gap in values is MarketWatch's interview series tackling inequality featuring business leaders, academics, policy makers, and activists.
For much of the 20th century, people of color in the United States, especially Black Americans, had limited options for buying, selling, and occupying real estate. These restrictions on homeownership, a new book argues, were largely the result of private actors such as developers and real estate agents, even before discriminatory public policies.
In his book Patchwork Apartheid: Private Ownership Restrictions, Racial Segregation, and Urban Inequality, author Colin Gordon analyzes the historical property records of five Midwestern counties and examines the They found that restrictions were widespread even before urban planning and building codes were enacted to shut down buildings. Before federal redlining took hold, people of color were excluded from homeownership opportunities.
“The roots of racism go back much further than federal redlining,” Gordon, a history professor at the University of Iowa, told MarketWatch. “It is primarily the work of private interests using these private restrictions and other means.”
Redlining is a color-coded map created in the 1930s in which black and immigrant-majority neighborhoods are deemed too dangerous to qualify for government-backed mortgages and are outlined in red. . This discriminatory practice was used to systematically deny black people access to mortgage loans.
As described in Richard Rothstein's The Color of the Law, the new Federal Housing Administration mass-produced condominiums for whites while refusing to guarantee mortgages in black neighborhoods.
In 1968, the Fair Housing Act prohibited racially motivated redlining. But the effects are still felt decades later, and research shows that redlining continues into modern times. White homeownership rates are far higher than Black homeownership rates, with nearly 73% of white Americans owning a home in 2021, compared to 44% of Black Americans. did.
Gordon's book details how private actors laid the foundation for redlining to flourish. The documents he pored over showed how racism developed in neighborhoods and suburbs, and how white developers, real estate agents, and others in the real estate industry erected barriers to black homeownership. It makes it clear how much it is.
Housing developers and real estate agents will come up with explicit racial restrictions that characterize certain neighborhoods as white and make them more desirable for black people compared to less desirable neighborhoods, Gordon said. Policies at the state and federal level then helped maintain these folk practices and protect whites-only areas, he writes.
In 2020, the National Association of Realtors formally apologized for past policies that supported redlining, racial covenants, and other racist practices, calling them a “betrayal of our commitment to fairness and equality.” did. Real estate industry associations in cities including Chicago, Atlanta and St. Louis issued similar statements.
This interview has been edited for length and clarity.
Market Watch: Why write this book now?
Gordon: I am a history professor at the University of Iowa, where my research focuses primarily on the history of public policy. However, a few years ago I became very interested in the mechanisms and origins of racism in American cities.
That led to several books about St. Louis. And with a newly available dataset, I pivoted to a book that delved into civilian racial restrictions.
Recorders are just beginning to digitize this history, so we can dig into it. And it turned out to be a good pandemic project. Because I just lived in the basement of the Recorder's office and did my research.
In some ways, I think it's a stretch to blame federal redlining on racism. And I think the origins of racism are much older. It is primarily the work of private interests using these private restrictions and other means. And when the federal government comes along to save the housing market during the Great Depression, it doesn't challenge what the private market has been doing, but it doesn't create a private market either.
In some ways, this is not surprising, since federal economic policy often prioritizes private interests, such as what needs to be done to stabilize industry. And I think that's what they did in this case.
Market Watch: Who were these civilian actors and what were they interested in?
Gordon: Most private limits are set by the developer. So when the scope and scale of subdivision development increased pretty dramatically in the 1920s, and it started off as a kind of large-scale operation, those big community builders basically had private building codes and zoning standards. Establish something like. Before most municipalities actually enacted systematic building use zoning ordinances. So they are the main culprits.
But in older areas like St. Louis and Waterloo, Iowa; [they were] In the face of an influx of African-American residents, most of the work is done by real estate agents, often going door-to-door and doing retrospective work to cover neighborhoods. They will try to get you to sign a contract.
By the mid-1920s, many other cities, even smaller ones, began to imitate what was happening in the big cities. [and it] It's just kind of a common business practice.
The town I live in, Iowa City, is a relatively small environment with a virtually negligible African American population.However, since the early 1920s, real estate agents [excluding African Americans from buying homes] everytime. It wasn't because there was any threat to the neighborhood or the city, it was just a business move. This is done to protect your property.
Market Watch: Can you give me some examples of what these developers and agents have done to segregate neighborhoods?
Gordon: There are two main types of restrictions. The most prominent one was fitted by the developers and was close to what is currently being considered. [a homeowners association] A set of rules — more detailed than zoning or building codes and often very specific to a particular setting. …It’s usually a huge list of things to do with buildings. [are] placed in your home.
So what did the roof have to do? [of]How many stories does it have? How far back from the street is it? Will it have a garage? Things like that. And a series of prohibitions against the nuisance use of property were put in place. …But the most notable nuisance listed was occupancy by someone not just of the white race. And that adds to the list of nuisance uses that destroy property value. That was the first big mechanism.
The second was an area where housing had already been built and where African Americans appeared to be at risk of moving. These restrictions were subsequently compiled by petition.and real estate [agents] They went door to door trying to get people to sign the petition. …They said he would get 40 or 80 property owners on both sides of the street for several blocks to sign and then submit it to the Recorder's office as a restriction binding on all homes on that street. went.
One of the things I argue in this book is that [that] The central idea that African American appropriation is a nuisance that destroys property values is a fabricated idea. But once you invent it and implement it, it becomes a reality, right? So, if they think their asset value is going to go down, they try to escape before anyone else.
You end up with a wave of white flight and it looks like a blockbuster because people overreact to it. And it's not a class issue. So this is for African Americans in every economic department.
For example, the city of St. Louis, which has had a significant African-American population since the beginning of this century, is home to the African-American Hospital, the first African-American high school. …So these people are school teachers, dentists, surgeons, and they are similarly affected by these restrictions.
Market Watch: What is the most surprising finding of your research?
Gordon: What surprised me the most was that we always knew about these documents because of the legal issues. But no one knew its extent until my colleagues in Minnesota conducted the Mapping Bias Project, the first large-scale study of digitization.
Minneapolis is an interesting case. Approximately 25% of residential bases in 1950 had these restrictions.and when [the researchers] When they finished their work, we thought, “Wow!''
I [analyzed] In St. Louis County, a suburban county just west of the city of St. Louis, 80 percent of its residential bases in 1950 had racial restrictions on almost everything. Virtually everything built between 1920 and 1950 was restricted. The only area that wasn't restricted was part of an older development.
So what's most surprising to me is how ubiquitous these were by the end of World War II, especially in the rapidly growing Midwestern cities where so much housing was built with infrastructure in those years. I was wondering if it was.
Market Watch: So where did African Americans live in St. Louis at the time?
Gordon: St. Louis is a good example.these [racial] There are regulations everywhere, whether in the suburbs or in the city, creating a kind of circle. [suburbs] that [were] This was done by petitioning the African-American majority areas of the South. So what that means is that in both stages of the Great Migration…African Americans are moving into smaller and smaller areas and into increasingly dense housing until these are no longer enforceable.
The city has responded by rezoning African-American neighborhoods for multifamily housing and allowing the homes there to be carved up and turned into apartments.
Therefore, they often go hand in hand. [this] Personal protection for single-family homes. They are for whites only. But that doesn't stop African Americans from moving to St. Louis. It only determines where they can go in the city.
Market Watch: So does America's strong cultural norm of owning a single-family home have a racist undertone?
Gordon: I think this is a very powerful driver of inequality, especially when you look at the evolution of house prices over the past 50 years. As I argued in the book, it is one of the long shadows of this era of private restriction. Because even though it was unenforceable in 1948 and illegal in 1968, it created a racial wealth gap that persists.
Most people's wealth is home equity, and most people enter the housing market with help from their parents. And if your parents or grandparents were shut out by discriminatory mortgage lending or private restrictions of this kind, that affects you. It will also affect your child. It is something that is passed down from generation to generation.
Market Watch: Did developers and agencies try to sell to people of color against their will, amid regulations and racial discrimination?
Gordon: Here I would like to tell you a small but interesting story. One of St. Louis' biggest developers was very active in the Catholic Church, a very racially liberal figure for the time, and marched in Selma. He was an important figure in the city's interracial civil rights movement.
But all the subdivisions he built before 1950 were racially segregated. And in his personal interactions, you can see that he's struggling a little bit with this and saying, “I don't know. to move there. ”
He went out at some point and built an African American-only community. …And he flips the script and says white people are not allowed to live here. And that's kind of a failure. So people are a little bit offended by the logic of separate but equal…and the housing he built in that subdivision is pretty cheap.
I think his thought process is, “We're doing this because we have to do it as a business practice.” I don't think that's a very good thing. So maybe, by the way, we'll build some houses specifically for black people. ”
