Redlining, Predatory Inclusion, and Housing Segregation

*This post is part of our roundtable on Keeanga-Yamahtta Taylor’s ‘Race for Profit’

From the presidential debates to anti-racist reading lists, redlining has gained purchase as a descriptor for many forms of spatialized dispossession. There is a tension inherent in this widened usage: the federal government’s maps from the 1930s are some of the bluntest examples of the mechanisms of segregation. Their color-coded system—green for the “Best” neighborhoods, yellow for “Definitely Declining” and red for “Hazardous”—make discriminatory lending easy to understand. Recently, at least one historian has suggested that redlining has become a narrative crutch. Rather than just an oft-repeated story, however, the spread of the term to processes beyond its original association with New Deal federal housing policy gestures to how people both acknowledge the limits of redlining’s explanatory power and still consider it the best way to account for America’s segregated geography, housing or otherwise.

As a historian of housing, I too have struggled with the limitations of redlining. In particular, its termination in 1968 makes it inadequate for answering the two questions people most frequently ask me: why does housing segregation persist nearly a century after the creation of redlining maps and what can be done to fight housing segregation today? Keeanga-Yamahtta Taylor’s Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership provides a blueprint that goes beyond the history of redlining to answer both.

That persistence resulted from what Taylor calls predatory inclusion, where Black Americans, low-income renters, and welfare recipients who were long shut out of the conventional housing market gained access to it on bad terms. Beginning with the Federal Housing Administration’s adoption of Section 235 and the subsequent passage of the HUD Act in 1968, the government created a public-private framework that insured unregulated mortgage banks against loss. Operators who profited from volume sales steered potential homeowners toward heavily marked up substandard structures where the buyer took on fee-laden debt. On paper, the new federal programs reversed decades of legal residential segregation by expanding homeownership opportunities. Yet the policies did little to challenge how the real estate and lending industries factored race into property value. As a result, the policies expanded a market already configured for white people to build wealth from homeownership and for low-income Black homeowners to be targeted for wealth extraction.

In addition to highlighting the exploitation embedded in efforts to extend homeownership, predatory inclusion does important work for Taylor with regards to decoupling the traditional urban crisis narrative from the notion of urban decline. The broadest contours of the urban crisis resemble the narrative Lyndon Johnson laid out in 1968: decades of urban decay created unprecedented conditions of dilapidation and poverty, most acutely felt in black neighborhoods in older sections of cities (Taylor, 55). By 1973 Republicans declared the urban crisis over even as housing conditions in many neighborhoods continued to worsen. 

In fact, one of the most searing images of urban decline came after the crisis was said to have ended: apartment buildings on fire in Black and Latino neighborhoods. Less widely understood, then and now, was the profitability of those fires, as landlords committed arson both for insurance payouts and redevelopment opportunities catering to white people. To them, Black and Latino neighborhoods were profitable up until they calculated that the lives of residents had less value than the ashes of a piece of property. One reason why widespread arson was possible was because predatory inclusion actually hardened neighborhood boundaries. Taylor observes that “capital could move freely, while Black people could not” (91). Federal homeownership programs were by design limited to the urban core, where many participants already lived ( 134). As these houses fell apart—in some cases the properties had even been condemned for demolition prior to sale—policymakers pointed to the conditions of neighborhoods as a reason for creating new exclusionary policies to maintain suburban segregation.

Decoupling urban crisis and decline can thus provide a useful model for understanding what happened after the events of Race for Profit. After 1973 Republicans successfully pivoted from legislative attempts to remedy structural causes of the urban crisis to the pernicious narrative of the underclass, attributing dilapidated housing stock to the personal failings of African Americans. The book brought to mind the case of Charlotte Street in the South Bronx, New York. Beginning in 1977 Jimmy Carter and later Ronald Reagan visited the burned-out buildings and empty lots of Charlotte Street, turning it into a national symbol for urban decline they attributed, in part, to those failings. Meanwhile under the rhetoric of personal responsibility, both administrations diverted funding away an anemic social safety net. This shift, which Taylor illuminates through the experiences of Black women, was not limited to the realm of housing, but rather coincided with what Melanie Newport and Elizabeth Hinton describe as “the merging of the welfare and carceral states” that was “both deeply deliberate and highly calculated in its racist intent.”

Bill Clinton’s 1997 visit to Charlotte Street was different: by then Charlotte Street had been redeveloped through public-private partnerships into single-family ranch homes and dubbed Charlotte Gardens. As Clinton vowed to end “welfare as we have come to know it” he deemed the redevelopment of Charlotte Street successful because it imported “suburban-style homeownership” to the middle of the South Bronx, complete with white picket fences included to increase property values and evoke the American dream. His remarks would not have been out of place in 1977 or 1987: “Government has to be a partner and get it right,” Clinton said. “We can give you the tools … so you can have the power to change your own lives.” The same racist paternalism that Taylor shows got Black women labelled “unsophisticated buyers” also permeated discussions on how to “fix” Charlotte Street and its residents: they included calls to paint the primarily symbolic white picket fences black to prevent graffiti. 

Politicians of all stripes consigned urban decline to the same dustbin of history as the urban crisis by the late 1990s thanks to the behemoth of gentrification. The handful of ranch houses that were to turn the South Bronx into a suburban haven were already misguided, but any impact they had was no match for systemic incentives that facilitated profits from inequality. The supposed reversal of urban fortunes from gentrification papered over the increasing scarcity of quality affordable housing that hit neighborhoods like those in the South Bronx the hardest.

Nowhere is this clearer in the present than following the burst of the subprime housing bubble, which Taylor briefly discusses in her conclusion. Decades of deregulation created new avenues for both exclusion and predatory inclusion, culminating in 2008 when areas that had been redlined bore the brunt of foreclosures after being flooded with bad credit. In this case exclusion and inclusion was both sequential and concurrent; first redlining starved areas of credit, creating conditions for financiers to reap profits from offering easy subprime credit as the only option. Lenders then steered African American buyers into subprime loans, creating second-class pathways to homeownership even when they qualified for cheaper options. 

Redlining cannot explain this persistence of inequality, even by drawing attention to similar patterns of exclusion. This is because the term redlining has contributed to a widespread understanding of discrimination as functioning solely through exclusion. To be sure, exclusion remains a driver of racial inequality in housing development and lending—the two industries at the center of redlining maps—as well as in the provision of services and technology, two realms into which redlining is now widely applied. Yet exclusion was not the sole mechanism. The geographic boundaries of the red lines are still there, but they do not delineate zones of something vs. nothing. Rather the lines mark different zones of engagement between residents, capital, and the state. 

Taylor leads a new generation of scholars grappling with how housing segregation fits into US urban history. They are producing racially literate structural analyses that emphasize the role of capital in housing’s political economy. They, too, have tried to account for the persistence of housing segregation, including by extending the history of redlining backwards to its roots in colonialism and enslavement. An issue with this new cohort’s work, including mine, is that explaining housing segregation through longer histories of structure and capital risks flattening it into an unchanging facet of America’s past, present, and future, and thus forecloses on the second question of what can be done about it. Not so with Race for Profit. While there is no question of white supremacy’s deep entrenchment in American institutions, Taylor deftly avoids the immutability trap to tell the story of how the federal government turned the American dream of homeownership into the “American nightmare” for African Americans in a just a few short years.

Predatory inclusion helps explain the persistence of housing segregation, but how does detaching urban crisis from urban decline better answer the questions of what can be done? Through her analysis of public-private partnerships promoting black home ownership, Taylor demonstrates the ways in which the housing market, like all markets, was built to value whiteness and de-value blackness. We must seek alternatives that in Taylor’s words do not make “the quality of one’s life and the substance of one’s citizenship contingent on the possession of private property” (262). Only by ending the promotion of homeownership as a panacea can Americans begin to break down an economic system where markets functioning correctly means that they are functioning unequally.