The Sum of All Fears: An Analysis of Institutional Discrimination in the Housing Market and its Effects on The District of Columbia

The Sum of All Fears: An Analysis of Institutional Discrimination in the Housing Market and its Effects on The District of Columbia

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The Sum of All Fears: An Analysis of Institutional Discrimination in the Housing Market and its Effects on The District of Columbia

Owning a home in the neighborhood of one’s choice is central to the American dream. Nearly all people would agree that the right to pursue the American dream should not be restricted for anyone, regardless of race, creed or national origin. But for millions of American citizens, and a majority of the District of Columbia’s residents, major barriers restrict freedom of choice in housing. Even after the passage of two Fair Housing Acts, blacks in America, and specifically in the District, face systematic discrimination that serves to perpetuate segregation and white oppression.
After being informed about the topic of this essay, my friend Robert Botta, a Mount Vernon Campus resident asked, “Why can I walk around this neighborhood all day and not see a black person in a city that is greater than 60 percent black?” (Botta). This question has an extremely important answer, and it lies in the practices used by racist institutions to perpetuate segregation. In our day, the most effective practices are also the most discrete. Steering is the process by which real estate agents show blacks only the homes in “their” neighborhoods. It is also the first institutional barrier faced by blacks in a struggle for freedom of choice in housing. Obviously steering perpetuates segregation, leading whites and blacks only to neighborhoods where their races are already predominant.

In April 1997 the Fair Housing Council of Greater Washington, with funding from the Department of Housing and Urban Development, released a report citing discrimination encountered by African Americans and Latinos when they tried to buy a home in the Washington area. A Washington Post article by Caroline Mayer details the results of the study and conveys the prevalence of steering in the Washington area:

White testers tended to receive more prompt attention and were shown more properties within their price range and in predominantly white areas, the report said. Minority testers, on the other hand, were taken to fewer properties and were shown houses in predominantly black or Latino areas. Blacks were often told that they must qualify for a mortgage before being shown any lists; the same requirement was not made of any white tester. (2)

Unfortunately, the real estate industry is not the only institutional barrier that blacks must overcome.

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Before potential homebuyers can apply for a mortgage loan, they must produce proof of insurance. Many studies point toward insurers underwriting fewer policies to black applicants, and for much higher premiums (Squires 3). The Fair Housing Council’s study indicates that insurance discrimination occurs 45 percent of the time in the Washington area (Fair). Because of institutionalized racism, the insurance industry is the next color-coded barrier to the American dream.

In early 1999 an African American tester for the Fair Housing Council called an insurance company seeking tenants insurance. The company advertised that it provided policies in The District of Columbia, Maryland, and Virginia. He was told, “we do not write policies in the District of Columbia.” A white tester called the same company and was provided with a quote of $107 per year for $15,000 worth of coverage (Fair). Such outright discrimination in the insurance industry has denied blacks the opportunity to purchase their own homes, and therefore, accumulate wealth. In short, insurance companies are the next institutional barriers to equal opportunity.

If a black person pursuing the American dream of owning a home has negotiated his way around these two obstacles, he or she must also deal with abnormally high rejection rates when applying for a mortgage. A 1991 Federal Reserve study in Boston was interpreted this way by The Boston Globe: “It can now no longer be doubted that banks are discriminating against blacks who try to get home mortgages in city after city across the United States…In many cities, high-income blacks are denied mortgages more frequently than low-income whites. This is a persuasive index of bias, whether conscious or not” (qtd. on Oliver 19). To deny that a similarly unjust rejection rate would be found in the District seems wrong, considering evidence of discrimination already uncovered.

While many common themes run through these practices, the most startling occurrence was the subtlety involved in the discriminatory practices. Most of the time the discrimination blacks encountered was so subtle that the prospective minority buyers were not aware of it until their treatment was compared with that received by white testers at the same office and often from the same agent. The facts are in: Blacks face unnecessarily high rejection rates when they apply for mortgages; blacks are often the victims of real estate steering and blacks are discriminated against in the insurance industry. The segregation that plagues Washington D.C. is not merely the unfortunate implication of income or class, but is the result of widespread racism by economic institutions with a history of discriminatory practices. The loss of wealth and opportunity for blacks in the District are crucial obstacles in the way of the American dream.

Discriminatory practices in the housing industry are often treated as the problem of selected individuals, or providers who have prejudicial attitudes. Todd Richardson of the Department of Housing and Urban Development represents this moderate position in the discrimination argument. Understanding the historical consequences to minority communities but unwilling to place blame on America’s institutions, Richardson recognizes race as an issue but places blame on the racist individual. I believe this argument breaks down in today’s world of hidden racism and segregation. Thinking this way, one loses sight of the structural and institutional roots of the problem. The problem has often been looked at on this individual basis: a corrupt insurer here, and a racist real estate agent there. To finally address the problem of urban segregation we must go beyond crucifying individuals, and address the institutional racism that has been a leading cause of white oppression.

Past institutional racism has directly caused today’s segregation and economic disparity. Some argue that ‘socioeconomic factors’ or ‘classism’ have caused the distance between the races. However, the term ‘classism’ fails to convey the historical roots of institutionalized racism. In fact, today’s ‘classism’ is merely the legacy left by yesterday’s institutional racism. Whites have consistently limited black opportunity. When a black person is rejected for a loan based on an economic situation, they are essentially told, “We cannot give you a loan today, primarily because we have discriminated against you very effectively in the past.” Over the last century, there have been many institutional attacks on equal opportunity and wealth acquisition, especially in the housing market. Here are some of the most grievous acts of institutional racism that have perpetuated white oppression and reproduced unequal opportunity.

Between 1924 and 1950 realtors throughout the US subscribed to a national code that bound them to the view that “a realtor should never be instrumental in introducing a character of property or occupance, members of any race or nationality, or any individual whose presence will clearly be detrimental to property values in the neighborhood” (Lipsitz 25). The racially restrictive covenant was an obvious effort to enforce segregation, and it received support in the District. The Washington case of Corrigan v Buckley in 1926 upheld racially restrictive covenants as constitutional when enforced in the private sector, perpetuating strict, legal segregation for another 25 years (Akins 204). While these covenants were declared unenforceable in the 1948 Supreme Court case Shelley v Kraemer, racially restrictive practices continued. Until the 1960s the Federal Housing Authority insured the financing of many homes in white suburban areas while providing virtually nothing in the urban markets where minorities lived (Squires 1). Institutions like the real estate industry and the federal government contributed to the deficit of wealth and opportunity, and restricted black Americans from pursuing the American dream. In short, these institutions blatantly encouraged white privilege, providing us with today’s racial inequality. In an interview with Todd Richardson of the Department of Housing and Urban Development, Richardson stated, “the effects of historical discrimination in the housing market have undoubtedly had a great impact on today’s conditions of racial segregation, including in the District.”
Howard Gillette Jr. relates the history of segregation in Between Justice and Beauty, describing the conditions less than 60 years ago.

Washington’s rigid segregation came under increasing national pressure in the postwar years, as reports from the President’s Commission on Civil Rights in 1947 sharply criticized District practices, which confined black residents to overcrowded quarters in the blighted central portion of the city through strict adherence to racially restrictive covenants. When a few realtors, influenced by the efforts of activists to promote desegregation, sold homes to blacks in white areas, the all-white citizens’ associations retaliated by circulating newsletters urging residents not to sell to blacks and forming pools to buy back homes that had fallen into the wrong hands. (160)
The practices of mortgage lenders, real estate companies, property insurers, and white citizens groups may have done more to shape housing patterns, and therefore wealth acquisition, than income disparity ever did. Disturbingly, for millions of minorities on all levels, including those who have worked their way into moderate- and upper-income brackets, the dream of buying a home continues to face obstacles. Institutional discrimination in housing and lending markets extends into the future the effects of historical discrimination.

Unfortunately, our federal government has historically been one of the most crucial perpetrators of institutional racism. The federal government’s racist procedures are one of the leading causes of today’s racial wealth disparity and the segregation in our neighborhoods. We can trace the legacy of white oppression by the federal government back even further than the racist procedures of economic institutions. Melvin Oliver and Thomas Shapiro show that the federal government has a longer record of white oppression than any other entity in society:

From the first codified decision to enslave African Americans to the local ordinances that barred blacks from certain occupations to the welfare state policies of today that discourage wealth accumulation, the state has erected major barriers to black economic self-sufficiency. Historically, policies and actions of the United States government have promoted homesteading, land acquisition, home ownership, retirement, pensions, education, and asset accumulation for some sectors of the population and not for others. Poor people –blacks in particular – generally have been excluded from participation in these state-sponsored activities (4).

Perhaps the most blatant assault on equal opportunity was occurring less than 60 years ago. The Federal Housing Authority was established in 1934 to usher in the modern mortgage system, one that allowed people to buy homes on small down payments at reasonable interest rates with lengthy repayment periods. The FHA refinanced thousands of mortgages in danger of foreclosure, and the new system made home ownership a much more affordable scenario. However, the growth in access to housing was restricted almost entirely to the suburbs. Why the limit on state sponsored opportunity?

The FHA was concerned with maintaining segregation. Fearing a drop in property values, the FHA Underwriting Manual stated that “if a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same racial and social classes” (qtd. on Oliver 18). The FHA formally recommended the use of restrictive covenants until Shelley v Kraemer in 1948. This federal barrier to equal opportunity prohibited blacks from access to sources of new investment; black communities deteriorated and lost value in comparison to those homes and communities that FHA appraisers deemed desirable. As Charles Abrams states in his book Forbidden Neighbors:
A government offering such bounty to builders and lenders could have required compliance with nondiscriminatory policy[…] From its inception the FHA set itself up as the protector of the all-white neighborhood. It sent its agents into the field to keep Negroes and other minorities from buying houses in white neighborhoods (qtd on Jackson 196).

Even after the passage of the 1968 Fair Housing Act, which prohibited housing decisions based on race, enforcement of anti-discrimination measures proved problematic. The Act limited the ability of the Department of Housing and Urban Development to initiate investigations, and limited damages in personal lawsuits to $1,000 (Lipsitz 28). As George Lipsitz notes in his book, The Possessive Investment in Whiteness, by 1986 the antidiscrimination mechanisms established in the 1968 law had led to decisions on only about four hundred fair housing cases (29). The Reagan Administration did nearly nothing to enforce the 1968 Fair Housing Act, apparently believing that enforcing anti-discrimination laws would hurt its economic agenda. The Justice Department greatly decreased its prosecution of those accused of housing bias during the early Reagan years, leading to a backlash and the push for an amendment to the Fair Housing Act (Kurtz).

In 1988 the original Fair Housing Act was amended to increase the enforceability of anti-discrimination measures. Department of Housing and Urban Development attorneys were now able to bring actions on behalf of victims, and the amendment expanded the jurisdiction of the Justice Department (Richardson). But even today, most experts estimate more than two million cases of housing discrimination occur every year without legal action being taken against them (Lispitz 29). As late as 1997 the District appeared to be one of the few jurisdictions with no ongoing efforts to monitor discrimination. “We have the authority to investigate complaints, but because of manpower shortages we haven’t been able to,” said William S. Stancil, special assistant to the director of the District’s Department of Human Rights and Minority Business Development (Mayer 2).

Grievous acts of institutional racism are condemned in today’s Washington. Explicit racial codes are no longer acceptable. Many people point to the elimination of blunt racism and call it “progress,” believing their city and their country have dealt effectively with the race issue. But the degree of residential segregation in the District and the lax enforcement of anti-discrimination laws, are evidence of a new racism. I point to the elimination of blunt racism and call it “evolution”, because a different type of impersonal, subtle racism has taken shape. And this new racism, just like the blatant racism of the Jim Crow years, has consequences for justice and equality.

“Discrimination has become more sophisticated,” Maurice White testified in a 1986 anti-discrimination case. “It’s much more difficult if someone doesn’t call you ‘nigger’ to your face to point out what it is,” said White, a black lawyer who worked in the Pentagon, “People have learned over the last 20 years that if you just don’t say ‘nigger’ you can get away with it” (qtd. on Marcus 3). Mr. White filed a civil lawsuit in response to being denied rental housing on Foxhall Road, not far from the present location of the Mount Vernon Campus of George Washington University (Marcus 3).

Both the tests by the Fair Housing Council and Mr. White’s lawsuit represent the intersection between the subtle, ignored racism that permeates our daily lives, and the visible racism that nearly everyone publicly condemns. The subtlety of modern racism presents another problem in looking at the discrimination issue on an individual basis:
the severity of the problem is often overlooked, perpetuating conditions of racial inequality. But clearly being accused of discrimination puts institutions on the ethical defensive. Thus, the goal must be to root out subtle racism and bring institutional discrimination into the light, forcing these practices into the realm of the visible and the condemned.

There are many ways to illuminate the hidden racism that plagues the housing market. Yolanda Surles, in a special to the Washington Times, has attempted to shed light on subtle racism through sheer numbers: “According to the 1990 Census, nationwide the homeownership rate stands at 65 percent. However, for blacks who live in the District the homeownership rate is 36 percent” (1). Even blacks earning at least $50,000 per year are more segregated and face more continued institutional discrimination than any comparable population (Surles 1). Sixty percent of the blocks in D.C are entirely uniracial (Rusk 355). That is, in 60 percent of the city, one’s neighbors are racially similar to each other. These statistics draw a negative picture of the housing market, yet the fact that they draw a picture at all is significant. These statistics are evidence of the widespread power of institutional racism, but also of its increased visibility. And racism that is visible can be condemned and punished. Moreover, the impact of the segregation these institutions encourage can also be quantified in many ways.

The social consequences of a seemingly trivial act like showing a black prospective homebuyer different properties than a white applicant are far-reaching and long -standing. For example, we know that the slower rate of appreciation for black-owned homes is a result of insurance redlining, outright discrimination by banks, and real estate steering (Kelley 4). We also know that lower black home values reduce black wealth. But furthermore, these lower prices make it harder for blacks to use their homes as collateral for obtaining loans for other investments, such as college or entrepreneurship. Segregation strips black communities of resources and reproduces inequality. Stark inequalities in education and healthcare are the two most obvious consequences of living in a segregated neighborhood; but there are even more insidious consequences. Robin Kelley details the further risks of living in a segregated, black community:

The evidence that poor communities of color are singled out for toxic waste sites is overwhelming. And a 1992 study concluded that polluters based in minority areas are treated less severely by government agencies than those in largely white communities. Also, federally sponsored toxic cleanup programs, according to the report, take longer and are less thorough in minority neighborhoods. (3)

Institutional racism has enriched white communities at the expense of black communities. Apparently, the right to a proper hospital and a non-toxic living environment, in addition to the right to equal opportunity and wealth, is applicable only to white communities.

Melvin Oliver and Thomas Shapiro point out the consequences of institutional discrimination in their book Black Wealth/ White Wealth. The book details the financial impact of increased interest rates due to mortgage discrimination, and the losses incurred by blacks due to the slower appreciation rate of their homes. Home equity, or the assets accumulated from property and home values, is the major source of wealth for Americans, and yet it seems to be color-coded. In reference to the black struggle with economic institutions the co-authors state, “Among the current generation of black homeowners [in America], to the $10.5 billion paid to banks in extra interest [on mortgage loans], one must add another $58 billion in lost home equity” (150). Obviously, institutional racism is important in its consequences for black wealth. And it gets worse. The cost for people who, because of institutional discrimination, cannot afford to own homes is even higher. Many black Americans never get the chance to build home equity, the greatest source of wealth in our country, while whites are under no such constraints. Institutional discrimination plays a large role in America’s problem with white privilege.

In addition, and contrary to popular perception, segregation is a barrier to black self-sufficiency. Money flows into white suburban neighborhoods and out of mostly black urban areas. African Americans still spend a high percent of their incomes with non-blacks, and this percentage often includes lending and insurance companies (Young 3). Despite the huge costs to black wealth, and the deficit of opportunity that segregation creates, the most important consequences may be those that cannot be quantified.

Residential segregation means that whites and blacks do not interact in many activities based on social proximity. Residential segregation also becomes reflected in uniracial schools, hospitals and other institutions. This isolation of the races has consequences beyond the visible or the testable. While statistics can measure the amount of wealth lost to institutional racism, and many other disadvantages caused by segregation, the psychological effect of the isolation of the races cannot be measured numerically. And yet, these psychological consequences, such as fear and discomfort, may be the most important factors in the perpetuation of racism and inequality. The suspicion and hostility encouraged by segregation have become the basis for personal and institutional racism.

An example of the psychological and social consequences of segregation is detailed in Sociology for the Twenty-First Century. Edited by Janet Abu-Lughod, the book quotes a study by a Chicago journalist, but the same concepts are clearly applicable to the District:

In the early 1990s journalist Isabel Wilkerson’s field report of two adjacent suburbs of Chicago, one white and one black, found that many whites “live out entire lives without ever getting to know a black person.” Each racial group feared the other, but black Chicagoans were “fearful because much of their contact with white people was negative,” while “whites were fearful because they had little or no contact.”Today, as in the past, most white Americans live in an isolated spatial “bubble” separated for the most part from the worlds of Americans of color. (206)

While the statistical calculations of interaction between the races are a recent phenomenon, the psychological consequences of institutional racism have been known for much longer than the last few decades. Because of the negative cumulative effects of the economic and psychological effects of segregation it seems logical that institutional discrimination should have been punished very severely, and possibly eliminated in the course of a century. And yet redlining, steering and rejection based on race are very close to the rule, rather than the exception, for blacks in the housing market. The racial “bubble” is very real in the District, where phrases like Northwest, Southeast, or “West of the Park” are often metaphors for racial identity.

Housing segregation is encouraged by lending institutions, insurance companies and many realtors. Specifically, the processes of steering, redlining, and subtle discrimination need to be dealt with in a forceful manner. Regulations that are enforceable need to be in place and those with the authority to enforce anti-discrimination laws need the funds and the manpower to do so. Penalties for discrimination should be even steeper and the findings of non-profit organizations should lead to investigations by the Justice Department and the Department of Housing and Urban Development.

The results of residential segregation serve no end other than to perpetuate inequality. The most important effects of institutional racism on The District, and the United States, are to decrease the wealth and opportunity of the black community and to increase the fear and misunderstanding between the races. It cannot be debated that both of these consequences are heavy obstacles to black equality and to black self-sufficiency.

An end to institutional racism would bring us closer to an end to residential segregation in America. This may be a utopian vision, but wouldn’t racial diversity and racial understanding in our neighborhoods go a long way to solving America’s race problem? An end to distrust between the races is certainly a desirable condition. This sum of all racial parts would probably be greater than the whole, possibly leading to the elimination of the perception of difference, while encouraging cultural diversity. In my view the sum of all parts is worth far more than the sum of all fears.

The end of discriminatory procedures in the housing market would bring our society closer to truly equal opportunity and closer to a society where success is based on merit rather than white privilege. The housing market in the nation’s capital could encourage equality and opportunity, rather than racism and fear. And yet the housing market is working against social justice. Right now, lending, insurance and real estate institutions are using weapons of subtle discrimination to perpetuate white oppression.

Works Cited

Abu-Lughod, Janet, ed. Sociology for the Twenty-First Century: Continuities and Cutting Edges. Chicago: The University of Chicago Press, 1999.

Avins, Alfred, ed. Open Occupancy v Forced Housing Under the Fourteenth Amendment. New York: The Bookmailer, 1963.

Botta, Robert. Personal interview. 20 March 2002.

Fair Housing Council of Greater Washington. 1999. 10 March 2002

Gillette, Howard, Jr. Between Justice and Beauty. Baltimore: The Johns Hopkins University Press, 1995.

Jackson, Kenneth T. Crabgrass Frontier: The Suburbanization of the United States. New York: Oxford University Press, 1985.

Kelley, Robin. “Integration: What’s Left?” The Nation (2001). 10 March 2002 .

Kurtz, Howard. “Administration Hit on Housing Segregation.” The Washington Post. 22 April 1983, sec. 1: A4.

Lipsitz, George. The Possessive Investment in Whiteness. Philadelphia: Temple University Press, 1998.

Marcus, Ruth. “Financial Stakes in Housing Discrimination Cases are Growing Higher.” The Washington Post 21 September 1986. 10 March 2002 .

Mayer, Caroline. “Evidence of Bias Spurs New Push for Fair Housing; Area Programs, Proposals Put Emphasis on Teaching, Testing.” The Washington Post. 12 April 1997. 10 March 2002 .

Oliver, Melvin and Thomas Shapiro. Black Wealth/White Wealth. New York: Routledge, 1995. .

Richardson, Todd. Personal interview. 15 April, 2002.

Rusk, David. Inside Game/Outside Game: Winning Strategies fro Saving Urban America. Washington D.C: Brookings Institution Press, 1999.

Squires, Gregroy, D. “The indelible color line.” The American Prospect 42 (1999). 15 March 2002 .

Surles, Yolanda. “Loan bias persists despite laws; but there is hope.” The Washington Times 22 July 1994. 10 March 2002 .

Young, Wayne A. “The U.S. Suburb Afraid of Becoming too Black.” The Weekly Journal. 13 July 1995. 15 March 2002 .
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