While HUD refused to consider the systemic problems of homes being sold without having been inspected, the chapter ends on a hopeful note. Taylor documents how women in several cities were able to build homeowner committees. They protested, testified before congressional hearings, brought class action suits, and eventually forced mortgage companies backed by FHA to inspect homes and take responsibility for correcting defects beforehand.

While the beginning chapters of Race for Profit outline the HUD Act and promise of home ownership for low-income families, by 1973 the plug was pulled. Chapter 6 details how both the rhetoric of the Nixon administration and its policies did that so quickly.

In one of his last speeches as secretary, Romney announced that HUD was suspending all funding and construction of low-income housing across the country, effective immediately. As a result, 117,000 lost their loans and their homes as well.

Yet Taylor summarizes what HUD had accomplished:

“By some measures, the federally backed, subsidized housing movement was a historic success. Between 1934 and 1968, there had been roughly 1 million units of subsidized housing built in the United States. But between 1969 and 1972, the numbers accelerated dramatically. Production of low-income housing jumped from 226,000 units in 1970 to 472,000 in 1971 and back to 380,000 in 1972. Of course, these numbers were lower than the ambitious goal of 600,000 units a year established by Congress in 1968, but they were higher than at any other point in U.S. history.” (239)

Federal Neglect

Given Nixon’s refusal to consider integrated housing in the suburbs, he developed a strategy of minimizing federal responsibility for low-cost housing and dumped the mission onto the cities and states.

The combined effect of destroying under-maintained public housing, the moratorium on low-income homeownership, along with rising unemployment in the post-1973 recession, produced thousands of foreclosures. This also drove down the market value of nearby homes and foreclosures ballooned. Taylor notes that by the end of 1974 the federal government was spending $460,000 a day to maintain 78,000 repossessed homes. (217-18)

The Nixon Administration’s analysis of why the program launched by the HUD Act didn’t succeed chalked it up to the “failure of big government.” The supposed fault was an underclass with various “pathologies” that money couldn’t solve. Poor people, particularly African Americans, were once again divided up into the deserving and the undeserving.

With rising unemployment and inflation, the “urban crisis” went on the back burner. Henceforth the main governmental housing tool would be a rent supplement (Section 8 vouchers) that families could use to find their own housing. It was their responsibility. Those who “chose” wisely might possibly lead the way to integrated housing — or not. The structural problems were never considered.

This sixth chapter probably quotes more racist comments about poor African-American families than any other, concluding this criminalization “legitimized the federal government’s return to policies that encouraged residential segregation and the further isolation of poor and working-class urban neighborhoods.” (251)

Profit from Segregation

Taylor’s concluding chapter points out that real estate profits have been and continue to be rooted in residential segregation. There is one housing market, with the market value inversely based on the proximity of African Americans, both individually and collectively. She defines this market as “predatory inclusion” because African Americans are “included” based on discriminatory practices that may entail ignoring fair housing laws, blocking access to credit or charging higher mortgage rates.

Home ownership is the main source through which white working-class families increase their wealth over generations. That is much less true for African-American families, who suffer greater rates of unemployment, underemployment and poverty.

When racism and inequality remain central to the housing market, promotion of homeownership as a means to overcome poverty is a cruel hoax. For a family with less stable income and less access to quality housing, African-American homeownership risks inability to keep their homes and neighborhoods in good repair, ultimately ending up in debt.

Race for Profit closes by summarizing in a long paragraph how the economic crisis of 2008-09 and the policy of subprime mortgages once again revealed predatory practices of the real estate market and governmental silence. This reality, so fundamentally rooted in racism and inequality, leads the author to state that this will be true as long as housing is a commodity and a badge of citizenship.

As an activist working to prevent foreclosures and evictions in Detroit — a Black and brown city — I found this detailed description of the “war on poverty” as it manifested itself in housing a compelling story. But as I was reading the chapters and marking passages, I found myself constantly questioning the author’s idea of integrating the suburbs. I confess I have a bias for cities, and I love Detroit’s oldest housing even though it costs more to renovate than constructing new housing.

The gentrification sweeping through most U.S. cities testifies to the attraction of urban life, even given the pandemic. Additionally, from the vantage point of what is environmentally sustaining, I’d suggest that cities are more energy efficient and, being compact, less intrusive on animal habitat.

The problem Detroiters currently face is displacement. Thousands of homes have been foreclosed and demolished; low-income housing is so difficult to find that some families are forced into nearby suburbs. Meanwhile historic downtown apartment buildings like The Albert have emptied out their previous largely elderly tenants and now, beautifully restored, cater to a different clientele.

Although these are not topics Taylor pursues, given her concluding remarks I don’t think she would disagree. Especially as the pandemic disrupts our “normal” way of life, now might be the moment to examine how we might live and work differently.

July-August 2020, ATC 207