It’s no secret that the real estate industry has a shameful past of discriminating against African Americans and other people of color, and that non-discriminatory laws are a relatively recent development in our history. Owning real estate is one of the most reliable methods of building wealth, and for far too long, people of color were subjected to unfair practices that made it difficult (or even impossible) to become homeowners. Although we’ve made progress, Whites are still significantly more likely than Black Americans to own a home. The history of how the real estate industry deliberately impacted people of color is a complicated one, but the brief overview shared here may serve as a starting point into understanding the disparities in homeownership between Black and White Americans that still persist today.
Redlining
African Americans and other people of color faced more than blatant segregation during the Jim Crow era. Prior to the Fair Housing Act of 1968, a practice called redlining was rampant in every corner of the country. Redlining is defined as the descrimination against borrowers, buyers, or renters based on race, sex, religion, diasbility, or other differences. This discriminatory behavior was exacerbated by the housing shortage of 1933, in which the federal government’s efforts to provide affordable housing to middle-class and lower-middle-class White families excluded Black families from newly-built suburban communities. Redlining was practiced by the Federal Housing Administration (which was founded in 1934) and made it all but impossible for people of color to obtain mortgages in desirable suburban areas. Although this practice was abolished in 1968 as a win of the Civil Rights movement, the long term effects of this policy still linger today. Studies have shown that 75 percent of areas redlined in the 1930s still experience economic hardship.
Unjust Government Intervention
The story of Bruce’s Beach is a tragic example of how the government has conspired against Black property owners. More than a century ago, the Bruce family owned property in Manhattan Beach, California, an area surrounded by white neighbors (and that now make up 99% of the population). The Bruce family purchased lots for $1,225 in 1912, where the family managed a lodge, cafe, and dance hall where Black individuals were welcome to enjoy the coast. The Bruce family paved the way for other Black families to settle in this area, and a community of color began to flourish. However, their white neighbors quickly made it clear that these Black families were unwelcome. When white hostility didn’t push the Black community out of Manhattan Beach, the government intervened. In 1924, city officials seized dozens of properties through eminent domain. Although the Bruce family and other families sued, they were not fairly compensated for this unjust property seizure. Today, the market value for the area is an estimated $75 million. Members of the Bruce family are still fighting for justice, and a representative of the family hopes to establish a historical center and scholarship foundation to tell the true story of what Black Americans like the Bruce family have encountered for centuries.
Predatory Lending Practices
Despite advances made during the Civil Rights era, predatory lending practices aimed toward communities of color flourished during the bubble years before the housing market crash. In order to capitalize on mortgage-backed securities, Wall Street incentivized lenders to offer an abundance of risky loans to consumers, who were primarily people of color. Lenders that practiced pricing discrimination offered African Americans and other people of color subprime loans with abusive terms, often resulting in foreclosure.
Gentrification
Gentrification is a challenge that communities across the country are increasingly facing. As cities are invested in and attract more affluent residents, Black and Hispanic Americans are disproportionately displaced from these areas. This is a double-edged sword: as the city begins to thrive and new jobs and services become available, rent and property values rise in turn. According to the National Community Reinvestment Coalition, at least 20,000 Black residents were displaced in Washington, D.C. from 2000 to 2013. In Portland, Oregon, 13 percent of the Black population was pushed from the city in just one decade. Gentrification is a growing problem in many areas throughout the country, but seven cities (New York City, Los Angeles, Washington, D.C., Philadelphia, Baltimore, San Diego, and Chicago) account for approximately half of the national gentrification.
People of color have historically struggled with deeply-rooted, systemic challenges that include redlining, predatory lending practices, and gentrification. Although laws have been passed to mitigate the issues mentioned here, communities of color still face the effects of these problems and further action is necessary. We hope to continue making progress on this front, and the Boulder community is part of the conversation. Organizations such as Home Wanted are confronting issues like gentrification and are actively working to create a more inclusive place to call home. To learn more about racial justice and work toward creating progress, please visit sites such as aclu.org and ncrc.org.