Black homebuyers paid premiums because housing exclusion left them few choices

Evidence

In reality, there was no empirical data to support the belief that the mere presence of black Americans in a neighborhood caused homes to lose value. When black Americans integrated a neighborhood, property values initially rose—black families were paying more for their homes than their new white neighbors had paid. The FHA admitted as much in a 1948 report. This was primarily because prospective black purchasers were ripe for exploitation in the real estate market. Many predominantly white neighborhoods and new developments in areas deemed “safe” for mortgages were bound by covenants that prohibited sales to black homebuyers. Such covenants were legal (and upheld by the Supreme Court) until 1948; the FHA underwriting manual even provided a sample covenant to developers. “If a neighborhood is to retain stability,” the manual said, “it is necessary that properties shall continue to be occupied by the same social and racial classes.” That left limited choices for prospective black homeowners, who were forced to pay a premium if they could find a home in a neighborhood that would accept them. — Dorothy A. Brown, The Whiteness of Wealth, 174

Categorization

• XREF: Ties directly into the redlining/prewar-conditions section I need for the article framing of the racial wealth gap.
• SEED: Angle: the FHA’s own 1948 admission that integrated neighborhoods ‘initially rose’ in value undercuts the race-neutral rationalization for redlining.