8.4 Housing Inequities’ Effects on Families
Carla Medel; Katherine Hemlock; Dominic Church; Shonna Dempsey; and Elizabeth B. Pearce
The government and financial organizations both hold substantial power in the United States. Together, they affect how homes are purchased and who can purchase them. Although we know that race is a social construction, it is still used as an identifying feature for families, and it has been used by these systems to control home purchases and to segregate living areas. We will discuss housing from the perspective of racial-ethnic groups affected by these regulations and practices.
While it may be obvious that home ownership increases stability and enables individuals and families to accrue wealth, it is also true that home ownership has a significant effect on the life satisfaction of low-income people. Home buyers have been found to have higher levels of life satisfaction and may also have increased self-esteem and a sense of control compared to renters (Rohe & Stegman, 1994). It is impossible to talk about lower rates of home ownership among minoritized groups without discussing the practices of intentional segregation and gouging enacted by the federal government, lending institutions, local governments, and housing covenants following the legal end of slavery in the United States. Figure 8.8 is an example of signage from this time period.
Redlining
Redlining is the discriminatory practice of refusing loans to creditworthy applicants in neighborhoods that banks deem undesirable or racially occupied. Although homeownership became an emblem of American citizenship and the American dream during the 20th century, Black families and other marginalized populations were specifically limited in their abilities to purchase homes. Both the federal government, which created the Home Owners’ Loan Corporation in 1933 and the Federal Housing Association in 1934, along with the real estate industry, worked to segregate White neighborhoods from other groups in order to preserve property values.
Lending institutions and the federal government did this by creating maps in which the places where people of color and foreign-born individuals lived were colored red (figure 8.9). Then, those areas were designated to be “dangerous” or “risky” in terms of loaning practices. Because families in these same groups were often denied access to the neighborhoods designated to be “good” or “the best,” they were forced to take loans that required higher down payments and/or higher interest rates.
The Home Owners’ Loan Corporation, which regulated home loans, created residential security maps divided into four different categories:
- Green: “The best” for businessmen
- Blue: “Good” for white-collar families
- Yellow: “Declining” for working-class families
- Red: “Detrimental” or “Dangerous” for “foreign-born people, low-class whites, and negroes”
These ratings indicated to lending institutions how “risky” it was to provide loans by area. It was the