Although systemic racism existed in America for hundreds of years before the 20th century, the policies of the past 100 years have been incredibly destructive to people of color, especially Black individuals, who have been denied the opportunity to build a better life for themselves and their families due to historic discrimination in U.S. housing policy.

Too many among the general public aren’t aware that the egregious racial disparities in the U.S. that exist today — in education, employment, health and wealth — are linked to Black families’ exclusion from opportunities to purchase an affordable home and live in non-segregated neighborhoods.

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1930s

Having an affordable mortgage helps homeowners save more, invest in education and have greater financial stability. Starting in this decade, millions of white families benefited from private loans insured by the Federal Housing Administration that helped them obtain low-down-payment homes. That hand up provided a foundation for white families to join middle class America, build strong communities and plan for the future.

Black families were prevented from receiving the same life-changing benefits and subsidies through the practice of redlining. Color-coded maps developed by the federal Home Owners’ Loan Corporation identified where households of color lived and deemed those “redlined” areas unsafe for lending. The FHA refused to insure loans in redlined communities, and private lenders across the country followed their lead.

1940s

Racially restrictive covenants, or clauses, in deeds also kept Black families from leaving redlined communities. The FHA accelerated the use of restrictive covenants when it began subsidizing subdivision construction in the 1940s. Restrictive covenants placed on the new homes stipulated they could only be sold or resold to white families. Again, private lenders followed suit nationwide.

Black veterans who served their country during World War II weren’t immune from housing discrimination. The federal government issued the GI Bill after the war to provide veterans with federally guaranteed, low-interest home loans with no down payment. The loans were originated by private lenders, and most of them practiced redlining. Black veterans were outright rejected by lenders or prohibited from purchasing homes due to restrictive covenants, while white veterans established safe and stable homes for their growing families with the help of an affordable mortgage.  

1950s

Another threat loomed for Black families during the 1950s. Urban renewal leveled Black homes and businesses to make way for new downtown office developments, civic spaces and federally funded highways. Black residents were stripped of their properties and forced to start over.

Between 1934 and 1962, households of color received just 2% of all government-backed mortgages, severely impacting their long-term economic mobility. When Black parents were denied pathways to affordable homeownership, it affected their ability to set up future generations for success.

1960s

In 1968, the Fair Housing Act prohibited racially restrictive covenants, but discriminatory practices continued. Communities developed new zoning rules that segregated by wealth and income, requiring large lot and home sizes that drove up home prices. Lower-cost housing options like attached homes and apartments were prohibited. These rules entrenched already established racial segregation. Without entry points to affordable homeownership, most Black families could not afford to live in communities with better school districts and employment opportunities, and many formerly redlined communities continued to be passed over for loans.

1970s

The Community Reinvestment Act in 1977 was meant to hold banks more accountable for delivering fair banking and credit services. But Black Americans continued to face deeply ingrained racism in all kinds of communities, including being targeted by predatory mortgages and refinancing programs.

1980s-2000s

Lack of adequate housing reform during the late 20th century allowed for market practices that continued to disadvantage Black Americans. Racial parity in housing remained elusive, and inequalities worsened. In 2008, the Great Recession disproportionately affected Black homeowners that had been steered into predatory loans and were left more vulnerable to losing their homes, contributing to the homeownership gap progressing little since the Fair Housing Act was passed in 1968.

2020s

COVID-19 and its economic impacts disproportionately impact Black Americans, exacerbating the already vast racial inequities in housing, health, education and financial stability.

Habitat for Humanity, a history of radical inclusivity

While the federal government and private lenders worked to keep Black Americans from accessing affordable housing in the early 1940s, the seeds of what would become Habitat for Humanity were sown at a Christian community in Americus, Georgia, where people of all backgrounds were invited to live in communion and fellowship. At Koinonia Farm, Black and white families worked the land together and earned equal pay for the equal work. In the polarized racial climate of the Southern U.S., they did so at their own peril.

That tradition of radical inclusivity is a core guiding principle of Habitat’s work — 40% of Habitat homeowners are Black families, and two-thirds are from non-white households. Habitat is committed to advancing racial equity through advocacy and empowering Habitat homeowners who build their own homes alongside volunteers and pay an affordable mortgage. We understand that we cannot build our way out of this alone, we must also address the systemic inequalities through advocacy and partnerships throughout our communities and networks.

Learn more about the policy changes influenced by Cost of Home, Habitat’s five-year U.S. advocacy campaign — including policies that address the homeownership gap for communities of color. 

Housing inequality is a primary culprit behind the large racial wealth gap between Black and white households in the U.S.

Mobilizing public and political will to craft and implement remedies necessary for a more just future is critical to rectifying the years of unjust housing policies that continue to impact families today.

Habitat’s Cost of Home campaign provided a vehicle for advocating for equitable housing and land use policies at the local, state and federal levels. The following is a non-exhaustive list of housing policy solutions that we can all help push forward to redress the nation’s legacy of discrimination against people of color — and especially Black Americans — and to help our nation begin to heal.

1. Increase opportunities for Black homeownership.

To start, we must set a goal of closing the Black homeownership gap within a generation. We can achieve that in several ways, including:

• Increasing access to down payment assistance. Discriminatory policies that have excluded Black families from homeownership, education and job opportunities often leave Black parents with less wealth to pass on to their children. Down payment assistance programs, like matched savings programs and advanceable tax credits for low-income first-time homebuyers, can help reduce this common hurdle.
• Increasing access to affordable credit. Given the history of redlining and discriminatory lending in the U.S., we must extend mortgage and business credit to underserved, low-income and minority homebuyers and communities. Many tools for rectifying racial inequities in lending exist but need to be strengthened.
• Investing in affordable homeownership. Even when down payment assistance is available, unaffordable home prices remain a major obstacle to homeownership. Expanding government grants that finance affordable home construction can help builders like Habitat create lasting, sustainable homeownership opportunities.
• Retargeting the mortgage interest deduction. The mortgage interest deduction for homeowners is strikingly inequitable — often only benefiting high-income homeowners with the largest mortgages. It is also quite expensive — historically costing more than all of HUD and USDA’s housing programs combined. Restructuring the MID as a tax credit to make it more accessible to low-income homeowners, including homeowners of color, and limiting it to low- and moderate-income households would free up scarce federal resources for other solutions to help those who need it most.

2. Invest in distressed, racially segregated communities.

Many formerly redlined and segregated neighborhoods continue to suffer from disinvestment and economic distress. Reinvestment and tax incentives targeting these communities would help spark recovery and opportunities. But these investments must be carefully designed to ensure they don’t price out existing residents and businesses.

One promising idea is tax credits to rehabilitate distressed homes in communities with low home values, to expand affordable homeownership opportunities for residents, such as the Neighborhood Homes Improvement Act. Property tax relief for low-income homeowners and investments in home repairs are also important for ensuring existing residents can remain and benefit as their neighborhoods improve.

3. Stop perpetuating segregation.

Segregation is the legacy of deliberate policy and zoning choices that led to the underinvestment and isolation of communities where Black households lived, and the creation of separate, higher-opportunity communities that excluded people of color. Today’s economically exclusionary zoning perpetuates this segregation. Governments at all levels are obligated to increase opportunities for Black households to live in neighborhoods with good schools and safe streets. They can do this by:

• Reforming zoning to allow mixed-income communities. By diversifying the types of homes allowed in their communities, localities can make them more racially and economically inclusive. Zoning modifications like lowering minimum home- and lot-size requirements, permitting duplexes and triplexes, allowing apartments in more locations, and/or minimizing discretionary review processes help achieve this. In considering these reforms, again, it is important to be mindful of how zoning changes might inadvertently displace existing residents of color and prevent this from happening.
• Building and preserving affordable homes in communities of opportunity. Zoning reforms are necessary but often insufficient alone — governments must also increase investments in affordable homes in non-segregated communities. Local and state governments can help by incentivizing mixed-income housing developments and making public land in well-resourced neighborhoods available at low cost for intentionally affordable homes.
• Increasing the mobility of families with vouchers. Federal housing choice vouchers were designed to help low-income households afford modest rental homes in every U.S. neighborhood. But landlord resistance, high deposit requirements and unaffordable moving expenses often restrict families from using them outside of high-poverty, segregated areas. Voucher mobility programs that include landlord outreach and mediation, tenant counseling and moving-cost assistance can dramatically improve access to high-opportunity neighborhoods for families with vouchers. Scaling these programs would bridge more low-income families to communities of opportunity.

4. Invest in affordable rental housing.

Public investment in rental affordability is critical to address the disproportionately high cost burdens and housing instability experienced by Black households. Housing choice vouchers are one of the most efficient tools for increasing affordability for very low-income renters, but currently there are only enough to assist 1 of every 4 eligible households. The federal government can quickly alleviate housing cost burdens for hundreds of thousands of Black renters by expanding voucher availability. Charlottesville, Virginia, and other cities have successfully implemented their own housing voucher programs.

5. Minimize the damage of COVID-19 on Black households.

A crucial, immediate step for remedying racial housing disparities is preventing eviction and foreclosure during and after the pandemic. On average, Black renters and homeowners are at higher risk of losing their homes, having entered the health and economic crisis with less access to stable and affordable homes.

Eviction and foreclosure moratoria as well as forbearance options are critical for stabilizing households during the pandemic, and just as critical is assistance to help families make up missed payments after those periods end. Foreclosure prevention assistance targeting low-income homeowners, emergency financial assistance for renters facing eviction, and extended repayment options for renters and homeowners alike are key to their — and our — recovery.

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The time for racial equality is long overdue. Join us in helping to ensure that all families have access to a stable, affordable place to call home.

Read Habitat’s full Racial Disparities and Housing Policy paper for further history on discriminatory housing policy and our specific policy recommendations for a more equitable future.