Race and housing in America

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Homeownership is key to personal wealth. But segregation promoted by government, banks and the real estate industry persists today in access to homeownership.

This special report explores the effect of race on housing in America.

Photo illustration of a row of houses, a young child seated on a luggage, and a “We want White tenants in our White community” protest sign

Photo Illustration: Eniola Odetunde/Axios. Photos: Bettmann, Universal History Archive/Getty Images

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Deep Dive: Hard Truths - Housing

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Homeownership is key to personal wealth. But segregation promoted by government, banks and the real estate industry persists today in access to homeownership.

The U.S. government partnered with the private sector for decades to prevent Black Americans and immigrants from owning homes, and while explicit rules regulating where people of color live were outlawed in 1968, the legacy of racial segregation in undervalued neighborhoods still reverberates throughout the country. 

Why it matters: Owning a home is an integral piece of the American dream, and the single most important driver of wealth generation and financial security — especially for Black households.  

The catch: Federal and state governments created policies to maintain and intensify segregation. The business community supported that discrimination by using racial criteria to make decisions about lending, property valuation and rental rates. 

“It was the continuation of the assumption that policymakers had about white superiority, African American inferiority, and the desire to keep the two apart.”

Richard Rothstein, Distinguished Fellow of the Economic Policy Institute 

Racial covenants: Starting in the 1920s, realtors and developers wrote language into deeds to prevent anyone who wasn't white from buying property. 

Redlining: The federal Home Owners’ Loan Corp. created "residential security maps"  in the 1930s based on evaluations from lenders, developers and appraisers. 

The lowest-rated, "hazardous" areas were outlined in red. The maps reinforced racial and income segregation, deterred investment in non-white communities and depressed home values — a dynamic that still exists in a majority of redlined areas today. 

Realtors: The profession required racial discrimination. 

“A Realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individuals whose presence will clearly be detrimental to property values in that neighborhood.”

The National Association of Realtors recently issued a public apology for its past. 

The big picture: Redlined maps are gone but the inequality they helped create has endured. Limiting the ability to build wealth through the value of a home touches future generations since houses can be passed on as inheritance and also tapped for anything from college funds to seed money to start a business. 

Data: Zillow; Chart: Andrew Witherspoon/Axios

“Redlining is still hardcoded in our cities, and that manifests itself in what home values are doing now,” says Cheryl Young, senior economist at Zillow.  

Asian American homes are often located in pricey geographies like California, where 30% of all Asians live, making their home values higher than those of Black and Hispanic homeowners, Young says.

Non-white Americans have a harder time finding homes — thanks to unequal treatment — and financing them at affordable rates using traditional mortgages. 

Being blocked from homeownership means more people of color rent and pay much more for the privilege.  Higher rents equate to lower savings cushions and more exposure to eviction. 

Housing equity makes up nearly 60% of total net worth for Black homeowners, compared with 43% for white homeowners, according to a recent report from the Urban Institute. 

Even so, Census Bureau data shows the rate of homeownership for Black (42%), Hispanic (48%), American Indian or Alaskan Native (51%), Asian or Native Hawaiian/Pacific Islander (58%) Americans is much lower compared with 72% for white Americans. 

The intrigue: If you think federal policies have changed to improve life for people of color, the reality is very different for Native Americans. Thunder Valley Community Development Corp. executive director Tatewin Means says few Native Americans feel the federal government will solve the housing crisis soon. "We keep expecting a broken system to work," Means tells Axios’ Russell Contreras. 

The bottom line: “Because housing was such a driver of intergenerational wealth in the 20th century, it is hard to say that anything else measures up to driving and worsening wealth disparity between people of color and white families in the last century," says Robert Nelson, a historian focused on housing and urban history at the University of Richmond.

"It is one of the main expressions of white privilege and systemic racism.” 

American dream deferred

Those areas remain undervalued, limiting family wealth.

Photo illustration of a home being sold to a white couple instead of a Black couple. 

Photo illustration: Aïda Amer/Axios. Photos: Lambert Studios (ARC), H. Armstrong Roberts (ClassicStock)/Getty Images

Latin America and Latinos

The U.S. government partnered with the private sector for decades to prevent Black Americans and immigrants from owning homes, and while explicit rules regulating where people of color live were <a class="gtmContentClick" data-vars-link-text="outlawed in 1968" data-vars-click-url="https://www.hud.gov/program_offices/fair_housing_equal_opp/aboutfheo/history" data-vars-content-id="fc7aa345-0dc3-4962-9cc9-aee5870e261d" data-vars-headline="American dream deferred" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.hud.gov/program_offices/fair_housing_equal_opp/aboutfheo/history" target="_blank">outlawed in 1968</a>, the legacy of racial segregation in undervalued neighborhoods still reverberates throughout the country. Why it matters: Owning a home is an integral piece of the American dream, and the single most important driver of wealth generation and financial security — especially for Black households.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Graphic: Eniola Odetunde, Danielle Alberti/Axios. Photos: Tim Graham, Travis Heying, Hearst Newspapers, Newsday, Bettmann, George Rinhart via Getty Images 

A timeline of housing inequalities

The Indian Removal Act was among the first laws that allowed whites to seize lands.

Photo illustration of house with protest signs, people holding racist picket signs, and young boy drinking from a water fountain

Photo Illustration: Eniola Odetunde/Axios. Photos: Buyenlarge, Bettmann, Newsday LLC/Getty Images

<div><figure><div id="av-2020-12-19-timeline-housing-discrimination-C9512" style="max-width:100%"><img alt="Graphic: Eniola Odetunde, Danielle Alberti/Axios. Photos: Tim Graham, Travis Heying, Hearst Newspapers, Newsday, Bettmann, George Rinhart via Getty Images " class="axios-visual-newsletter-fallback-image" src="https://graphics.axios.com/2020-12-19-timeline-housing-discrimination/fallbacks/2020-12-19-timeline-housing-discrimination-fallback.png" width="1200" height="2589"/><img alt="Graphic: Eniola Odetunde, Danielle Alberti/Axios. Photos: Tim Graham, Travis Heying, Hearst Newspapers, Newsday, Bettmann, George Rinhart via Getty Images " class="axios-visual-apple-fallback-image" src="https://graphics.axios.com/2020-12-19-timeline-housing-discrimination/fallbacks/2020-12-19-timeline-housing-discrimination-apple.png" width="300" height="1308"/></div><figcaption>Graphic: Eniola Odetunde, Danielle Alberti/Axios. Photos: Tim Graham, Travis Heying, Hearst Newspapers, Newsday, Bettmann, George Rinhart via Getty Images </figcaption></figure></div>

Markets

Axios Markets

The homeownership gap between Black and white Americans is worse today than when race-based housing laws and policies were in effect decades ago. 

Why it matters: Decades of unequal access to mortgage financing have had a predictable effect: Non-white Americans have much lower homeownership rates, lower wealth and a higher degree of financial precarity. This is especially true among Black Americans.

Non-white Americans face a harder time finding and financing a home. They also pay higher rates once they get a loan. And they are more likely to be targets of predatory lending.

About 4-in-10 (42%) Black Americans own a home; for Hispanics it's 61%; and for whites it's 72%, per the Census Bureau. 

The government's New Deal-era "redlining" program officially labeled predominantly Black neighborhoods as a "hazardous" investment for the Home Owners Loan Corp., creating lower home prices that persist to today.

Today, Black families are denied mortgages at a much higher rate than other Americans. According to Zillow, some 24% of mortgage applications by Black Americans are denied, compared to nearly 20% for Hispanics and 14% for Asians and for whites.

Black-owned banks have tried to fill the gap, supporting borrowers in predominately Black communities. But their numbers have shrunk by 50% since 2001, according to the Urban Institute.

The big picture: When loan officers at local banks extended mortgages, they often withheld loans from people of color. In recent years, those decisions are increasingly made by faceless algorithms, based on credit scores. But that's not necessarily an improvement, since Americans of color have lower credit scores, on average.

Households of color are more likely to be renters — and timely rent payments, unlike timely mortgage payments, are not reflected in credit scores. So renters' credit scores remain low, and the bottom rung of the housing ladder remains out of reach.

"Credit scoring, the way in which it's done, has a disparate impact on African American and Hispanic families," says Richard Rothstein, distinguished fellow of the Economic Policy Institute.

Even if one gets past all those barriers, homeowners who are not white tend to have less equity in their homes. On average, Black homeowners have $67,000 of equity in their homes, Hispanic homeowners have $95,000 and white homeowners $130,000, according to 2019 Federal Reserve data.

The housing boom and bust of the 2000s saw Black and Latino borrowers deliberately put into higher cost, higher-risk loans than similarly situated white borrowers — and then saw the same borrowers suffer significantly higher foreclosure rates than their white counterparts. 

Homeowners who avoided foreclosure in the wake of the 2008 financial crisis are generally now sitting on significant positive equity. Those who were foreclosed on, however — disproportionately Americans of color — were booted off the homeownership ladder entirely. 

Similarly, during the 2020 crisis, white borrowers are more likely to have received forbearance from their mortgage lender than their Black and Latino counterparts. 

Predatory lenders destroy wealth rather than creating it. Such lenders "disproportionately target minority, especially African American, borrowers and communities," as one Harvard study found.

The bottom line: Racism can still be found at every stage of the homeownership financing process. As America approaches a new eviction crisis, the racial housing gap looks as though it's going to get even worse.

Why the racial homeownership gap persists

The homeownership gap between Black and white Americans is worse today than when race-based housing laws and policies were in effect decades ago.

Photo illustration of a hand holding burnt mortgage papers with an aerial photo of a suburb and a Black couple looking over housing plans

Photo illustration: Sarah Grillo/Axios. Photos: H. Armstrong Roberts (Classicstock), Cliff de Bear (Newsday RM), Lambert/Getty Images 

The homeownership gap between Black and white Americans is worse today than when race-based housing laws and policies were in effect decades ago. Why it matters: Decades of unequal access to mortgage financing have had a predictable effect: Non-white Americans have much lower homeownership rates, lower wealth and a higher degree of financial precarity. This is especially true among Black Americans.

Renters of color, especially Black Americans, often pay a "Black tax" — a premium for renting similar housing in the same neighborhoods as whites.

Why it matters: A recent study found that Black tenants paid as much as 2% more in rent — a gap that widened if the area had a bigger population of white people. Higher rent is just one hurdle to accessibility and affordability in the rental market that people of color uniquely deal with despite federal fair housing laws enacted more than 50 years ago. 

What they’re saying: “Putting everything else constant, we're talking about paying an extra 2% for your housing, and you get nothing for that,” Dirk Early, the study’s lead researcher, tells Axios. “It’s just another cost associated with race.”

By the numbers: Locked out of homeownership, people of color overwhelmingly rent.

More than half of Black American and Latino households are renters, according to USAFacts, while Asians and Native Americans are just under that threshold. 

Compare that to the 27% of white households that rent.

How it's playing: People of color already put more of their income toward housing compared to white people. 

They’re more likely to have fallen behind on rent during the pandemic — namely because minority renters overwhelmingly work in sectors that shed jobs because of COVID-19. 

Households of color make up just under half of all renters but are projected to account for 58% of the households that will owe back rent by the end of the year, according to the Philadelphia Federal Reserve.

The outsized burden comes due on Dec. 31, when the CDC's halt on evictions expires. 

The big picture: Fair housing laws have reduced blatant discrimination from the levels seen in the late 1960s and 1970s, but they've also made disparities harder to spot "when you as a renter are being discriminated against," said Claudia Aranda, a researcher at the Urban Institute who focuses on metropolitan housing.

Studies by the institute and housing coalitions have found that landlords show more properties, and offer more incentives, to white prospective renters compared to non-white renters.

Discrimination against vouchers, which help low-income families, the elderly and the disabled access housing in the private market, also disproportionately affects people of color. 

In 2018, over 90% of D.C. voucher holders were Black, despite making up only 48% of the city’s residents, according to the Equal Rights Center. 

15% of all Black renter households in D.C. used vouchers, compared to less than 1% of white renter households.

In New York, landlords often stood up interested tenants of color when they said they were using housing vouchers, The City reported last year. A similar phenomenon played out in Boston and in many other cities.

What to watch: Pandemic-induced evictions could exacerbate the already high levels of homelessness among Blacks, Latinos, Asians and Native Americans.

Latinos make up roughly 18% of the U.S. population, but they represent 22% of all people experiencing homelessness, per HUD’s 2019 annual report to Congress.

Among Black Americans, the figure jumps to 40%, although they comprise around 14% of the country's population.

The bottom line: Higher rents, a diminished paycheck and the pandemic have renters of color on a downward spiral that affects opportunities in other areas of their lives.

"Ultimately, this is about the choices that people have, and how the housing that we have access to may limit our ability to access other things: better schools, transportation and jobs," Aranda says.

The rental housing market's "Black tax"

“It’s just another cost associated with race.”

Photo illustration of a row of apartment buildings, with a giant hand holding a stack of hundred dollar bills behind them

Photo illustration: Sarah Grillo/Axios. Photo: Underwood Archives/Getty Images

Renters of color, especially Black Americans, often pay a &quot;Black tax&quot; — a premium for renting similar housing in the same neighborhoods as whites.Why it matters: A recent <a class="gtmContentClick" data-vars-link-text="study" data-vars-click-url="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3200655" data-vars-content-id="876c4951-0e25-4be4-96e3-00323dc4f601" data-vars-headline="The rental housing market&#x27;s &quot;Black tax&quot;" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3200655" target="_blank">study</a> found that Black tenants paid as much as 2% more in rent — a gap that widened if the area had a bigger population of white people. Higher rent is just one hurdle to accessibility and affordability in the rental market that people of color uniquely deal with despite federal fair housing laws enacted more than 50 years ago.

Data: Census Bureau; Chart: Andrew Witherspoon/Axios

It's taken the coronavirus pandemic to highlight the dismal housing that many Native Americans and Alaska Natives are forced to call home: dilapidated, overcrowded structures without electricity or indoor plumbing. 

Why it matters: Native Americans on reservations have lived for decades under these dire conditions. The difficulty in building or even improving homes is traced to federal policies on reservation land and limited access to capital for Indigenous families. 

By the numbers: 40% of reservation housing is substandard and nearly one-third of reservation homes are overcrowded, according to the National Congress of American Indians — conditions that have turned private homes into superspreaders of COVID-19. 

Some homes on the Oglala Lakota Nation, for example, have 21 people living under one roof, Thunder Valley Community Development Corp. executive director Tatewin Means told Axios.  

Less than half the homes on reservations are connected to public sewer systems, and 16% lack indoor plumbing, making frequent handwashing more difficult. Now more than 10% of the 173,000 people of the Navajo Nation, for example, have tested positive for the virus.

Around half the homes lack phone service. Just 46.6% of housing units on rural tribal lands have access to 25/3 Mbps broadband service, a Federal Communications Commission report said, making telehealth impossible during the virus. 

Residents have to travel long distances from isolated rural homes to get basic needs like groceries, putting them at higher risk of contracting the virus.

The unemployment rates of the Navajo Nation and the Oglala Lakota Nation — the nation's two largest reservations — are 42% and 80%, respectively, preventing residents from saving for a down payment.

Between the lines: Experts say there's little hope of improvement as long as Native American housing and property ownership sit in a maze of federal bureaucracies and underfunded projects. 

Tribal members in need of housing on reservations face long waitlists. Off tribal lands, they face the same obstacles to getting a mortgage as Black and Latino Americans. 

The lack of housing forces some tribal members into homelessness in urban areas like Seattle, Phoenix, and Albuquerque, New Mexico.

17% of Native American households have at least one “doubled-up” person, nearly 85,000 in all, because they have nowhere else to go, a 2017 U.S. Department of Housing and Urban Development (HUD) report found.

What they're saying: Brett Chapman, a Tulsa, Oklahoma, attorney and a descendant of Ponca Chief Standing Bear, said the current poor housing conditions for Native Americans are civil rights violations.

"It's not that anyone objects to providing Native Americans better housing. It's just that no one cares."

Means said few Native Americans feel the federal government will solve the housing crisis soon. "We keep expecting a broken system to work."

Where it stands: Tribal governments are watching a housing project by the Thunder Valley Community Development Corp., which teaches Oglala Sioux tribal members the value of homeownership within their culture. 

The tribal members learn financial literacy outside of the traditional U.S. banking system, by raising funds with help from the community to enable tribal members to declare their "independence from a colonial system."  

They're also learning homebuilding techniques using available materials, such as compressed-earth blocks and straw bales.

The homes are built in a circle with an opening to the east in a Lakota tradition.

A reckoning on housing for Native Americans

40% of reservation housing is substandard and nearly one-third is overcrowded.

Policymaking

It&#x27;s taken the coronavirus pandemic to highlight the dismal housing that many Native Americans and Alaska Natives are forced to call home: dilapidated, overcrowded structures without electricity or indoor plumbing. Why it matters: Native Americans on reservations have lived for decades under these dire conditions. The difficulty in building or even improving homes is traced to federal <a class="gtmContentClick" data-vars-link-text="policies on reservation land" data-vars-click-url="https://www.huduser.gov/portal/sites/default/files/pdf/NAHSG-Lending.pdf" data-vars-item="in_content_link" href="https://www.huduser.gov/portal/sites/default/files/pdf/NAHSG-Lending.pdf" target="_blank">policies on reservation land</a> and limited access to capital for Indigenous families.

Race, Politics and Influence in America

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Structural barriers keep people of color from gaining the political power that reflects their numbers.

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Photo Illustration: Eniola Odetunde/Axios. Photos: David Fenton, Karl Gehring, Bettmann/Getty Images

Deep Dive: Hard Truths - Power and Influence

America is more racially and ethnically diverse. But structural barriers keep people of color from gaining the political power that reflects their numbers.

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