Race for Profit, How Banks and the Real Estate Industry Undermined Black Home Ownership, Keeanga Yamhatta Taylor, 2019 UNC Press
Keeanga as always is an excellent writer. She takes up the racism in the lending and real estate industries abetted by the government from 1968 on. Up until 1968, red-lining was dominant, making credit for Blacks difficult to get. On top of this, the real estate industry used residential segregation to increase profits. For whites, the value of a home increased the further away it was from Blacks. This was not peripheral but built in to the market. Keeanga makes clear that there are not 2 housing markets in the U.S. but one shaped by racism.
There was a division among private actors. Home builders were quite happy to build anywhere for anyone. In some cases they called for the enforcement of open housing to allow more home building in white suburbs for Blacks. However, the real estate industry which profited off of segregation dominated over the home builders.
Of course real estate agents could use this structure to “block bust”. If Blacks were seen to be moving in, whites would flee and property values would drop. Real estate agents could buy the property of fleeing whites cheaply and sell the houses to incoming Blacks at inflated prices. This was a time honored practice.
As a result of new HUD programs and the open housing law it became more profitable to banks to lend directly to Blacks. They no longer had only to rely on marginal mechanisms such as contract buying. Since HUD would guarantee loans, it became profitable for banks to lend to Blacks. This meant that racist exclusion no longer applied as much. This switched to what Keeanga calls “predatory inclusion”.
In spite of open housing, the overall structure of white suburban segregation continued from the 20 years after WWII. Open housing was only sporadically enforced. As such, Black options were limited. FHA was supposed to inspect homes but often these inspections were shoddy. The new market of potential home owners included welfare mothers and other very low income people. Even if they would have preferred to rent , they were pushed into purchasing homes that they could not afford to keep up , or even get into decent shape if they were slums to start with. These homes were usually concentrated in the inner city Black neighborhoods.
The Open Housing Law was a response to the Black movement and specifically the urban riots that swept US cities in the late 60s. This concession by the state to the CRM etc. was resisted by the real estate industry---though it was quite happy to sell to the new Black market guaranteed by FHA. It was also resisted by white home owners who saw their home value as tied to segregation. Because of this, Blacks were only marginally able to break into the white suburbs.
Selling homes to poor people who could not keep them up without any aid or even real guarantee of quality led to continuation of inner city slums. It also led to HUD becoming the nation’s largest slum lord. At first, under the Johnson administration, racial liberalism prevailed and the problem was seen as lack of opportunity and availability of housing for the poor and especially Black people. Up until 68, public housing had been pushed. Often however it was not properly resourced and tended to deteriorate. As this happened , the reflex of the government was to create public-private partnerships. This was the essence of even liberal LBJ’s approach. The government would back up the loans but let the private sector do the work of providing housing , incidentally of course at a great profit. So even under Johnson, the plan was not the big government bogey man later attacked.
George Romney, a racial liberal was head of HUD under Nixon. He wanted to open up the suburbs to Blacks but faced a big push back from the rest of the administration. Over time he was worn down and there never was a major push to integrate the suburbs. The limited options of Blacks continued. In response to the ongoing poor housing situation, more and more commentators including Romney began to blame the poor and Blacks for their predicament. “We did what we could and they messed it up”. Nixon’s response was race-baiting but also the “New Federalism” , giving block grants to states to deal with housing and other issues. This was the dominant approach by 1974 when Nixon was on his way out and Ford came in.
This shift also went along with the on-set of neo-liberalism. Usually this RC strategy is seen as coming in during the late 70s and even 80s. In reality Ford , Carter and even Nixon began to grope toward it much earlier. The most consistent move toward it happened under Carter though most want to attribute that to Reagan.
Keeanga doesn’t spell it out in explicit terms at any length, but it is clear that there is a fundamental conflict between private profit and the needs of the public. Especially in the case of Black access to housing, it was not in the interest of the real estate industry and banks to do anything other than what they did---confine Blacks to ghettoes and sell them substandard housing at a profit. The market structure based on racism required that these private entities reinforce racism to continue making profit. The government , even if at first trying to solve a problem due to the mass struggle of Black people, confined itself to relying on the private actors. It therefore allowed its programs to be distorted by the profit drive. This was true under Johnson and was especially clear under Nixon. Keeanga’s conclusion is that capitalism cannot solve the housing crisis(13) (135).
Since her study stops at 1974 with only a bit of post-script, she doesn’t address subprime lending that led to such a massive loss of wealth by Blacks and other BIPOC and poor people in 2008-9. It does however neatly fit into her description of “predatory inclusion”. As in the earlier period, real estate agents went to poor people who could not qualify for conventional loans and sold them subprime loans at variable interest rates. As the rates went up and especially when the housing bubble crashed, millions were left “under water”. The housing crash took down the economy and millions could not pay their now out of line mortgages.
The changes in housing patterns since 1974 prompted me to write this to Keeanga:
Obviously there have been tremendous changes in the housing situation since 1974. Many U.S. cities if not all are whiter and richer than in the 70s. Poor and working class people have been pushed out of cities into suburbs due to gentrification. This includes BIPOC people. On top of this is middle class Blacks moving into formally white suburbs. In the Seattle area , probably the largest portion of the working class lives outside the city now. Housing prices are just too high for all but more professional workers. Especially the suburbs south of Seattle are more racially diverse than before and in some cases more than Seattle.
Part of this I believe is the cycle of capital investment. The price of property declined in large areas of cities. This drove capital to invest in central cities including high priced housing. This in turn drove poor and working class people out. The suburbs in turn aged and relative property values declined so that the poor could afford them.
Did this alter the dominant racial rigidity of the real estate industry? Were they more willing to sell BIPOC people houses in formerly white suburbs? Is the same pattern you described now true of some suburbs but not others? Are some suburbs relatively integrated while others are still exclusive racially?
Obviously institutional racism is as strong as ever if not moreso. However , it does seem that the housing pattern has shifted.
My guess is that inner ring suburbs are more working class and more BIPOC than more exclusive outer ring suburbs. In discussing elections the press is stuck in the early 70’s: they claim that the suburban vote is “middle class” and white. They assume that Democrats appealing to the suburban vote is an attempt to win middle class support as they dis the working class. This is true in a general sense, as the Democrats move rightward, they look more and more for middle class and upper class votes. Yet many suburbs now are working class---and actually many already were in 1950. Trump too was stuck in the early 50s when he made a racist appeal to suburban women who he assumed were white to protect them from the lower income Black hordes who wanted to take over the suburb
Mid-70s , massive cut in housing subsidies.(217)
Corruption in all these programs was endemic, from poor inspections , to pushing high turnover to get more fees etc.
Excellent book !! Now just needs to be updated to the present !
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