Racial Restrictive Covenants and Wealth Inequity

An oft-stated adage in the United States goes something like, “home ownership, is a part of the American dream.” While this point of Americana can be debated, something more certain is that homeownership increases familial net worth and generational wealth overall.1 When a household owns a home, that property can serve as an asset which could be used to pay for things that provide long-term value such as education or be passed on to relatives. Owning property is also considered to be one of the most important factors in the pursuit of upward financial mobility.2 But does homeownership offer the same opportunities for all? In looking at overall net worth by race, the U.S. Census Bureau provides some stark statistical contrasts.

A closer look at household net worth

In a 2016 data set which examined household net worth, after removing values for home equity (the difference between what a home is worth and how much is owed on it), the median net worth of Black households was just $3,802 compared to white households whose median net worth was $54,210. When home equity is included, net worth rises to $12,920 for black households, but jumps to $143,600 for white ones.1 To further illustrate this at a local level, in 2017 rates of homeownership in Durham show that people of color only own 38% of the households which they occupy compared to 66% for white households.3

The effects of property deeds and restrictive covenants

A previous blog post entitled Why Hack into Durham History, noted that using property deeds, accompanied by restrictive covenants, was a formal method used to force minorities into and out of certain sections of a community. This helped create a system which historically generated lower property values in some areas, typically those with higher black populations, and higher property values in others, usually where a larger white demographic could be found.4 In addition to this specific practice, tools of systemic and institutional racism such as redlining and blockbusting played key roles in affecting minorities’ ability to access wealth through property ownership. About 30% of household wealth can be found in home equity, so eradicating this type of housing disparity will go a long way in eliminating wealth inequality (although it will by no means solve the problem).5 

In addition to the financial disparities that arose from housing segregation, the locations where minority groups were forced to live also had a profound effect on other components of their wellbeing. The map of Durham below highlights congregations of minority communities in 1937.6 As the map notes, a significant portion of Durham’s industrial district was set near or in communities of color. Add to that the fact that most of the parks and recreational areas were not in close proximity to these neighborhoods either. These findings further highlight that inequity based on race is multifactorial and the work needed to address these issues should not place an overemphasis on any one aspect of this problem facing our society.

Tim Stallmann for Bull City 150 & Duke World Food Policy Center

Hidden monuments to racism

Through this project, one of our beliefs is that the restrictive covenants uncovered in historical land records will provide even more context into how racism proactively served to segregate people and undermine their well-being. These hidden monuments to racism helped drive inequity in ways that are still evident and profound even today. Homeownership directly impacts familial wealth across generations, and the weight of yesterday’s racism can still be felt in how property is valued today. Going forward, we must counter pernicious discrimination in housing with proactive solutions. The National Equity Atlas offers a glimpse of what that might look like:

“…the ability of homeownership to foster economic mobility will depend on access to affordable, sustainable mortgage financing as well as the amount of home appreciation, both of which are affected by discriminatory lending practices and racial segregation.”3

1U.S. Census Bureau. (2016). Wealth, Asset Ownership, & Debt of Households Detailed Tables: 2016. Retrieved September 22, 2020, from https://www.census.gov/data/tables/2016/demo/wealth/wealth-asset-ownership.html

2Molinsky, Jennifer. (2015, June 10). Homeownership and Affordable Housing a Key Part of Upward Mobility, but Hard to Come By. Retrieved September 23, 2020, from Harvard University Joint Center for Housing Studies Website: https://www.jchs.harvard.edu/blog/homeownership-and-affordable-housing-a-key-part-of-upward-mobility-but-hard-to-come-by/

3National Equity Atlas. Homeownership: Homeownership can be a critical pathway to economic security and mobility. Retrieved September 22, 2020, from https://nationalequityatlas.org/indicators/Homeownership#/

4Durham Neighborhood Compass. (2018). Retrieved September 22, 2020, from https://compass.durhamnc.gov/en

5U.S. Census Bureau. (August 2020) The Wealth of Households: 2017. Retrieved September 22, 2020, from https://www.census.gov/content/dam/Census/library/publications/2020/demo/p70br-170.pdf

6Bull City 150. (2019). Segregation and Upbuilding: Making A Place for Black Durham. Retrieved September 23, 2020, from https://www.bullcity150.org/uneven_ground/segregation_upbuilding/

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