Discrimination - Housing Segregation
In the years between Emancipation and World War II, many newly freed slaves and their decendants migrated from the rural South to the urban North in search of work in the North’s industrial factories. With the influx of Southern blacks, Northern whites reacted with fear and hostility and forced blacks into segregated urban ghettos.
In the 1930's the federal government created the Federal Housing Administration, whose job it was to, provide loans, or the backing for loans, to “average” U.S. citizens so they could purchase a home. As a result, federal programs and banks sank millions into the home construction industry. From this, what we now call the suburbs was born. As more and more European immigrants moved into whiteness, they moved out of the slums and moved into a new era of respectability – which included access to government backed loans.
While this “white flight” was taking place from the ghettos of the United States, FHA underwriters were warning that the presence of even one or two non-white families could undermine real estate values in the new suburbs. These government guidelines were widely adopted by private industry.
Race has a long and ugly history in local real estate practices across the United States. Starting in the 1930's, government officials institutionalized a national appraisal system, where race was as much a factor in real estate assessment as the condition of the property. Using this scheme, federal investigators evaluated 239 cities across the country for financial risk.
Those communities that were all white, suburban and far away from predominant communities of color, received the highest rating, green. The communities that were, at the time, predominantly Black or Hispanic - or in the process of becoming so - received the lowest rating there was, the color red.
And thus the term “redlining” came into existence and as a result, most of the mortgages went to suburbanizing the United States, and it was done so along ethnic lines.
Housing segregation has declined, but, especially for African Americans, still persists at a high level. Segregation is highest, and has declined the least, in the areas with the largest minority populations - i.e., the places where most people of color live . Due to segregation and discrimination, African Americans and Latino/a Americans remain disproportionately concentrated in central cities.
The high levels of segregation between whites and African Americans cannot be explained away by racial income differences. Preferences of whites regarding neighborhood racial composition account for some of the persistence of segregation. Preferences of African Americans regarding neighborhood racial composition account for very little segregation. Although declining, discrimination – in sales, rentals, lending, and insurance - remains common and is an important factor contributing to racial housing segregation.
Housing segregation and discrimination have significant consequences for people of color, including deprivation of asset accumulation (through limited access to homeownership and the “segregation tax”); restricted educational opportunities; and reduced access to employment opportunities (“spatial mismatch”). Housing segregation and discrimination have broader implications for race relations, by preventing opportunities for meaningful intergroup contact.
Segregation is highest, and has declined the least, in the areas with the largest minority populations - i.e., the places where most people of color live. In the 1/4 of U.S. metropolitan areas with the highest percent African American population (more than 19%), segregation only fell from about 73 to about 67 between 1980 and 2000. This is a higher level and a smaller decline than for areas with smaller African American percentages.
In some metro areas with large African American populations, segregation between whites and African Americans is quite extreme. For example, in the New York, Chicago, Detroit, and St. Louis metropolitan areas, the majority of whites in 2000 lived in census tracts that are less than 2 percent black – even though the percentage of African Americans in these metropolitan areas ranges from around 19 to 24 percent. At the same time, the majority of African Americans lived in neighborhoods that were less than 5 percent white.
The high levels of segregation between whites and African Americans cannot be explained away by racial income differences. Poor whites don’t live near poor blacks. Middle-income blacks don’t live near middle-income whites. And especially, upper income whites and blacks don’t live in the same areas.
Preferences of whites regarding neighborhood racial composition account for some of the persistence of segregation. Between 1/3 and 1/5 of whites indicate unwillingness to move to a neighborhood as little as 20% African American. Only about half of whites are willing to move into a neighborhood that is one-third African American. Roughly the other half of whites are unwilling to move into a neighborhood with this racial mix. But the number of whites who actually do live in neighborhoods that are 1/5 or 1/3 black is far below the 65-80% of whites who indicate willingness to do so.
Although declining, discrimination – in sales, rentals, lending, and insurance - remains common and is an important factor contributing to racial housing segregation. Even though in most cases there is a decline, discrimination occurs more than 20% of the time in rentals and 15-20% of the time in sales. White borrowers are offered more choice in loan products, higher loan amounts, and more advice than minority borrowers. African American applicants were not only more likely to be rejected; they were also more likely to give up and withdraw the application without receiving the loan.
Preferences of African Americans regarding neighborhood racial composition account for very little segregation. Blacks consistently live in neighborhoods where the percentage of blacks exceeds their preferred neighborhood composition, suggesting the segregation is largely involuntary.
Both discrimination and the segregative preferences of many whites are important factors contributing to housing segregation, inner-city concentration of minorities, and lack of homeownership among people of color. The preferences of some African Americans for segregated neighborhoods are at most a minor cause of segregation and concentration.
Housing segregation begets school segregation. In particular, it overconcentrates African American and Latino/a students in central city schools. Typically, these schools experience greater financial difficulty and place lower expectations on students than many suburban schools. Consequently, students in suburban schools usually fare better. In the absence of integrated housing, students of color lack access to suburban schools except through busing. Busing has been eliminated in areas throughout the country. As a result schools are becoming steadily more segregated.
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