Housing, White Privilege, and Wealth Inequality

As a social justice issue, housing seems simple and relatively bland: people need shelter, what else is there to talk about?

A lot, actually.

Housing issues are related to a complex web of social justice concerns. Two related concerns that are particularly relevant to housing are white privilege and wealth inequality. In fact,  understanding the history of discrimination in America—particularly housing discrimination—is indispensable to understanding contemporary economic inequality.  What’s the connection between housing,  white privilege, and wealth inequality? Here’s a statistic that might surprise you:

The Federal Housing Administration and the Veterans Administration financed more than $120 billion worth of new housing between 1934 and 1962, but less than 2% of this real estate was available to nonwhite families—and most of that small amount was located in segregated communities.[1]

In other words, for almost three decades the U.S. government backed $120 billion worth of home loans and 98% (!) of those loans went to whites.

How did this institutionalized racism become possible?

Spurred on by massive mortgage foreclosures during the Great Depression, the federal government […] began underwriting mortgages in an effort to enable citizens to become homeowners. But the mortgage program was selectively administered by the Federal Housing Administration (FHA), and urban neighborhoods considered poor risks were redlined—an action that excluded virtually all the black neighborhoods and many neighborhoods with a considerable number of European immigrants. [2]

More important than this shocking history, however, is the relationship between home ownership, wealth, and opportunity—a relationship that links past discrimination to economic inequality today. To begin with, a home is one of the most important assets that a family can own. As Dalton Conley—associate professor in the Department of Sociology at New York University—explains in the PBS documentary Racethe Power of an Illusion, “The majority of Americans hold most of their wealth in the form of home equity.”[3] Therefore, because of the significance of housing as an asset, discrimination in housing directly contributed to inequality in wealth accumulation.

Wealth, in turn, is an important determinate of the opportunities that a family can provide for their children. As Larry Adelman has written, “a family’s net worth is not simply the finish line, it’s also the starting line for the next generation.”[4] A family can take out a second mortgage on their home, for instance, to finance their child’s college education or job search. Actions such as these can significantly affect a child’s life trajectory.  Indeed, because of the way that wealth creates opportunity, “Economists have shown that about 50-80% of our lifetime wealth accumulation is really attributable, in one way or another, to past generations,” writes Conley. Wealth, in other words, provides a mechanism that transfers opportunity, or the absence of opportunity, from one generation to the next. It is this intergenerational link between wealth and opportunity that explains why the effects of long past institutionalized racism—such as FHA housing discrimination—are still felt today.  [*]

How are the effects of historic discrimination still felt? Take the “wealth gap,” for example. Thomas Shapiro, in The Hidden Cost of Being African American, writes that “The net worth of typical white families is $81,000 compared to $8,000 for black families.”[6] That’s a 10:1 difference! This present day racial inequality in wealth, however, must be understood in light of the history of institutionalized racism and privilege. And housing discrimination is a fundamental part of that history. As previously mentioned, a home is often a family’s most important asset or source of wealth. Housing discrimination, therefore, created inequality in the accumulation of wealth. Moreover, wealth has two distinct characteristics: 1) it creates opportunity and 2) is it inheritable. The combination of these characteristics produced a dynamic whereby inequality in wealth—initially bolstered by discriminatory practices—was often passed down and maintained from one generation to the next. So long past discrimination in housing affected the wealth and opportunities of later generations. In short, past housing discrimination is an important factor in explaining economic inequality today. Conley writes:

Today, the average Black family has only one-eighth the net worth or assets of the average white family. That difference has seemingly grown since the 1960s, since the Civil Rights triumphs, and is not explained by other factors like education, earnings rates or savings rates. It is really the legacy of racial inequality from generations past. No other measure captures the legacy – the cumulative disadvantage of race for minorities or cumulative advantage of race for whites – than net worth or wealth.[7]

Thus, the reverberations of long past institutionalized racism are still felt today. As a primary example, housing discrimination creates inequality in wealth and opportunity that is often inherited by succeeding generations. Tracing back the linkages between present day inequalities in wealth and past housing discrimination demonstrates that—as a social justice issue—housing isn’t simple. Yet these linkages also show that, in spite of their complexity, contemporary housing issues remain as important as ever.


[1] George Lipsitz. 1998. The Possessive Investment in Whiteness. Philadelphia:Temple University Press.

[2] William Julius Wilson. (2005 [1996]) “When Work Disappears: The World of the New Urban Poor,” in Mapping the Social Landscape: Readings in Sociology. ed. by Susan Ferguson. New York: McGraw Hill.

[3] Dalton Conley. 2003. Interviewed in Race the Power of an Illusion. PBS Transcript available at http://www.pbs.org/race/000_About/002_04-background-03-03.htm.

[4] Larry Adelman. 2003. A Long History of Racial Preferences – For Whites . http://www.pbs.org/race/000_About/002_04-background-03-02.htm.

[*] Note that wealth, not income, has been the touchstone for economic status throughout this discussion. This is no accident. For wealth, not income, is a much better indicator of opportunity: “Even when families of the same income are compared,” explains Adelman, “white families have more than twice the wealth of Black families. Much of that wealth difference can be attributed to the value of one’s home, and how much one inherited from parents.”

[6] Thomas M. Shapiro. 2004. The Hidden Cost of Being African American: How Wealth Perpetuates Inequality. New York: Oxford University Press.

[7] Dalton Conley. 2003. Interviewed in Race the Power of an Illusion. PBS Transcript available at http://www.pbs.org/race/000_About/002_04-background-03-03.htm.

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What is the New Normal?

It seems that everyone these days, from economists to Wall Street analysts, to talk show pundits, to the average person on the street is speculating on when the economy will recover and get back to “normal.”  But what normal are they referring to? 

 The normal of the past decade has been ever-increasing home prices, enabled by cheap credit, exotic sub-prime mortgage products, little or non-existing underwriting standards and a broad assumption that housing values can only go up.  This boom turned the typical house into an ATM machine of home equity, which in turn fueled huge increases in consumer spending and the resulting debt.  While this was happening, incomes were stagnant and our personal savings rates were very low.

 So the bubble has finally burst.  House prices have plummeted in every neighborhood, exotic mortgages have for the most part disappeared, mortgage underwriting has tightened and housing has returned to what it has always been: shelter, a sound long-term investment, and not the right choice for everyone.  People are saving more and spending less, which is good for the individual household, but evidently bad for an economy that seems to be based on little more than consumer spending.

 So, what is the new normal we are hoping to see?  In housing, it appears that the answer is the return of the housing bubble.  What are we paying attention to?….hoped for increases in home sales, home prices and housing construction starts.  All homeowners, me included, want their lost home equity wealth back, but how can that happen?  Given past and likely continued income stagnation, the only way to increase affordability is through cheaper credit.  And with mortgage rates near record lows, there is little room to decrease further without the return of the poisonous loan products that got us into this mess in the first place.

American Casino: St. Ambrose Staff Make it to the Silver Screen

St. Ambrose staff have made it to the Silver Screen. Featured in the documentary movie American Casino were Stephanie Davis, Cara Stretch, Anne Norton and Lisa Evans.

The Roqoff Crew, some young musicians from the Chesapeake Center for Youth Development, composed and performed music for the film.

St. Ambrose hosted a special screening of American Casino at The Charles Theatre on June 9. Mayor Sheila Dixon attended along with over 200 others to view the film before its release to the public in August.

“American Casino is a powerful and shocking look at the subprime lending scandal. If you want to understand how the US financial system failed and how mortgage companies ripped off the poor, see this film.” —Joseph Stiglitz, Nobel Prize winning economist

NeighborWorks Plants and Paints

June 6–13 was NeighborWorks® Week this year. The theme was NeighborWorks® Plants and there were crews all over the neighborhood painting and planting.

NWPlants and Paints was a volunteer project where young men from Boys Latin School worked with the Facilities Maintenance staff to clean and green our local community.

Thank you to everyone who supported our efforts.

A City of Homeowners

Except for the past several years, Baltimore has always been an affordable town, and a town of homeowners. One reason was the savings and loan industry, which was brought over by East European immigrants. In the old ethnic neighborhoods, on every block you had a pub on one corner, and there would be a little saving and loan, or building and loan association, up on a second floor of a house. The men on the blocks could get together and pool their resources. They did it so that their children could buy a house in the neighborhood. It was a wonderful concept.

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