JCN and the Rise of City Planning—Part IV: Continued Discrimination in Housing

Photo taken in the Western Historical Manuscripts Collection at the University of Missouri, Kansas City in 2017 (State Historical Society of Missouri)

Letter describing Nichols’ departure from the National Capital Park and Planning Commission after 22 years of influence on planning in Washington D.C.

So far in this five-part series on the work of Jesse Clyde Nichols of Kansas City, we have seen how Nichols’ rhetoric and practices, couched in idealism and appeals to public benefit, have led to devastating and persistent housing segregation. Cloak-and-dagger practices have reared their heads in a number of ways since the time of J.C. Nichols, from deed restrictions to blockbusting, discriminatory city planning, redlining, contract selling, mass incarceration, gentrification, and an ongoing lack of green investment. 

This approach to policy has clouded the legislative and judicial battles surrounding discriminatory housing. In 1948, the Supreme Court ruling of Shelley v. Kraemer declared the enforcement of racially restrictive covenants illegal. However, only the enforcement, not their use in the first place, was outlawed. Thus, restrictive covenants could still be written into deeds, influencing communal opinions of the need for all-White neighborhoods and conveying to Black, Jewish, Hispanic, Asian, and Native American aspiring homeowners that they were unwelcome. 

Violent acts and coercion were used post-Shelley to unofficially enforce restrictive covenants. Historians Carol Rose and Richard Brooks noted that even after Shelley v. Kraemer, “real estate professionals simply copied the racial prohibitions, and they warned any purchaser who objected that the failure to include these provisions would put a cloud on the title,” which could inhibit someone from obtaining a mortgage loan.[1] Rose and Brooks further asserted that the continuation of restrictive covenants post-Shelley was based on the belief that 

segregation, however effected, would bring higher housing prices, particularly by satisfying the tastes of white purchasers, who would in any event not wish to purchase in minority or “changing” neighborhoods...An unenforceable covenant obviously could not give out the sense of legal entitlement and general imprimatur that an enforceable covenant used to give, but it was still something and not nothing.[2]

It should also be noted that the state enforcement of restrictive covenants was unanimously deemed illegal by six Supreme Court justices (six instead of nine because three recused themselves for owning property with racially restrictive covenants), but private parties were free to write in and abide by such covenants. 

Redlining continued cloak-and-dagger practices (a.k.a. obscurification) in housing, disguising race- and religion-based prejudices as risk ratings of mortgage loans, empowered by the Underwriting Manual discussed in Part III. 

After the Fair Housing Act of 1968, the profitable practice of contract selling continued redlining’s legacy, targeting Black families and individuals historically barred from obtaining mortgage loans. Within this practice, as seen in Chicago and documented by Beryl Satter, speculators would act as third-party sellers, charging obscenely high prices for their own buildings (though speculators did not inform buyers that they owned the property). If a resident was unable to make their inflated monthly payment, the owner/speculator would immediately evict them, causing them to lose all of their investment, including any maintenance performed on the property.[3] Then the speculator was free to use the property to swindle the next would-be homeowner.

Subprime lending, ultimately the cause of the 2008 housing market crash, continued discriminatory housing practices into the 21st century. Georgette Chapman Phillips, in her essay on the racial underpinnings of the housing crisis, noted that “85 percent of the worst-hit neighborhoods (defined as where the default rate is at least double the regional average) have a majority of black and Latino homeowners.”[4] Black and Latino homeowners were originally pushed to accept predatory loans because “people were simply priced out of the market. Using alternative (subprime) loans was the tool that allowed them to participate.”[5] 

Subprime lenders disproportionately targeted communities of color. Astoundingly, in neighborhoods where minority residents accounted for less than 10% of the population, 22% of loans were classified as subprime, while in neighborhoods with a minority population accounting for 90% to 100% of residents, 48% of loans were classified as subprime.[6] Specifically for Chicago, “neighborhoods where the population is more than 80 percent nonwhite account for 65 percent of all foreclosure cases—up from 61 percent in 1993.”[7] 

This predatory lending was legitimately condemned in two cases, resulting in a $175 million settlement from Wells Fargo and a $335 million settlement from Bank of America.[8] However, this small measure of justice was enacted after decades of prejudiced practices and colossal damages to not only the livelihoods of those targeted by predatory lenders but also to the economy at large.

Homeownership has major implications for establishing generational wealth, and because of discriminatory housing practices, it plays a critical role in income inequality along racial lines. Amir Sufi at the University of Chicago discussed how rising income inequality in general acts as a shock to the ecosystem that is the U.S. economy, and without addressing this shock, the economy as a whole suffers (with the threat of eventual collapse). Heather McGhee writes about racism’s impact on the entire country in her book, The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together. In a New York Times opinion piece, adopted from the book, she wrote,

Progressives often end up talking about race relations through a prism of competition—every advantage for whites, mirrored by a disadvantage for people of color...The task ahead, then, is to unwind this idea of a fixed quantity of prosperity and replace it with what I’ve come to call Solidarity Dividends: gains available to everyone when they unite across racial lines.

Of course, perpetrators of obscurification often twist a “better for all” message to sell harmful discriminatory ideas. Particularly relevant to Kansas City in 2021 is the practice of gentrification and “urban renewal.” Within this practice, race- and class-based discrimination are obscured by the publicized need to renew blighted areas. “Renewal” does not benefit the resident population but instead displaces them. While this practice may be successful in improving the economy of these physical locations, this improvement is isolated and ineffective for the city as a whole, as the practice simply moves an impoverished economy elsewhere within the city, further disadvantaging these communities and neglecting their needs.

While clearly rampant in housing, cloak-and-dagger practices are used in all policy areas. As one non-housing example, Eduardo Bonilla-Silva, in his book, Racism Without Racists, discussed how obscurification has been pursued over time in the criminal justice system. He wrote, “As the Jim Crow practices have subsided, the control of blacks has been chiefly attained through state agencies (police, criminal court system, FBI).”[9] These agencies’ appeals to legality, public safety, and objectivity allow heinous acts like the numerous murders of Black individuals by police officers and racial profiling in the courtroom, where juries are primarily White, where Black people receive longer and harsher sentences than White people, and where capital punishment is 4.3 times more likely for a Black defendant than a White defendant.[10] Bonilla-Silva wrote that “because these agencies are legally charged with defending order in society, their actions are deemed neutral and necessary.”[11] 

Obscurification and the rhetoric used by Nichols and his contemporaries have shaped current housing segregation and inequality. Yet, similar tactics have bled into all policy areas—education, voting, policing, healthcare, employment—and that is why identifying such practices is essential. Obscurification has the power to mold (and deteriorate) every aspect of civic life. Exposing and dismantling this dishonest approach provides the power to fuel progress and equality.

Notes

[1] Carol M. Rose and Richard R. W. Brooks, “Racial Covenants and Housing Segregation,” in Race and Real Estate, ed. Adrienne Brown and Valerie Smith (Oxford: Oxford University Press, 2016), 168.

[2] Rose and Brooks, 168–169.

[3] Beryl Satter, Family Properties: How the Struggle over Race and Real Estate Transformed Chicago and Urban America (New York: Henry Holt and Company, 2009), 3–4.

[4] Georgette Chapman Phillips, “Black, Brown, and Green: The Persistent Effect of Race in Home Mortgage Lending,” in Race and Real Estate, ed. Adrienne Brown and Valerie Smith (Oxford: Oxford University Press, 2016), 15.

[5] Phillips, 18.

[6] Phillips, 20.

[7] Phillips, 21.

[8] Phillips, 22.

[9] Eduardo Bonilla-Silva, Racism Without Racists, 5th ed. (Lanham: Rowman and Littlefield Publishing Group, Inc., 2018), 33.

[10] Bonilla-Silva, 38.

[11] Bonilla-Silva, 44.