Housing Policy: Addressing the Legacy of American Racial Inequality

 /  Dec. 5, 2021, 2:33 p.m.

whites only sign


Of the various statistics thrown about in American debates about race, one of the most startling is that the average net worth of white families is nearly ten times that of Black families. This is the type of statistic that cuts through noisy arguments around affirmative action, microaggressions, and calls of ‘reverse racism’ and shows how unequal our society truly is. Though it is cited to support many different policies, from reparations to baby bonds to universal basic income, one of the simplest ways to combat the racial wealth gap involves striking directly at the heart of the problem and guaranteeing access to a resource that many of us take for granted: housing.

A history of housing and wealth

To understand how to correct the tremendous gap between Black and white wealth, we need to understand its origins. Racial wealth inequality has a long and complicated history, with concerted efforts to hinder Black wealth development ranging from the mismanagement of the Freedman’s Savings Bank following the Civil War to the exclusion of Blacks from the GI Bill. These policies have snowballed to prevent wealth building from generation to generation, leaving Black households with much less to pass on to their children than white households. 

One of the best ways to build intergenerational wealth is through housing. Real estate is an incredibly useful asset-building tool, as it greatly appreciates in value over time and can be easily passed between generations. The federal government made concerted efforts in the mid-20th century to increase homeownership and expand access to housing, catapulting millions of white Americans into the middle class. As part of the New Deal and after World War 2, the Roosevelt administration passed a wide variety of policies that made mortgages more accessible to Americans. However, these laws were explicitly racist and designed to work within existing Jim Crow policies, concentrating the benefits among white households.

The government’s willingness to guarantee mortgages hinged in part on the racial composition of neighborhoods, with Black and other nonwhite areas designated as ‘red’ or hazardous. This process, known as redlining, means that today those same neighborhoods deemed risky remain poor due to their lack of real assets. Even when Black households applied for mortgages in white neighborhoods, local banks could legally discriminate and deny them service. The post-war boom and accompanying expansion of suburbs further strengthened white assets at the expense of Black neighborhoods. Federally-financed housing in newly built suburbs isolated whites from Black cities, while new highways were paved through Black communities to benefit white commuters.

The results of suburbanization were two-fold: the suppression of Black wealth-building and the de-facto segregation of communities into white suburbs and Black inner cities. Modern real estate practices, while less explicitly racist, exist in a world where white homebuyers have significantly more wealth, perpetuating de-facto residential segregation. Conscious and unconscious biases combine in the practice of racial steering, when Black buyers are not shown houses in affluent white neighborhoods even if they can afford them. In 2017, 45 percent of Black Americans experienced racial discrimination of some kind while trying to rent or buy housing. Black Americans also have significantly lower rates of homeownership than whites, at 41 percent compared to 73 percent.

The effects of residential segregation

The effects of segregated physical spaces permeate throughout American society and affect educational opportunities, health outcomes, and unconscious racism. The most glaring example of this is public schools. Middle class Black families are even more likely than low-income white families to live in high poverty neighborhoods, which are in turn associated with low academic performance. These results aren’t just due to direct effects of poverty on families: poor Black children attending affluent public schools are on average two years ahead of their counterparts in high poverty schools. Rather, lower educational attainment in disadvantaged neighborhoods is due to both environmental stress and funding shortfalls.

Segregation also has adverse effects on health outcomes. Grocery store density, an indicator of the availability of quality food, is significantly lower in poor neighborhoods. Even adjusting for wealth, however, black neighborhoods across the U.S. have the lowest supermarket availability compared to integrated or white neighborhoods. A good example of this is in our own backyard: in the predominantly Black neighborhoods directly south of the University, thirty to fifty percent of residents lack a grocery store within a half-mile, compared to only eight percent of residents in Hyde Park. Black neighborhoods also disproportionately lack access to quality hospitals, one factor underlying the elevated Black mortality rate.

One of the most pervasive aspects of de-facto segregation, however, is its effect  on racial attitudes. The physical separation of people by race brings out a variety of damaging cognitive biases. The illusory correlation bias causes people to form stereotypes about groups they have had little interaction with based on sensational events. In the context of racism, this means that people with little exposure to marginalized groups tend to unconsciously associate them with racist tropes. This phenomenon combines with in-group favoritism, which causes people to give preferential treatment to those they consider to be part of their group. In this case, this means that people who grow up in racially homogenous areas may unconsciously favor people of their own race over others in their day-to-day interactions.

These factors all combine to create a self-perpetuating separation between races in America. They also contribute to a different form of segregation—so-called role segregation. In the modern economy where more than two-thirds of all jobs are filled through networking and are not officially advertised, personal connections are crucial. Jobs that have traditionally been held by affluent, mostly white employees are likely to continue excluding minority candidates. Even when jobs are filled through official channels, unconscious biases can cause managers, most of whom are white,  to prefer candidates of their own race. 

A case study

These arguments are all theoretical, but one doesn’t need to look very far to find how housing and de facto segregation shape the lives of American citizens. For the three years that I attended high school in the United States I lived in the town of Brighton, a suburb outside of Rochester, New York. It’s one of the best public high schools in the country, winning a national award in 2018 for academic excellence. The student body is 70 percent white, and 7 percent Black.

Just two miles north, however, schools don’t fare as well. Graduation rates in the heavily Black city of Rochester are 55 percent, compared with 99 percent in Brighton and 80 percent on average throughout New York State. The border between Brighton Central School District and Rochester City School District is one of the most economically disparate in the country: Brighton has double the household income and almost four times as much local funding per pupil than the City of Rochester. Brighton is also 30 percent nonwhite, compared to 90 percent in the city.

Some point to efforts to bus low-income minority students to affluent suburban high schools as good ways to improve educational equity. Even within schools, however, students can be discriminated against through the racialized use of tracking, where students are selectively placed into higher or lower level courses. While tracking makes intuitive sense in theory, in practice it creates racial stratification in upper level classes due to its reliance on teacher references or parental decisions. It also means that in schools like Brighton, urban-suburban students arriving from worse performing middle schools will be placed in remedial classes, and will often stay in lower level classes for the remainder of their high school years.

The need for housing reform

In order to build Black wealth, we must consciously integrate neighborhoods. This includes specific efforts to increase Black wealth through homeownership and allow them to move to better educational opportunities, as well as general policies to lower housing prices and increase economic diversity within neighborhoods. One of the simplest strategies is to simply make housing cheaper for families with limited wealth, which would give Black Americans more choice in where they live and encourage wealth-building through homeownership. This process cannot be undertaken on the national or even the state level, however, as housing policy is effectively controlled by local governments.


Local zoning ordinances in the US dictate what kind of buildings can be built in a given area. Currently, almost three quarters of land in major US cities are zoned for single family detached homes, making it illegal to build denser housing that could be more affordable to low-income families. Modifying zoning laws to allow for more diverse housing, such as duplexes, townhouses or apartments in suburbs and other affluent areas would increase economic diversity of residents and give poorer children access to better education.

Zoning reform can get very messy, however, mainly due to its extremely local character. A case study from Washington D.C., where high housing prices are prompting many to demand more residential density, shows that affluent neighborhoods are staunchly opposed to zoning their neighborhood for more affordable housing. This attitude, dubbed “NIMBY” for “Not In My Back Yard,” ostensibly stems from fears of depreciating housing prices or harming ‘neighborhood character’, but in reality is often racially driven. Ironically, the most resistant residents often hail from liberal white neighborhoods in coastal cities, speaking out against racial injustice while simultaneously fighting against policies that would give minorities access to housing in their neighborhood.

The procedural idiosyncrasies of zoning reform lend themselves to capture by affluent anti-development interest groups. Zoning decisions are often made at public hearings, which usually see attendance from only those with particularly negative attitudes towards new construction. Potential buyers of affordable housing, who are those with the most to gain from zoning reform, often do not live nearby and cannot easily travel to meetings. If meetings take place at inconvenient times, they ensure that only residents with adequate spare time or flexible work hours can attend. Such people are more likely to be wealthy and already own housing in the affected area.

The solution is to make zoning reform larger, by presenting it as a city-wide policy rather than a neighborhood issue. Minneapolis has achieved a significant victory for affordable housing, passing a plan that effectively banned single-family zoning in December of 2018. The policy still allows for single family homes to be built, but prevents mandating it in any area. The city took a very intentional approach, consciously reaching out to marginalized groups that would have the most to gain from increased affordability in the city. Their one-size-fits-all approach allowed for almost no exemptions for specific neighborhoods, increasing the plan’s efficacy by minimizing the influence of granular local anti-development groups.

Property taxes

Zoning reform represents the beginning of a solution to pervasive spatial segregation, but it can by no means integrate America overnight. Other policies should be implemented in tandem that incentivize construction of affordable housing. One such initiative involves changing tax incentives around property. Currently, most state and property taxes are calculated based on the value of a building on a given plot of land instead of the underlying land itself, meaning that duplexes or apartments pay more in taxes than a single family house even though they may sit on the same land. By changing tax values to reflect the underlying value of land instead of the size of the house built on the land, property owners would pay the same tax for a house on their land as for an apartment, incentivizing developers to build denser and more valuable housing, such as apartments or duplexes.

Subsidized housing

More conscious approaches to integration should also be considered, and can be modeled on existing federal policies. Americans living at or below the poverty line, many of them Black, have difficulty affording market-rate rent even in areas of high supply, and buying housing to build their wealth is entirely out of reach. The federal government, through the Department of Housing and Urban Development, issues Section 8 vouchers to low-income families and other benefits to reduce the financial stress of housing. These programs are egregiously underfunded, however, and are not structured as entitlements—only one in five eligible families receive benefits. 

Existing Section 8 housing vouchers are also poorly designed. Their goal is to help families move out of poor neighborhoods and into safer environments with better schools. Even after getting off lengthy waiting lists, however, families often wait for years before receiving vouchers, and complicated cost calculations have kept assistance low, forcing families to stay in low-income neighborhoods. Even when families are able to move to more affluent areas, many states allow landlords to refuse them based on their need for housing assistance. Vouchers need to be increased in size and scope, and landlord discrimination outlawed, to effectively incentivize integration. By reimagining safe and affordable housing as a right rather than a privilege, the federal government could go a long way towards improving quality of life and economic opportunity for millions of disadvantaged Americans.

Some experts have even suggested explicitly taking race into account when distributing vouchers, giving grants to families who improve racial diversity in the neighborhoods they move into. Such policies would reward white families moving into predominantly Black areas and vice versa, potentially counteracting the unconscious biases that develop when people live in racially homogenous communities.Explicitly race-based policies may face some legal pushback, though, as they have traditionally only been used in education and employment.

Discussions surrounding racial integration brings up legitimate concerns of gentrification, where low-income minorities are displaced by affluent families moving into their area. It is important to note, however, that gentrification happens when rising housing prices from increased demand involuntarily push existing residents into other neighborhoods. Incentivizing integration must go hand-in-hand with zoning reform and other initiatives to lower the price of housing to ameliorate these effects, allowing existing residents to stay in their neighborhoods and by giving them the option to freely move into more affluent neighborhoods. Additional government programs, such as well-executed rental vouchers, can increase the autonomy of existing residents as well. Changing racial demographics of neighborhoods is not inherently negative, and with enough care the benefits of such changes can be allocated to underprivileged populations.

The bottom line

The United States’ legacy of racism is incredibly complicated, and this country has a long way to go before it can rid itself of systemic inequality. The best way to begin to address these disparities is to grant Black citizens equal access to economic opportunity in the form of housing. Housing reform and the spatial integration that accompanies it would put America on the right path by allowing future generations to grow up in communities free of racially inequitable education and self-segregating environments. Housing reform does not represent the end of racial inequity, but it’s a good place to start.

The image used in this article was taken by Arthur S. Siegel and is in the public domain. 

Ólafur Stefàn Oddsson Cricco


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