In 1934, Homer Hoyt wrote a dissertation—“One Hundred Years of Land Values in Chicago: The Relationship of the Growth of Chicago to the Rise of Its Land Values, 1830–1933”—that ranked various races and nationalities by order of “desirability.” Most desired were the old American stock of Anglo-Saxons and Northern Europeans—English, Germans, Scots, Irish, and Scandinavians—followed by Northern Italians, Czechoslovakians, Polish, Lithuanians, Greeks, “Russian Jews of the lower class,” South Italians, and at the bottom of the list, “Negroes and Mexicans.”
Hoyt, as chief economist of the Federal Housing Authority, wanted to improve the accuracy of real-estate appraisals so that an affiliated agency—the Home Owner’ Loan Corporation, established by the Home Owners’ Refinancing Act of 1933—could standardize the process for making mortgage loans, avoid undue risks, and bail out homeowners who lost their homes in the economic crash. Working with Hoyt at the FHA, the HOLC would map cities and divide neighborhoods into various risk categories that were based on his ethnic hierarchy and coded accordingly. A “green” neighborhood was white, affluent, Anglo-Saxon, and appropriately Protestant. A “blue” one had less desirable whites—Jews, Irish, and Italians—but was stable and upwardly mobile. A “yellow” one had undesirable, often working-class whites, and a “red” one was predominantly black or Mexican, regardless of wealth or class. And in these “redlined” areas, loans were either expensive or nonexistent, forcing families to rely on speculators and private sales by unscrupulous homeowners.
For whites, there was some flexibility. Journalist Antero Pietila gives a short biography of Hoyt in Not in My Neighborhood: How Bigotry Shaped a Great American City. As he notes, “Hoyt allowed that many whites on the lower rungs could become less objectionable once they ‘conform to the American standard of living.’ ” By contrast, blacks and Mexicans had no chance of overcoming ‘the opinion or prejudice’ of the real estate market, even though such bigotry ‘may have no reasonable basis.’ That was just the way real estate operated, he wrote. ”If the entrance of a colored family into a white neighborhood causes a general exodus of white people, such dislikes are reflected in property values.” (Emphasis added.)
On Tuesday, New York magazine shined light on “the grim, racist methods of one Brooklyn landlord,” a developer who does most of his business in gentrifying neighborhoods like Bushwick, Bedford-Stuyvesant, and Crown Heights. As a landlord, he explains, he works hard to get black people out of his buildings. “Everyone wants them to leave, not because we don’t like them, it’s just they’re messing up—they bring everything down. Not all of them.” He continues: “If there’s a black tenant in the house—in every building we have, I put in white tenants. They want to know if black people are going to be living there. So sometimes we have 10 apartments and everything is white, and then all of the sudden one tenant comes in with one black roommate, and they don’t like it. They see black people and get all riled up, they call me: ‘We’re not paying that much money to have black people live in the building.’ ”
This is obviously racist, but it’s also unsurprising. As the Hoyt story shows, this discrimination is in the DNA of American real estate. For most of the last century, lenders and brokers—including national realtor organizations—used race as a proxy for neighborhood value. “Appraisal manuals,” writes Pietila, “continued to repeat Hoyt’s hierarchy until the 1960s … implying that the groups lowest on the ladder were detrimental to housing values.” These manuals also pushed realtors and homeowners to use private agreements—called covenants—that forbade sale to “undesirable” neighbors.
Housing discrimination is illegal, and most Americans express egalitarian beliefs on race. But while unused and largely forgotten, Hoyt’s hierarchy retains its symbolic force in housing markets, albeit in diminished and simplified form. Indeed, real-estate racism helps illustrate the extent to which culture is built by institutions and individuals, in interactions that reflect on each other. These institutions, private and public, didn’t cause racism in housing markets, but they gave it official sanction, which—over time—influenced how individuals understood the value of their homes and neighborhoods. A white neighborhood was a good one; a black neighborhood, a bad one.
We see this in public opinion. Twenty-eight percent of whites support an individual homeowner’s right to discriminate on the basis of race when selling a home, note researchers in their analysis of the General Social Survey, a long-running study that measures Americans’ attitudes on a wide range of topics. Likewise, when asked in 2008, 20 percent of whites said their ideal neighborhood was all white, 25 percent said it had no blacks, and 33 percent said it had neither Hispanics nor Asians. And only 25 percent of white respondents said they would live in a neighborhood where one-half of their neighbors were black.
We see it in the actions of landlords and real-estate agents. Compared to whites, according to a 2013 study from the Urban Institute and Department of Housing and Urban Development, black renters learned about 11 percent fewer rental units and black homebuyers were shown roughly 20 percent fewer homes; Asian renters learned about 7 percent fewer properties, while Asian homebuyers also learned about 20 percent fewer homes; and Latino renters learned about 12 percent fewer units. (There was no difference in the treatment of Latino homebuyers.) As NPR points out in its analysis, this wasn’t a regional problem: Researchers ran their experiment in 28 different metropolitan regions, with similar results.
Finally, we see it in the financial penalty that accrues to middle-class blacks who live in predominantly black, middle-class neighborhoods. Here’s how the Washington Post describes the phenomenon, writing about the largely black Prince George’s County, Maryland. “Most whites live in largely white neighborhoods, where homes often prove to be a better investment because people of all races want to live there. Predominantly black communities tend to attract a narrower group of mainly black buyers, dampening demand and prices, they say.” For wealthy blacks who bought into Prince George’s County for the comfort they felt in a mostly black community, that “meant their home brought them less wealth than if they had purchased elsewhere.”
Put differently, they suffered a kind of tax that reflects the stigma associated with blackness, independent of wealth or status. It doesn’t matter how rich the inhabitants are. If a neighborhood is black, other groups don’t want to live there, hurting the value. And on the other end, while we tend to associate gentrification with poor minority neighborhoods, the reality is a little different. According to a Harvard study on Chicago neighborhoods, full gentrification only happened in low-income neighborhoods with substantial white populations, 35 percent. If there's an equally substantial black population, around 40 percent, the process either slowed, or stopped altogether.
Don’t fool yourself into thinking the Brooklyn landlord is a New York problem. He is just a dramatic example of a dynamic that happens in neighborhoods across the country, in subtle, often imperceptible ways. Realtors discourage black and brown buyers; lenders charge higher rates to them; and towns use exclusionary zoning to block subsidized housing and multifamily dwellings, excluding huge groups of low-income people (and not just minorities).
Despite the laws we pass and the values we say we have, discrimination is part and parcel of how Americans do housing. It’s how it was 100 years ago, and it’s how it is now.