While buying a home can feel like a serious undertaking today, it used to be even more challenging for many Americans. Before 1968, there were no laws outlawing discrimination when buying a home. This meant that a buyer could be turned down by lenders and real estate companies merely because of their gender, race or religion.
Luckily, in 1968 congress passed the Fair Housing Act, which acted as a follow-up to the Civil Rights Act of 1964. The bill prohibited discrimination in housing based on race, religion, national origin or sex. While the bill made overt discrimination illegal, the shadow of unfair housing practices has lingered in the U.S. for decades.
In 2019, a three-year Newsday investigation uncovered significant unequal treatment based on race by real estate agents on Long Island, despite the legal protections aimed at ending such discrimination.
In response to that report, Howard Hanna moved to make changes in our daily practices to ensure we uphold the highest standards of fairness and professionalism in every aspect of our business. We know that in order to move the real estate industry forward, we have to create a playbook for the future.
As part of Fair Housing Month, Howard Hanna is reflecting on the housing policies that have shaped where we are today and looking forward to the future.
Homeownership Then and Now
Did you know that the homeownership rate for Black Americans is 30 points lower than their white counterparts? It’s been that way for decades, and there has been little change in the last 70 years.
According to an article by Forbes, the homeownership rate for Black Americans increased from 35% in 1950 to 42% in 1970, likely in part because of The Fair Housing Act being passed into law. However, the 2017 census found that 41% of Black households owned their homes. To see this number practically unchanged from 1970, and to be even lower now, is a tragedy. Why is this happening?
History is complicated, of course, and there are likely a number of factors influencing this situation. The following are just a few examples of historical events that put these homeownership numbers into context.
The Origins of Redlining
Following a wave of foreclosures during the Great Depression, the Federal Housing Authority (FHA) began offering government-insured mortgages to prop up the housing industry and encourage homeownership. Unfortunately, the agency also created a set of criteria that disqualified Black homebuyers from participating in the program.
The agency used a set of color-coded maps to identify neighborhoods that were loan-worthy and could qualify for a mortgage. The maps were used in 200 cities across the U.S. and ranked each neighborhood from “A” to “D” based on their creditworthiness. The “A” regions were the most creditworthy, while “D” neighborhoods were considered not worthy of a loan.
Across the country, neighborhoods made up of predominantly Black residents were given a “D” rating, which disqualified them from the program. This practice, also called “redlining” because “D” neighborhoods were coded red, prevented Black Americans from accessing crucial loan programs that white families could easily access.
Redlining continued well into the 40s, 50s and 60s, giving white families who qualified for government loans three decades’ worth of equity appreciation that Black Americans did not gain.
The 2007-2010 Housing Crisis
According to data from the National Bureau of Economic Research, in the early 2000s, Black Americans were 105% more likely than white Americans to have a high-cost mortgage. As a result, a higher number of Black homeowners were impacted by the 2007-2010 housing crisis. And, according to cnbc.com, roughly 10 years after the housing crisis ended, many Black families have still not financially recovered.
These reflections are not meant to be a comprehensive list of the factors affecting homeownership in 2023. They are instead a single step in discussing an important part of our history, and a necessary conversation during Fair Housing Month.