Skip to content

How Banks and the Real Estate Industry Undermined Black Homeownership


Keeanga-Yamahtta Taylor (@KeeangaYamahtta) is Assistant Professor of African American Studies & Charles H. Mcilwain University Preceptor at Princeton University.

This post is part of our Race for Profit symposium. Read all posts here.

In Houston’s upscale Galleria-Uptown neighborhood, the mall known simply as “TheGalleria” is, according to its website, “Texas’ largest and most luxurious shopping destination.” A local real estate website confirmed the value of the location, pointing out that housing values in the neighborhood sustained a “55 percent appreciation rate from 2005 to 2014.” The prize of rising property values was the promise to keep the neighborhood as white and middle class as possible.

In 2015, the Houston Housing Authority proposed building two hundred and thirty-three units of affordable housing in Galleria-Uptown, a neighborhood that is eighty-seven percent white. Swarming to the public meeting the way Texans flock to Friday night football, hundreds of mostly white residents packed public meetings to register, not just their disagreement, but their vehement opposition to building “affordable” housing units in their neighborhood. When a 281-unit apartment complex had been built two years earlier, there had been no outcry, but also no affordable units in that development.

White residents, two decades into the twenty-first century, have long perfected the art of talking about race by way of cues and codes to avoid talking specifically about Black or Latinx people. In this meeting organized to discuss the future of affordable housing in the Galleria district, residents complained about traffic, overcrowded schools, the construction costs of the project, and, of course, the potential effect on property values. But in a fit of frustration, one resident set aside time to write to the Department of Housing and Urban Development, and she wasted little time getting to the unvarnished point. Her opposition to the new, affordable development because it threatened to introduce “an unwelcome resident who, due to poverty and a lack of education, will bring the threat of crime, drugs, and prostitution to the neighborhood.” The woman writing the letter went on to extol her personal virtues as a hard worker, while disparaging those who she believed to were not, “I will fight very hard…before I give up that privilege and dignity to those who, either from lack of initiative or misfortune, don’t deserve to be [here].” These views may seem extreme in our era of coded and duplicitous double talk, but the sanctity of property value extracts a deeper truth that might otherwise remain hidden. Consider the comments of Galleria’s City Councilman, Greg Travis. His opposition to the affordable housing development that would bring Black residents to this white neighborhood was that, “People of different socioeconomic status sometimes have different values based on their socioeconomic status. Some people can afford things that other people cannot.”

In my book Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, I show the ways that public-private initiatives have undermined African American access to safe and sound housing in communities across the country. If this were the only outcome, it would be shameful enough. Ironically, because of the legal prohibitions on invoking racial identity as a factor in excluding individuals from buying or renting housing in particular locations, real estate operatives and mortgage bankers speculated about the competence of African Americans as buyers, renters, and neighbors to cast aspersion on their housing aspirations. Assumptions of Black residents as untidy, inept, overwhelmed, poor, ignorant, and at the very least, risky has been the stain, the permanent residue, in the aftermath of decades of exploitative housing discrimination. The result has been the consistent dearth of good housing available to African Americans coupled with pernicious stereotypes that reinforce the perception that Black residents should be held in suspicion or kept at bay.

The most important lesson in this is the way that segregation works to preserve multiple financial orders. For so long, racial segregation in the United States has been viewed through the lens of personal choice. Of course, personal choice is not irrelevant, as the history of white homeowners’ mobilizations to drive African Americans from their neighborhoods has evidenced. But personal choice must be understood within the wider context of the way that the drive for the personal accumulation of wealth is the steam in the piston of U.S. social mobility. To that end, homeownership has been the most important variable for ordinary people to amass the assets and other resources that define the quality or ease of one’s life in U.S. society.

The persistence of residential segregation in the most important population centers of the country has been driven by many factors, but chief among them has been the preservation of property values. The popular perceptions of African Americans as deleterious to property values has created lucrative incentives to exclude and marginalize. This is not just a historical factor, but one that has continued long after the official endorsements of redlining faded away. This powerful dynamic continues to exert influence because the calculus to a stable life has not given way in the U.S.: it remains myopically oriented on wealth as the key dividing factor.

For this reason, I wanted to examine what happened after the end of legal discrimination; I found that outlawing explicit discrimination did not necessarily give way to greater freedom or just access. In the case of housing, the much celebrated efforts by Civil Rights activists and their allies to undue legal strictures were focused on contemporary problems. As a result, lawmakers and advocates failed to account for the ways that generations of legal discrimination could erode the tools for opportunity to such a degree that those implements were rendered inoperable; perhaps new tools were necessary to make sense of these new realities.

In other words, a housing market that had been degraded for decades could not simply be opened anew without attending to the damage that had already been incurred. The lack of recognition of the consequences of that damage meant a failure to comprehend the difference between a housing market composed of new, or relatively new housing, sold with low interest rates to people with robust job opportunities compared to a market with decades old housing in a market with historic high interest rates, sold to people with limited job opportunities and leveraged by two industries known for their antipathy towards African Americans—real estate brokerage and mortgage banking.

The low-income homeownership programs created by the 1968 Housing and Urban Development Act not only faltered as a result, but its failures were weaponized and deployed as evidence of Black homeowners’ incompetence. The lasting legacy of overwhelmed and under-prepared Black homeowners was resurrected in the aftermath of the 2008 Housing Crisis, as old stereotypes found new life in a new century. This residue is partly how we can understand how the number of Black homeowners has drifted down to 40 percent—its lowest rate since 1970. It’s not just homeowners, but the problem of Black neighbors undoubtedly fueled the contempt of the woman from Houston who believed that those in need of affordable housing did not deserve to be in the same neighborhood as someone such as herself.

As I point out in my book, this reaction is not so much a case of poorly thought out resistance to African Americans as it is the inevitable outcome of market-based approaches to housing issues in the United States. The market is not a safe space, free of racial animosity, gendered discriminations or other exacting viewpoints. The market is us. It reflects our greatest desires and those things, or people, we quietly hate. It is why in the fifty years since the legal obstacle to Black housing have been removed, there has been almost no difference in housing outcomes. It is read in the subdued vitriol of the white woman who made time to write a letter to HUD about “undeserving” African Americans threatening to bring prostitution to the tony Uptown-Galleria neighborhood of Houston. This is, ultimately, what is so difficult to solve with our persisting and vexing housing “crisis”; it is so intimately bound up with who and what we value as a society. Changing those dynamics are much harder than just changing the law. 

I look forward to this discussion opening to further interrogation of the history, politics and activism that may eventually unlock the quandary of housing inequality and insecurity in the U.S. today.