There are few things more American than the prototypical American home—apple pie aside—and there are few things of more value to Americans than owning this home. In politics, presidents and representatives repeatedly value this American tradition. We are a “nation of homeowners,” extolled Franklin Roosevelt, stating in his 1944 State of the Union address that “the right of every family [is] to a decent home.” Former President Barack Obama praised homeownership as something “important to encourage” among Americans. Homeownership is woven into the American spirit and is naturally something “our liberty-loving forebears should hand down to us…[and] fundamentally we are and must continue to be home owning people,” said J.C. Nichols, one of the most prominent and coveted home builders of the early 20th century. So, if these home owning tenets are continually ingrained in our nation’s psyche, why is it that homeownership is so unequal?
Currently 63.9% of Americans own homes, a figure bolstered by a white homeownership rate of 72.3%. Although hispanic/latino homeownership is rising steadily in recent years to 46.2%, black homeownership lags at a 42.3%, a rate not seen since the implementation of the Fair Housing Act of 1968: a national policy requiring communities receiving federal funding to actively work to desegregate neighborhoods. However, homeownership disparities among races are just the beginning of America’s housing inequities. The median income for white homeowners ($162,800.00) is 10 times more than that of black homeowners ($16,300.00), and young black millennials have a homeownership rate of 13% compared to a 37% homeownership rate among white millennials. In fact, the aggregated white to black homeownership gap of 30% is wider than it was 20 years ago in 1998 (26.2%).
Despite the mid-2000s housing boom, when black homeownership reached record heights, the Recession largely erased economic gains in black communities where 8% of black homeowners lost their homes to foreclosure caused by the ubiquity of subprime loans targeted at black communities. It is clear that the America’s housing market is lopsided towards white homeownership, but why?
Until the 1920s, homeownership was prohibitively expensive for the vast majority of Americans. The process of purchasing a home pre-20th century required tremendous amounts of capital, including a down payment worth 50% of the land’s value, in addition to the home’s mortgage (typically a 5-year fixed schedule with the mortgagee paying 50% of the home’s value upfront). Once buying a home became financially manageable, through federally sponsored housing programs, both public and private interests safeguarded developments to ensure black citizens were barred from homeownership.
By and large, unequal government housing practices began amid World War II when the federal government segregated all federally-sponsored temporary worker housing. The new housing ameliorated dwelling shortages in cities but solidified segregation. Metropolitan areas grew increasingly segregated as federally sponsored redlining practices made purchasing homes financially impossible for black communities. As private suburban development arose outside of urban wartime facilities, white families moved as black families remained stranded in ad hoc wartime housing. Restrictive covenants codified in new suburban developments, prohibiting “occupancy or tenancy by blacks” and enabling white flight. The boilerplate covenant was inscribed throughout deeds in private, federally backed suburban developments around the U.S.
Additionally, the federal government promoted homeownership for returning veterans, offering 30-year amortized mortgages at pennies down for white purchasers. Conversely, prospective black homeowners wanting to benefit from federally sponsored home programs were deemed too risky to be given a federal loan, pointing to prevailing notions that black presence in a neighborhood would lower housing values. On the off chance that blacks were given a loan, lenders sought to minimize risk through a contract buying system, which imposed egregiously high interest rates, high down payments, and no equity until the home loan was paid. Whether in the private or public spheres, black families were unable to attain American homeownership.
Democrats and Republicans acknowledge home owning is an important issue and presidential hopefuls, like Elizabeth Warren, are releasing plans to provide federally sponsored down payments to first-time homebuyers in previously redlined districts. Unfortunately, these redlined districts are now merely 28% black and far from the suburban development where private covenants are still prevalent, illustrating that American’s largest investment remains structurally unattainable for historically marginalized homeowners. To finish Roosevelt’s quote, “a nation of homeowners is… unconquerable,” and we are a nation that is conquered by housing injustice.
Patrick Hosford is a Senior at Hunter College pursuing a degree in Urban Studies, certification in Public Policy, and a minor in Economics. Hosford currently serves as a Public Service Scholar fellow on the Cyber NYC program at the New York City Economic Development Corporation, having worked prior in the agency’s Asset Management Department. Upon graduation, Hosford is pursuing career opportunities in nonprofit research and urban development throughout the New York City area.