‘Owning Up’ to Segregation in Real Estate Industry
“Owning Up,” a history exhibit on housing segregation that shows how real estate agents, builders, lenders, and others contributed to a system at the root of current homeownership disparities, was presented over the summer by the St. Paul Area Association of REALTORS® (SPAAR). The subject matter is also part of a PBS documentary named “Jim Crow of the North” (see link below).
In 2018, SPAAR’s diversity committee partnered with the Mapping Prejudice Project from the University of Minnesota, to learn about the underlying causes of disparities in homeownership as a way to encourage conversations and solutions for addressing the disparities.
Segregation in the Twin Cities began with the creation of a racially restrictive deed in 1910, according to the Mapping Prejudice Project, when a couple named Henry and Leonora Scott sold off a property. The deed to the property stated that the “premises shall not at any time be conveyed, mortgaged or leased to any person or persons of Chinese, Japanese, Moorish, Turkish, Negro, Mongolian or African blood or descent.”
Henry Scott then went on to become the president of the Seven Oaks Corp., a real estate development company that included this language in the deeds to properties across the city.
The approach was then adopted by public officials.
“In the 1930s, federal housing administrators endorsed these legal instruments, requiring them for projects that used federally-backed financing,” explained project creators. “Lenders followed suit, accepting the rationale that covenants provided essential insurance for their investments in residential property. Banks made it a routine practice to ‘redline’ or deny loans for properties in racially-mixed neighborhoods.”
Kevin Ehrman-Solberg, a native of Minneapolis and a University of Minnesota doctoral candidate, led a team that created an interactive map that shows the impact of these deeds on the Twin Cities’ development over time (below).
If you click to use interactive map you can see how their use grew. You can then also look at the U.S. Census Bureau’s maps of where Black, non-Latino residents lived between 2010 and 2014.
REALTORS® played a role in neighborhood segregation too. If you look at Article 34 in the 1924 REALTOR® Code of Ethics handbook it reads:
“A REALTOR® should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individuals whose presence will clearly be detrimental to property values in that neighborhood.”
This June, Minnesota Gov. Tim Walz signed into law a bill that allows property owners to attach an affidavit to their deed disavowing these covenants, many of which still exist.
Just over 50 years after the passage of the Fair Housing Act, and more than 70 years after the U.S. Supreme Court made the covenants unenforceable, Americans are still living with the legacy of the racist covenants.
Gap in Homeownership Most Notable
The creators of the Mapping Prejudice Project found that “covenants created demographic patterns that remain in place” today. Residential segregation reinforces other disparities in employment, education and health care. “Most notable is the gap in homeownership rates.”
While a pattern of segregation occurs in cities across America, 78 percent of white families own homes in the Twin Cities, only 23 percent of blacks own their homes as of 2015, the latest available data from the Census Bureau. That’s among the lowest in the country.
Homeownership has long been considered the most important way middle class families can build wealth. On the national level, data from the Federal Reserve released in 2017 shows that the median net worth of white households in the United States is nearly 10 times the size of the average Black household’s.
Today in Minneapolis, local builders publish magazines with pictures of new construction, and pictures of white couples and their children inside. The housing is being marketed to specific demographics.
“The Twin Cities region is among the most prosperous regions in the U.S.,” reports the Metropolitan Council of St. Paul. “Overall, our unemployment rate, home-ownership rate, and per capita income rank favorably compared with the 25 largest metropolitan areas. However, even with these assets, the presence and potential growth of our region’s disparities between white residents and residents of color may undermine our economic competitiveness and prosperity.”
Leads to ‘Employment Segregation’
Camille M. Busette, a senior fellow at the Brookings Institution, told the financial publication 24/7 Wall St. that residential segregation has other knock-on impacts as well.
“People are not walking around, working together, going to school together, taking the same metro together, etc. So there isn’t a lot of familiarity” she told 24/7 Wall St. “People tend to hire people like themselves, so when you get residential segregation, you tend to also get employment segregation.”
My own clients and the people that my company serves tend to be mostly white, and a high percentage of the homes we sell are in mostly white neighborhoods. (To give you a sense of context, Black residents make up 8.4 percent, or 245,500, of the area’s total population, and their numbers are projected by demographers to grow more rapidly than the white population.)
The legacy of this ignoble history, and our industry’s role in creating it, is too big for any one person to address.
However, the first step is to acknowledge it, and to understand how it relates to today’s economic and demographic realities. For me, this new knowledge has heightened my awareness of the nature of the world and my sensitivities to the people around me.
–Teresa Boardman is broker/owner of Boardman Realty in St. Paul, and founder of StPaulRealEstateBlog.com.