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How Racial Thinking Influenced Housing Policy


The American dream and citizenship are inextricably linked to property ownership. It is also essential for generating intergenerational wealth. However, this dream accomplishment of becoming a homeowner is becoming increasingly rare among Black Americans (CHANG et al., 2021). Due to segregation and disparities in property appreciation, people of color are at a disadvantage when it comes to establishing equity and generating wealth. The isolation of people of color in some neighborhoods in big cities has long been explained by a story of racially prejudiced bankers and landlords, all independent actors. However, this widely held belief that residential segregation in America is justified misses the lengthy history of state, federal, and even local actions that have resulted in today’s residential segregation.

A century of policies resulted in today’s divided America. From President Franklin D. Roosevelt’s first segregated public housing projects to the 1949 Housing Act, which fortified White migration to the environs, to unconstitutional zoning regulations ratified by city governments, the current state of country is the result of illegal, state-sanctioned racial discrimination (Tobey, 1996). One common confusion is that this is because of a succession of mishaps that drive prejudice and human choices that neighborhoods in most urban region in the nation are separated by race. De facto exclusion includes income variances, private discrimination by real estate brokers and banks, which the Courts defined as “something that happened by accident or by individual choice.” That deception, generally held across the political field, deadlocks the capability to concentrate segregation and the excessive misery it causes in the country.

The truth is that segregation was forced in every urban region by racially explicit national and local regulation, which rendered private actions of discrimination or prejudice ineffectual. Only after the country recognizes that segregation is a government-sponsored structure, which we would call de jure segregation, then we start addressing it. It is not easy to imagine how to fix it if an individual’s choice caused it. The country has to be willing to design effective administration arrangements to reverse them since they are caused by government action. There are two significant reasons why the crisis persists even after several decades.

Redlining Effect

Generations of families were hampered by redlining, which combined with racially discriminatory housing restrictions that prevented Black Americans from purchasing specific properties, gaining equity in their homes, or renovating those they already owned. These unfair behaviors are part of an extensive history of prejudice that has furthered the existing disparities in homeownership and wealth among people of color and white Americans. The demographics and socioeconomic outcomes of redlined communities and the adjacent cities would potentially be faint if the effects of redlining had faded. The fact that this is has not happened, but the degree to which a redlined neighborhood’s people of color vs. non-color population corresponds to the nearby area differs greatly between cities. In 114 of the 174 major cities studied, the redlined districts had a statistically significantly higher population of Black people than the rest of the city (Perry & Harshbarger, 2019).

The exercise of redlining was overt in its discrimination towards people of color. While Hispanic or Latino inhabitants, low-income residents, immigrants, communists, and other communities deemed “risky” by the federal government were frequently redlined, they were not targeted in the same way that African American residents were. Neighborhoods that were once redlined had a higher percentage of the Black population, lower wages, lower property values, and other unfavorable economic characteristics than the rest of their cities. (Perry & Hershberger 2019).

Irresponsible Government Policies

Even though the Fair Housing Act of gave some enforcement to avert future discrimination but nothing was done to reverse or repair a century of federal sanctioned abuses of the Bill of Rights, predominantly the 13th Amendment, which prohibits treating formerly enslaved people as lower cadre citizens (Rothstein, 2017). Due to this, the organizational conditions established by state policy in the 20th century have remained even now. The administration and the courts upheld discriminatory measures to keep whites and people of color apart at every turn, resulting in the powder keg that has defined many cities. This is the tale of America in all of its cities, large and small. Rothstein offered the most compelling thesis on how the federal, state and municipal governments created and sustained neighborhood segregation, based on a thorough analysis of many historical records. His central argument, calls for an ultimate reexamination of US constitutional law. The Supreme Court has been unable to comprehend for decades the extent to which residential segregation in the country is the result of unconstitutional administration action rather than the private decisions made by private individuals (Rothstein, 2017). His findings have far-reaching ramifications.

Effects of The Housing Policies

Despite African Americans’ economic and political progress since the Civil Rights Act, major disparities remain between people of color and whites in terms of homeownership, quality, employment chances and education. These imbalances are echoed in housing segregation and a segmented residential market, which have serious consequences for people of colors economically. Segregation, unequal access to finance and homeownership, and the continued depreciation of property in the communities limits their ability to create equity and wealth through homeownership (Perry, 2019).

According to empirical studies, the average Black American now lives in a neighborhood that is just 35% white. This has not improved substantially than in the previous century when non-Hispanic whites made up 40% of the population (Logan, 2013). Today’s racial landscape is still shaped by yesterday’s public policy. This is especially true in the field of housing, where racially prejudiced state administration policies played a key part in the development and maintenance of segregated zones for much of the twentieth century. For example, in response to the Great Depression, a two-tiered approach to housing policy benefited white middle-class households while deliberately hurting persons of color (Policy, 2005).

To stabilize homeownership financial circumstances, the federal administration introduced the Home Owners’ Loan Corporation, the FHA, and the secondary mortgage market. Housing demand and the construction and banking industries were boosted by the establishment of government-backed, payment, amortizing, fixed-rate and long-term, house mortgage loans. On the other hand, the Public Works Administration Housing Division programs reinforced public housing expansion and removal of slums to progress the housing circumstances of economically challenged homes and increased engagement in construction.

However, this two-tiered method of housing policy resulted in significant residential segregation. The government’s home-buying assistance routinely favored white borrowers, excluding people of color and other minorities. The HOLC formalized redlining as a means of evaluating community quality based on ethnic and racial configuration. Discrimination in the residential market promotes residential segregation patterns that have been created in large part by decades of racially discriminatory housing regulations. The capacity of people of color homebuyers to accumulate equity is hampered by housing discrimination and residential segregation. Homes in primarily Black American communities have more fluctuating demand and prices compared to those in principally white districts, where resources like better paying employment and good colleges are located, contributing to higher housing prices and demand (Cohen et al., 2012). In formerly redlined districts, the depreciation of African American-owned property is particularly noticeable. Furthermore, since the pinnacle of the housing bubble, African American-dominated communities have depreciated and are not expected to appreciate than primarily white districts (Lane, 2019)


Due to segregation and disparities in property appreciation, areas covered by people of color are at a disadvantage when it comes to establishing equity and generating capital. Homebuyers remain to be focused in nonwhite communities even when they have the economical ability to pay for homes in any community of their choosing, where the prospects for equity accumulation are equivalent to those of white buyers of similar socioeconomic position. This is alarming since they show and contribute to racial exclusion in the housing scene. The Fair Housing Act was supposed to abolish residential segregation by removing explicit prejudice and inequities in the housing market. Even though the Fair Housing Act has prospered in removing the most flagrant kinds of segregation that existed several decades ago, the housing market in the U.S. remains intensely fragmented racially. The legacy of national discriminatory and redlining residential rules and practices can still be seen now. Housing segregation has evolved, and people of colored communities are still undervalued compared to white communities. Not only are homebuyers continuing to buy in mostly nonwhite communities, but property prices in segregated districts where people of color are concentrated are also continuing to appreciate at a slower rate than in neighborhoods where white purchasers buy. This has remained even as national property values have improved following the recent financial crisis.


CHANG, A., INTAGLIATA, C., & MEHTA, J. (2021, May 18). Black Americans And The Racist Architecture Of Homeownership.

Cohen, J. P., Coughlin, C. C., & Lopez, D. A. (2012). The boom and bust of U.S. housing prices from various geographic perspectives. ReviewSep, 341–368.

Lane, B. (2019). Home – HousingWire. HousingWire.

Logan, J. R. (2013). The Persistence of Segregation in the 21st Century Metropolis. City & Community12(2), 160–168.

Perry, A. (2019). The Devaluation of Assets in Black Neighborhoods: How Racism Robs Homeowner of the American Dream. Brookings Scholar Lecture Series.

Perry, A. M., & Harshbarger, D. (2019, October 14). America’s formerly redlined neighborhoods have changed, and so must solutions to rectify them. Brookings; Brookings.

Policy, H. &. (2005, November 10). History & Policy. History & Policy.

Rothstein, R. (2017). The Color of Law: A Forgotten History of How Our Government Segregated America. Economic Policy Institute.

Tobey, R. C. (1996). Technology as freedom: the New Deal and the electrical modernization of the American home. University Of California Press.


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