Real Estate Exploitation


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The African Americans during the 1910s owned up to 16-19 million acres of land in America mainly in the rural areas. Currently, the figure has significantly dropped to less than eight million acres of land. Only two million acres in the rural areas belonging to the Black Americans. Many have questioned what happened. The question under debate today is whether or not racial based policies have contributed to the exploitation of the black Americans especially in the ownership of property. This paper will present a critical examination of the aspects which have caused racially unbalanced ownership of property in the United States today. This paper will be based on the thesis that in American history there were racially based policies of  bank credits in the nation and  particularly the biased pre -1965 Federal Housing administration witch greatly contributed to property ownership differences based on racial lines


Real estate ownership of the blacks has significantly dropped. Home ownership and lose of housing a value among the black Americans has been witnessed over the years. Many authors have examined the American Economic history based on residential segregation, racial, housing values and home ownership (Collins and Margo, 2003, pp 255-86). Statistics have shown that the rate of home ownership per household heads by 2000 was just the same as it was in 1900.  By the middle of the century the gap has widened with an increase of home ownership among the Whites. The blacks have consequently had a low rate of home ownership as many of them are moving to the cities. This gap narrowed between 19670 and 1980 but still the gap between the whites and blacks in estate ownership is still large.

The major cause of this gap by 2000 is mainly attributed to racial difference in terms of location, education, income and the composition of household among families. This large gap is also similar to what was witnessed in the 1940s little changes have taken places since then.  Majority of the black- white convergence in housing values and ownership is noted to have occurred before the passing of anti discrimination policies and the Federal Fair Housings Act policy and also took place before black families migrated to the suburbs in large numbers.

The black Americans have low percentage rate in the ownership of property in the United States. This is not because of poverty among the black people because according to data of the 1960, it shows that 65 percent of black residents and two thirds of whites in urban centers had comparably modest incomes.

Current situation

In America, today the geography or housing is the central elements of the structure of opportunity.  The locality which people live defines who they are and what they will be in future. This means that the school one goes, hospitals visited and the employment opportunities are determined on the basis on where the person is living in because the areas have the central aspect acting as models of success. From the 1970s, there have been gradual changes but are improvements which are slow in addressing ways of   decreasing racial segregation and opening housing market to all American citizens.  Also   since the 1970s, there has been a growing rate of class segregation (Satter, 2009). By 2000 the nothing had changed to address the aspects of racial segregation and property ownership. This point further supports the fact that the areas one lives in determines the class and race one is in.

Cashin (2004) identifies three main factors that have contributed to the class and race   segregation of the housing markets in the United States. First is the push of geography which reflects on the American opportunity structure.  Second point is on the personal preference pull. This means that the place you live define the person and what and what the person is exposed to on daily basis. This further determines the opportunities one will be having in life. Such privileges are the kind of school one will attend, the employers one access to and whether one will be exposed to successes hosts of models.

Since 1970 there has been a marked increase of class segregation in housing market.   There is aspect of the host of private and public institutional policies which do not value inclusion but instead prefer homogeneity.

Property rates in 1930s

Various procedures carried out in the 1930s were in highly biased.  Property was rated by appraisers on the basis of schemes of colors symbolize the racial diversity in the United States. Green color symbolized the areas for the white people. Yellow and blue represented the areas v inhabited by the Jews and other foreigners and the Black areas where the inhibited was represented by the color red (Satter, 2009). The appraisal policies of FHA meant that the blacks were not included to acquire any mortgage loan on the basis of the policy definition. This is because the appraiser believed that the redlining of a mortgage would show the presents of any black family in that area.

Both the black and white Non Commercial purchasers found out that is was not possible to get loans from areas with red lines (Satter, 2009).  The whites living in areas with black families were frightened by speculators to sell their homes and buy in places inhabited by the whites. The only common solution for the black purchaser to generate income was through overcrowding and dividing their properties in order to them making up for the monthly payment which were constantly inflated. This strategy however reaped off the earnings of the blacks and strained community ties (Satter, 2009).

Personal preferences

Through opinion polls carried across various states, it indicated that  majority of all  the   races  would prefer  to live in a neighborhood which is integrated  another groups  at the same time indicate that they would  prefer to live in a neighborhood which is  inhabited by  people of their own race. The blacks, whites, Asians and Latinos indicated that they would not prefer to live in a place where the others out number them. With such  a prospect, then it means that inherently the society will be structured in  a way    which a   group of  people of a particular  race would be prefer to own homes near those of  the  people they share common culture. This therefore dangerously limits residential integration in the society (Collins and Margo 2001). In 2000, a racial discrimination audit was carried out which showed that since 1989, there has been a considerable improvement in racial discrimination, but still there has been makeable favor of the Whites over the minorities (Metzger, 2001).

The department of  housing and urban development has also  made efforts  in determining  the outcome on what would happen if the minorities and the  white made attempts to purchase homes in metropolitan areas which are inhabited by  the Latino and black population.  This study showed that the Latino were more likely to be discriminatory than the blacks the Latino renters were preferring the white tenants than the black. The study further indicated that the white testers were more likely to get valuable units and information on the housings units which were available (Orfield, 2003). This study showed that there exists separatism which is not naturally inherent because there is social order which human beings create from private and public choices in the institution.  The start of the 20th century was also marked by racial and economic integration.

Segregation through public policy

The policy choices made in the 20th century greatly affected the division of the housing ownership through economic and racial acts, the bastons of need and affluence commonly familiar in Americas metropolitan. Firs there was the adaption of local governance system based on local autonomy religion which lead to the development   of   homogeneous and new communities. The main reason was the use of local powers which were used to practice use of land in an undesired way and to do away with   undesired population.  Secondly the public policy from the federal government through the mortgage insurance program of the Federal Housings Administration (FHA) propagated and adopted the theme of homogeneity based on the orthodoxy that it was necessary in maintaining stable values of the housing sector. In those days the FHA was the largest operator in housing insurance across the world and it chooses it had the power to underwrite mortgages to only those having single or nuclear homes within the white neighborhoods. FHA policy also propagated and invented the redlining notion which basically locked our certain classes of people from other races from gaining opportunities into the mortgage program provided by FHA (Metzger, 2001).

another  policy is  the interstate high way program  which was  consisted  to  be one of the   largest  programs  in  public works  in the world history. This program is mainly noted for destroying the neighborhoods belonging to the white Latinos and black and at the same time opening venues through which people would come to cities. The federal   government created various urban development programs which lead to the creation of   black ghettos still seen today (Turner, M.., et al 2002). The program was known as Negro Removals by the black   people because they were programs aiming to renew the urban areas. Many houses occupied by the blacks were destroyed especially those near the central business district. The support of these programs was with the aim of preparing the urban cities for post industrial economy and d at the same time to remove blight. 

The federal   government removed about 400,000 units by using about $ 3 billion. These units were mainly occupied by the blacks and had to move to marginal and public housing neighborhoods. The metropolitan landscape therefore had to changed based on this public policies. It also important to note that all these public policies were created in a way  that  would advantage the white who were in power and to greatly disadvantage  the blacks and  other minority groups. These policies were also passed way before the passing of anti discriminatory policies and policies which ensured equality among races.  By then the society was already structured in a way that the whites were enjoying the privileges while the blacks suffered with little to start from. These policies worked hand in hand with the strong resistance of discrimination in housing by the federal government in creation of biased proceeds in enhancing economic segregation and favor racial segregation rather than inclusion (Turner, M.., et al 2002).

Zip Code by racial profiling

The private actors in the industry of real estate have mainly contributed to economic and racial segmentation currently witnessed today. The insurance, banking, and the real estate industries have collaborated and adopted the orthodoxy of the government that economic and racial homogeneity is an important aspect in ensuring there is the protection of property values. There is a high tendency for private developers to create a class niche but the most critically part is the use of zip codes which are racially profiled.  Based on demographics, marketing companies have come up with databases which rate the buying power of the zip codes. This in turn influences how the real estate, market is shaped in America today. Real estate developers, land use planners, insurance companies, financial institutions are retailers use these databases to make decisions on where they would develop, invest and carry out profitable business.


By the study of real estate laws in America today, it is evident that nothing much has-been done to stop racial discrimination in the country. There is need to come with a public consensuses In the nation  to  come forward and explain whether the integration seen among classes races seen in schools, neighborhoods and other situations  were important aspects to be incorporated into our American society.  The earlier cases such as case of Plessy v. Ferguson and Brown v. Board of Education were a little step taken in addressing the aspects of segregation in our society. Much more reforms have to be implemented in ensuring that our society provides equal opportunities for all Americans.


Cashin, S (2004) The Failures of Integration: How Race and Class are undermining the American Dream, Cambridge: Public Affairs.

Turner, M.., et al (2002) Discrimination in Metropolitan Housing Markets: National Results from Phase I retrieved from

On February 28, 2011

Metzger, J. (2001) Clustered Spaces Racial Profiling in Real Estate Investment Paper prepared for the International Seminar on Segregation and the City, Lincoln Institute of Land Policy, Cambridge, Massachusetts

Orfield, M. (2003) Comment on S. A. Bollens in through the Back Door: Social Equity and Regional Governance, Housing Policy Debate

Collins J and Margo, (2001) Race and Home Ownership: A Century-Long View NBER Working Paper No. 7277, and Regional Science and Urban Economics 33 (2003): pp. 255-86.

Satter B (2009) Family properties: race, real estate, and the exploitation of Black urban America Publisher Metropolitan Books, pp 43


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