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How Segregation Destroys Black Wealth - The New York Times

The Opinion Pages


How Segregation Destroys Black Wealth


SEPT. 15, 2015

Americans commonly and mistakenly believe that well-to-do black

people no longer face the kind of discrimination that prevents them from
living anywhere they can afford. But a federal housing discrimination
complaint filed last week by the National Fair Housing Alliance shows that
this toxic problem is very much with us, nearly 50 years after Congress
outlawed housing discrimination in the Fair Housing Act.
The complaint, and the investigations that led to it, shows how real
estate agents promote segregation and deny African-Americans the
opportunity to buy into high-value areas that would provide better
educations for children and a greater return on their investments.
Over the course of nearly a year, the alliance reports, black and white
testers posing as home buyers had drastically different experiences when
they contacted a real estate company near Jackson, Miss. Agents often
declined to show properties to black customers who were better qualified
than whites, with higher incomes, better credit scores and more savings for
down payments. Meanwhile, white testers who had expressed interest in
properties in the majority-black city of Jackson were steered into majoritywhite communities elsewhere.
These problems are not limited to the South. Indeed, another alliance
investigation covering a dozen metropolitan areas, including Atlanta,
Austin, Birmingham, Chicago, Dayton, Detroit, New York, Philadelphia,



How Segregation Destroys Black Wealth - The New York Times

Pittsburgh, San Antonio and the District of Columbia, suggests that housing
market discrimination is universal.
Despite being better qualified financially, black and Latino testers were
shown fewer homes than their white peers, were often denied information
about special incentives that would have made the purchase easier, and
were required to produce loan pre-approval letters and other documents
when whites were not.
Moreover, real estate agents enforced residential and school
segregation by steering home buyers into neighborhoods based on race.
Whites were encouraged to live where the schools were mainly white;
African-Americans where schools were disproportionately black; and
Latinos where schools were disproportionately Latino.
This behavior is reminiscent of the practices used by the real estate
industry in the early 20th century that created ghettos for blacks regardless
of income. As the black population grew in Northern cities, realty agents
developed a variety of tools for isolating black families, including contracts
that barred owners from renting or selling to outsiders always a code
for African-Americans.
The Federal Housing Administration, created during the New Deal to
promote homeownership, openly supported these racist measures; it
forbade lending to black people even as it subsidized white families that
moved from the cities to the suburbs. Cut off from fairly priced home loan
credit, black neighborhoods deteriorated and their values plummeted.
Many discriminatory practices were formally ended with the civil
rights and fair lending laws of the 1960s and 70s. But these were quickly
replaced by subtler techniques that encouraged ghettoization, like
channeling black families away from white areas and banks and mortgage
brokers systematically pushing middle-income black families into highcost, high-risk loans when they could have qualified for more affordable



How Segregation Destroys Black Wealth - The New York Times

This history of discrimination has taken an enormous toll on black

wealth, as is shown in research by Douglas Massey and Jonathan Tannen at
Princeton Universitys Office of Population Research. In 1970, two years
after the passage of the Fair Housing Act, for example, the average well-off
black American lived in a neighborhood where potential home wealth, as
measured by property values, stood at about only $50,000 as opposed to
$105,000 for affluent whites and $56,000 for poor whites.
By 2010, affluent African-Americans had passed poor whites in
potential home wealth but had fallen further behind affluent whites. There
is more than money at stake, Mr. Massey and Mr. Tannen write, because
home values translate directly into access to higher quality education given
that public schools in the United States are financed by real estate taxes.
Throughout history, ethnic groups have been able to translate
economic gains into housing in better neighborhoods and advantages for
their children. But for African-Americans, the researchers write, that
transition has been thwarted by segregation and the prejudice and
discrimination that create and maintain it. In other words, the damage
reaches across generations and continues today.