Institutional discrimination in the United States housing market

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Charges of Institutional discrimination in the United States housing market hold that discrimination and segregation in the United States housing market have endured despite the condemnation of discriminatory practices. Institutionalized, or systematic, racism has been shown to occur even though overt racist policies have been discontinued. Race is the most significant factor in residential segregation, not class.[citation needed] Socioeconomic factors generally do not keep from desegregating communities.[1] Non-discriminatory policies have been created in order to help desegregate neighborhoods and assist in home ownership.


In the past, African Americans have faced overtly racist policies, such as being legally prohibited to use the same parts of restaurants and beaches. Jim Crow racism was based on the idea that blacks are biologically different from white European Americans, and that difference made them lesser. This type of racism led to a great deal of discrimination. However, such blatant discrimination has taken a back-seat to a much more secretive type of racism. Laissez-faire racism is based on the idea that black people have a cultural inferiority to other races, i.e. African Americans' are responsible themselves for the gap between whites and blacks in America. This idea allows white people to hold blacks responsible for the inequalities that they face, including the discrimination that they receive in the housing market.[2] By assigning fault to blacks for the discrimination that occurs, whites are then able to perceive themselves as not racist, because they are not at guilty for the flaws of the African American community. Whites in different areas of the country surveyed about the characteristics of African Americans admitted to believing that they do not keep their homes as well as whites and other minorities and cause lower property values in their communities that they inhabit. People surveyed also believe that blacks are more likely to become violent and will increase crime in their neighborhoods.[1] This type of racism employs many contradictions between how a person acts and what they say. It gives whites the ability to express racist views, while not sounding traditionally racist.[3]


Blacks are typically the group that whites keep the most social distance from.[2] Although most white people claim to hold no racist beliefs in a study conducted in a Detroit neighborhood by Douglas Massey and Nancy Denton over 60 percent of the whites in the neighborhood would do everything in their power to move to a different area if their community was composed 57 percent by African Americans. Eighty four percent of white people said that they would not consider moving to a neighborhood that had such a high number of blacks living in it. As the percentage of African Americans went down, the more white people were willing to continue living in their neighborhood or consider moving to the community. In a similar survey from the Detroit area done by Massey and Denton 55 percent of blacks responded that they would prefer to live in a community that was about 70 percent black and 30 percent white and other. Their least preferable neighborhood would be an area that is overwhelming occupied by whites.[1] In San Francisco (1973) when whites were surveyed:

  • 41 percent thought that blacks do not take care of their homes and yards
  • 24 percent more likely to steal or cheat
  • 14 percent more likely to commit sex crimes

In the Detroit area, white response to the survey was:

  • 70 percent believed that blacks do not take care of their homes and yards
  • 59 percent thought that blacks were more likely to be violent
  • nearly 50 percent thought that blacks are less moral than whites.[1]

Middle class blacks have a difficult time turning their economic success into a residential change, due to the prejudice that is held against them in the housing market.[2] One way that white people view the highly racially segregated neighborhoods is that people live where they want to live, which is the idea of individualized choice. If an African American family wanted to move into a neighborhood that was predominantly white, they can.[4] This view of individual choice allows whites to see segregated communities as a choice that was made, not created out of racial discrimination.

Federal Housing Administration[edit]

Throughout its history the Federal Housing Administration (FHA) has contributed to the discrimination that African Americans face in the housing market. It has allowed arrangements within housing deeds that forbade them from being sold to black Americans. In 1948, these types of covenants were prohibited by the Supreme Court, the FHA still urged builders to include them in the housing contracts.[5] The issue with this ruling, in the case Shelley v. Kramer, was that it did not make it illegal for voluntary observance of the policies and were still able to register these policies with local authorities.[6]

Federal Housing Act of 1934[edit]

The Federal Housing Act of 1934 was created to aid prospective home-buyers, especially during the time of the Great Depression. It was created as a New Deal program, in order to stimulate house construction and home purchases. This act put the credit of the United States government behind private lenders, so that private loans could be made available in order to buy or build houses.[5] Instead of helping everyone however it funneled money towards whites and away from urban areas, due to the racist polices of the FHA's city surveys. This helped to create the residential segregation that has formed in the United States.[6]

Systematic redlining[edit]

The invention of redlining is often credited to the Home Owners Loan Corporation (HOLC), which designed a rating system for neighborhoods. There were four ratings, green, blue, yellow, or red. The neighborhood that received the highest rating, green, were white and middle class, while the lowest rating, red, was used for neighborhoods that were nonwhite or mixed and working-class. The higher the rating equaled higher property values and were seen as good investments, whereas the area that were red, or redlined, were considered to be poor investments. Banks viewed the redlined areas as high risk and would not give loans for the properties in these neighborhoods. This program made it nearly impossible for African Americans to borrow money in order to purchase a home or improve theirs.[5] Due to redlining, minority and black neighborhoods receive less economic assistance than other neighborhoods in terms of loans and mortgage money as economically equal white communities.[1]

White resistance to policies[edit]

There was a lot of resistance to the policies that were put into place by the Federal Housing Agency by white organizations. For example, the refusal to follow the Supreme Court's decision to ban restrictive contracts. White agencies skirted the rules that were put in place in order to eliminate the discrimination that African Americans faced in the housing market. Although realtors, home owners, and bankers continue to include the racist policies in their contracts, they also began to use other devices more heavily, including redlining, directing minorities to nonwhite neighborhoods, and block busting. Another example of white resistance is the response to President John F. Kennedy's Executive Order 11063. The order instructed that government agencies to fight against discrimination in federally sponsored housing. However, the agencies refused to pass on the order to local agencies, even the FHA did not apply Order 11063 to its policies. Although President Kennedy created the order, he did so as a response to minority population's request for fair housing.[6] Also, realtors are able to make it extremely difficult for black home buyers to purchase a home in a white community. In the 1970s and 1980s an experiment created sent out African Americans to ask about houses that were for rent or sale,

  • 15 percent of the time they received less information about a home for sale than the whites also participating in the study and,
  • 27 percent of black participants received less information about rental homes than white participants.

Realtors are able to show them houses that are located within highly minority neighborhoods or lie about the home (it has already been rented, quoting a higher rent/purchase price) are all tactics that can be used in order to continue to segregate communities, despite non-discriminatory policies.[1] Two acts that were created for the intention of non-discrimination in the housing market were the 1975 Home Mortgage Disclosure Act and the 1977 Community Reinvestment Act. These acts required lenders to keep track of what communities they loaned money to for mortgages and home-improvement. The Reagan administration ignored the acts, rendering them completely useless. Unfortunately, they were created in a way that made it possible for white agencies to get around them.[6]

Title VIII of the Fair Housing Act[edit]

Title VIII of the Fair Housing Act allowed the white authorities to discriminate further against African Americans in the housing market, even though it had been created as a part of the Fair Housing Act. It allowed people to bring complaints of discrimination to the Department of Housing and Urban Development (HUD). The agency was only allowed to look into complaints that were made to the HUD secretary, and the secretary had only thirty days to process and decide whether the case required action. If it was found that the party that made the complaint had been discriminated against the agency had no authority to enforce any type of punishment. If a person had been treated unlawfully then it was up to them to bring the case to court, which meant that they had to take on the costs themselves. Even if they won the case the maximum in damages that they could be paid was $1,000. This left many people unable to receive any type of justice in these situations.[6]

Urban renewal[edit]

Urban renewal programs throughout the United States caused the devastation of many minority communities. During the time of attempted urban renewal in the 1950s, 1960s, and 1970s federal government projects:

  • demolished 20 percent of urban housing units inhabited by African Americans
  • at the same time they only demolished 10 percent of urban units occupied by whites
  • more than 60 percent of people displaced by projects were minorities
  • of the $120 billion of housing created between 1934 and 1962 by the FHA and Veterans Administration only 2 percent was available to minorities[6]

During the time of urban renewal even liberal mayors attempted to justify the programs by claiming that they created more housing for the poor, however it did the exact opposite and destroyed more than was built. Urban renewal targeted minority communities and increased the disparities between the white communities and minority areas. During the 1970s African Americans who lived in urban areas still lost housing at about 80 percent of what had been lost in the 60s. It helped to provide white European Americans the distance that was needed to create a stronger white identity away from black communities.[6]

Effects on African Americans[edit]

It has been estimated that discrimination has caused black homeowners to pay more than $10.5 billion in extra home payments, and that black American homeowners lost $4,000 due to their home mortgages being 54 percent higher than whites'.[6] This has also caused a disparity in the education that their children are able to receive, since education opportunities vary throughout communities, based on taxes.[6] Schools in more impoverished areas are unable to provide the same type of educational opportunities as other communities. School building tend to be more rundown and the technology is typically older.


  1. ^ a b c d e f Massey, Douglas and Nancy Denton. American Apartheid. 1993.
  2. ^ a b c Bobo, Lawrence & Ryan Smith. “From Jim Crow Racism to Laissez-Faire Racism: The Transformation of Racial Attitudes.” In Beyond Pluralism. Ed Katkin, Landsman & Tyree. University of Illinois Press. 1998.
  3. ^ Bonilla-Silva, Eduardo. White Supremacy and Racism in the Post-Civil Rights Era. Lynne Rienner Publishers. 2001.
  4. ^ Bonilla-Silva. White Supremacy and Racism in the Post-Civil Rights Era. Lynne Rienner Publishers. 2001.
  5. ^ a b c Karen Brodkin Sacks, "How Did Jews Become White Folks?" in Race, eds. Steven Gregory and Roger Sanjek. New Brunswick: Rutgers UP, 1994.
  6. ^ a b c d e f g h i Lipsitz, George. The Possessive Investment in Whiteness. Temple University Press, 1998.