Black Americans and the Racist Architecture of Homeownership

[SummerMadness]

Black Americans and the Racist Architecture of Homeownership

Last summer, DonnaLee Norrington had a dream about owning a home. Not the figurative kind, but a literal dream, as she slept in the rental studio apartment in South Los Angeles that she was sharing with a friend.

At around 2 a.m., Norrington remembers, "God said to me, 'Why don't you get a mortgage that doesn't move?' And in my head I knew that meant a fixed mortgage."

The very next morning — she made an appointment with Mark Alston, a local mortgage broker well known in South LA Black community, to inquire about purchasing her very own home for the first time.

She was 59 at the time.

Alston has built his lending practice on the hope of expanding access to homeownership for Black Americans. He says they have been systematically discriminated against by the real estate industry and government policy. Unlike most loan officers, Alston works with his clients for months — even years — to disentangle a convoluted loan application process, pay off bills and boost credit scores so they can ultimately qualify for a home loan.

The story of housing discrimination is rooted in a long history of racist government policies perpetuated by the real estate industry and private attitudes that began with slavery. The federal government began to push and expand homeownership in the New Deal era through innovations like the 30-year mortgage.

But one way Black people and other minority groups were left out systematically was through a process known as "redlining" which labeled certain areas as "risky" for a home loan. African Americans and immigrants were relegated to areas, marked in red on government-sponsored maps, where poverty was most concentrated and housing was deteriorating.

The Fair Housing Act of 1968 recognized segregationist practices like redlining to be unconstitutional. But the law only prohibited future, formalized discrimination rather than undoing the foundationally racist landscape on which homeownership in America was built.

The vicious cycle and legacy of redlining has persisted: Residents of redlined communities struggled to receive loans to buy or renovate their homes, which led to disrepair and a decline of a community's housing stock. That in turn forced businesses to close and depressed tax revenue, diminishing school funding.

Great article, Richard Rothstein's The Color of Law: A Forgotten History of How Our Government Segregated America does a deep dive into the subject, it really demonstrates how government policy shapes the communities (and their subsequent wealth) we see today.

 

[essentialsaltes]

It is a great article. One I've already bookmarked to read more fully since it's pretty long. The focus on the Los Angeles area resonates with what I know.

 

[2BeholdHisGlory]

I live between two neighbors that are black and their houses are nicer then mine Both built their homes from the ground up (like mine was built) I don't know who was funding them but they sure got the bigger dreams

 

[essentialsaltes]

Norman O. Houston, mentioned prominently in the article, has a city park named after him near my home.

 

[essentialsaltes]

This graphic of how black people have left LA county in the past 30 years is pretty interesting. Elsewhere, I mentioned the movement toward Lancaster/Palmdale in Northern LA County. I wonder if you included just Los Angeles City what this would look like. I bet the drop is a lot more than 14%.

 

[SummerMadness]

This graphic of how black people have left LA county in the past 30 years is pretty interesting. Elsewhere, I mentioned the movement toward Lancaster/Palmdale in Northern LA County. I wonder if you included just Los Angeles City what this would look like. I bet the drop is a lot more than 14%.

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I will have to find the name of the reference, but I was discussing this apparent dynamic with someone; cities used to be white because most Black people were in the South after the Civil War. However, terrorism forced many to flee, precipitating the Great Migration. There was also the promise of manufacturing jobs in cities, that led many to seek a life heading North and West. When Black people arrived, white flight began. Pair that with the government backed mortgages that helped grow the white middle class, while simultaneously denying those same opportunities Black people, along with redlining, and you have the recipe for the modern ghettoes of the United States.

With a primarily black and brown populace in cities, we saw a lot of disinvestment, making those areas worse, which is conveniently blamed on the people they trapped in those spaces. There was a stasis where Black people were told, to get a better life (education, jobs, wealth, etc.), you need to move to the suburbs. What happened? You now see Black people moving into suburbs to achieve the wealth that was once cutoff from them. Of course, the mortgages they received were far more predatory, but what's more important is what happened after. It was either The Color of Law or Racism Without Racists where people were asked what level of diversity do they consider to be acceptable. For black people that number was around 65%, for white people that number was around 15%. In short, if 50% of a community became white, black people would be fine with it; in contrast, white people begin moving out when when less than half that percentage becomes black in their community.

So we see this reversal, where many young, white urban professionals begin to move back into cities... that came with police presence and investment into these areas. As a result, cities have become extremely expensive areas to live in, and property that was once labeled as blighted has been snatched up by developers to make room for housing that is far from affordable. Meanwhile in the suburbs, we're seeing disinvestment in our suburban schools; many programs that once existed, get cut to only allow the bare minimum. I see a cycle developing here, where that 15% attitude drives where investment lies and how stable a community is. In my opinion, we have to break that cycle if we wish to move forward.

 

[disciple Clint]

Black Americans and the Racist Architecture of Homeownership



Great article, Richard Rothstein's The Color of Law: A Forgotten History of How Our Government Segregated America does a deep dive into the subject, it really demonstrates how government policy shapes the communities (and their subsequent wealth) we see today.

The 1968 Fair Housing Act and the 1977 Community Reinvestment Act (CRA). prohibit home lending discrimination https://crsreports.congress.gov/product/pdf/R/R43661

 

[98cwitr]

Renting is just not a smart move long term. You build zero equity, you own nothing. This should be financial and economic common sense. I don't understand the perma-renter mentality.

 

[essentialsaltes]

The 1968 Fair Housing Act and the 1977 Community Reinvestment Act (CRA). prohibit home lending discrimination https://crsreports.congress.gov/product/pdf/R/R43661

Graffiti is prohibited, but that doesn't make it go away. The question is whether the banks and insurers are obeying the law, and who has the resources to sue the bank if it's not.

 

[iluvatar5150]

Renting is just not a smart move long term. You build zero equity, you own nothing. This should be financial and economic common sense. I don't understand the perma-renter mentality.

The economics of buying vs renting depend a lot on where you live and how the relative costs shake out.

For one thing, buying is just generally a lot more expensive - that doesn't necessarily mean it's a bad investment, but it can just cost more. This is partly because people typically buy more house than they rent (which is, itself, partly a result of the available housing stock); this is partly because multi-unit properties can benefit from certain economies of scale with regards to maintenance, utilities, property taxes, and such. This is partly because buying can require a significant down payment that people struggle to accumulate. The cost of buying is also more volatile, because the homeowner is on the hook for all of the (often unforeseen) repairs. Maintenance also imposes psychological and time burdens that some people would rather not deal with.

Yeah, if you live in a place where there are few rental options and the going price for a 1500-2000 sq ft single-family house is around $150,000, then renting is probably dumb unless you're very poor. But if you're in a major city where you can spend $325,000 on a condo the size of my very unimpressive living room and most anything with 2 bedrooms is north of $600k, then buying isn't an option for a lot of people.

 

[98cwitr]

The economics of buying vs renting depend a lot on where you live and how the relative costs shake out.

True, but shouldn't you have the forethought to plan where you live based partly on economic factors (truly I kinda regret moving to NC instead of SC, but it's a wash income/CoL wise)?

For one thing, buying is just generally a lot more expensive - that doesn't necessarily mean it's a bad investment, but it can just cost more.

On the contrary, renting is a zero-sum game. Land lord holds all the cards. Who would want that long term? I'm sure some do...but why? Everytime I wrote a check for rent I said out loud: "I'll never own this"...that was a real motivator.

This is partly because people typically buy more house than they rent (which is, itself, partly a result of the available housing stock); this is partly because multi-unit properties can benefit from certain economies of scale with regards to maintenance, utilities, property taxes, and such. This is partly because buying can require a significant down payment that people struggle to accumulate. The cost of buying is also more volatile, because the homeowner is on the hook for all of the (often unforeseen) repairs. Maintenance also imposes psychological and time burdens that some people would rather not deal with.

Not really. I didn't have enough to put down on this house we're in now, so I just paid the PMI. If we boil this into a debate though, you know what the root matter will be: credit score.

Yeah, if you live in a place where there are few rental options and the going price for a 1500-2000 sq ft single-family house is around $150,000, then renting is probably dumb unless you're very poor. But if you're in a major city where you can spend $325,000 on a condo the size of my very unimpressive living room and most anything with 2 bedrooms is north of $600k, then buying isn't an option for a lot of people.

I'd rather have a bit of a commute and save the money. In the era of covid though, I've been working from home for over a year now. Really saved on all the fuel costs.

 

[iluvatar5150]

True, but shouldn't you have the forethought to plan where you live based partly on economic factors (truly I kinda regret moving to NC instead of SC, but it's a wash income/CoL wise)?

Lots of people live where near where they were born and/or have family. They have no control over where they were born or where their family lives.

Lots of other people go where the work is. They have little control over where that is. Personally, I can count on my fingers the number of metro areas in the US where I could reasonably expect to find full-time, in-house work.

On the contrary, renting is a zero-sum game. Land lord holds all the cards. Who would want that long term? I'm sure some do...but why?

I just told you. The monthly expenditures are typically smaller and more predictable. Maintenance responsibilities are less, too.

I own a house. I like owning a house. But in no way is it cheaper or easier than renting and I have a giant stack of Home Depot receipts to prove it. How many renters do you know who dropped $600 on a door lift so they can install new doors by themselves?

Everytime I wrote a check for rent I said out loud: "I'll never own this"...that was a real motivator.

Not really. I didn't have enough to put down on this house we're in now, so I just paid the PMI.

You’re okay paying pmi and property taxes but not rent? PMI is a couple hundred bucks a month you tossed away to protect somebody else from your potential inability to make good on your loan.

I'd rather have a bit of a commute and save the money. In the era of covid though, I've been working from home for over a year now. Really saved on all the fuel costs.

But now you’re spending money on a vehicle that maybe you wouldn’t have to spend if you were close to downtown. When we moved to Baltimore, we ran the numbers and found that the money we’d save in housing (mostly in property taxes) by moving to the county would be entirely consumed by my wife having to commute to work. Moving into the city cost more for the house, but enabled her to walk (which she prefers).

 

[disciple Clint]

Graffiti is prohibited, but that doesn't make it go away. The question is whether the banks and insurers are obeying the law, and who has the resources to sue the bank if it's not.

They do not have to sue, the Justice Department will take the case if it is valid.

 

[98cwitr]

Lots of people live where near where they were born and/or have family. They have no control over where they were born or where their family lives.

I don't. I moved 6 hours away from everyone I knew and got a great job.

Lots of other people go where the work is. They have little control over where that is. Personally, I can count on my fingers the number of metro areas in the US where I could reasonably expect to find full-time, in-house work.

Work is in every state, albeit you couldn't pay me to move to California.

I just told you. The monthly expenditures are typically smaller and more predictable. Maintenance responsibilities are less, too.

Sure...there's some silver linings there, but looking at the broader picture it's senseless longterm.

I own a house. I like owning a house. But in no way is it cheaper or easier than renting and I have a giant stack of Home Depot receipts to prove it. How many renters do you know who dropped $600 on a door lift so they can install new doors by themselves?

It is actually quite cheaper when you factor in equity. I had to replace the spring in my garage door. Was a learning experience, but pretty straight forward. I'll admit, it's a complete disservice to society the amount of young people not being taught how to turn a screwdriver.

You’re okay paying pmi and property taxes but not rent? PMI is a couple hundred bucks a month you tossed away to protect somebody else from your potential inability to make good on your loan.

My PMI was $75/mo and was cancelled once I reached 20% down on the mortgage.

But now you’re spending money on a vehicle that maybe you wouldn’t have to spend if you were close to downtown. When we moved to Baltimore, we ran the numbers and found that the money we’d save in housing (mostly in property taxes) by moving to the county would be entirely consumed by my wife having to commute to work. Moving into the city cost more for the house, but enabled her to walk (which she prefers).

Baltimore is a pretty dangerous place. You sure she should be walking?

 

[essentialsaltes]

Work is in every state, albeit you couldn't pay me to move to California.

Someone would probably have to, since the "statewide median home price was $758,990"

Even a 6% down payment is pushing $50K. It's just not realistic for busboys or nail salon workers with no inherited wealth.

 

[iluvatar5150]

I don't. I moved 6 hours away from everyone I knew and got a great job.

As did I.

Work is in every state, albeit you couldn't pay me to move to California.

No, work isn't in every state. Every state has work, but certain industries are highly localized and require people to move to them. A person with skills related to oil drilling isn't going to find much work in the northeast. A talented actor isn't going to find much work in Kansas. A construction rigger won't find much work in rural Idaho.

You live in NC - I might be able to find work in the Research Triangle area, but that's about it between Baltimore and Florida. In reality, it's slim pickins anywhere east of Austin.

It is actually quite cheaper when you factor in equity.

That's not necessarily true - again, it depends on the specifics. I pay about $500/mo in property taxes and another $475/mo in mortgage interest. That's $975/mo that I pay to live here that does nothing for my equity.

Since I've bought my house, it has appreciated in value by about as much as I've paid for those taxes and interest, so it's more-or-less a wash for me. But that's mostly because I live in one of the hotter markets in the city and bought at a pretty convenient time. There are plenty of places where this isn't remotely true. Heck, even if I'd bought a bigger, nicer house in the next neighborhood over, it wouldn't be true.

My PMI was $75/mo and was cancelled once I reached 20% down on the mortgage.

Your house must have been relatively inexpensive then, right? Under $200k? And that took what, about 5 years and a total of $4600?

There are a lot of places where those numbers aren't realistic.

Baltimore is a pretty dangerous place. You sure she should be walking?

It's not nearly as dangerous as people think, especially if you stick to the nicer areas.