AILSA CHANG, HOST:

This week, we're celebrating NPR's 50th anniversary, kicking off a series we're calling We Hold These Truths to examine what's working and what's not in American democracy. And one of the underpinnings of democracy, without question, is property ownership. You see; there was a time when owning property was required simply to participate in this democracy. Yet we began as a nation that considered Black people to be property, to be three-fifths of a person.

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There's also an assumption in this country that owning a home is the best way to build intergenerational wealth. But more than a century and a half after the end of slavery, property ownership eludes Black Americans more than any other racial group. In fact, the gap between white and Black homeownership is bigger today than it was in 1960, when race-based discrimination in the U.S. was still legal.

CHANG: So this week we're going to look at the structural forces both from the government and the real estate industry that have denied Black Americans a fair shot at the American dream of home ownership. One person who has spent many years thinking and writing about this is Keeanga-Yamahtta Taylor. She wrote the book "Race For Profit," a finalist for the 2020 Pulitzer Prize in history, and she's going to help us open our series. We began our conversation discussing why homes owned by Black Americans don't accrue value the same way that white-owned homes do.

KEEANGA-YAMAHTTA TAYLOR: The market is a reflection of social attitudes in our society. I think sometimes we are led to believe that the market is this neutral space where supply and demand are the only thing that dictate how it functions.

CHANG: Yeah.

TAYLOR: And that's simply not true. The market is a reflection of that which we hold to be valuable, that which we see as desirable, that which we see as undesirable. And it's impossible to measure that without factoring in race in the United States.

CHANG: And there has been a longstanding practice in real estate to connect race with the perception of risk, meaning it's considered riskier to loan to Black homebuyers. Can you talk about how the government helped perpetuate this perception through redlining?

TAYLOR: So redlining is a practice that developed out of public policy in the 1930s. And essentially the federal government - in response to the Great Depression, where millions of people were losing their homes and banks were no longer willing to lend money - created programs to help people refinance their homes. So the federal government were considering, what is a good neighborhood for us to refinance home loans of people in that community? And later, what is a good area for us to guarantee a home loan?

And so you have the federal government acting as an insurance agency, and it meant that they created color-coded maps that originate in the 1930s. The most prized areas on these maps were blue, green, yellow, and then red signified that an area had very old and dilapidated buildings. It was unlikely that value would accrue in these properties. And it also was to signify what kinds of people were moving into those areas, whether they were African American, immigrants or other undesirable populations. And this desire was built around the notion that some people are good for property values and some people are bad for property values.

And this helped to really dictate where other business would invest, and this is really the moment where disinvestment and all of the consequences of that are really etched in policy. And we continue to see the reverberation of those public policy decisions made in the 1930s today.

CHANG: Exactly. Consequences have flowed from those decisions. This perception that it's a bigger risk to loan to Black people - I mean, you have written about how that ends up becoming kind of a self-fulfilling prophecy for Black homeowners, evidence we can see today.

TAYLOR: Yeah, no, that's exactly right. It does become a self-fulfilling prophecy where - if the federal government has refused to back mortgages in these areas, which signals to other businesses not to participate economically in these areas, then it means that there is greater levels of dilapidation and deterioration in the housing because it's not just the big mortgage loans that Black people are excluded from, but the Federal Housing Administration was also giving white homeowners small maintenance repair loans so that they could keep up with maintenance issues with their homes.

So African Americans and other people living in the redlined, grade-D areas on these residential maps are excluded from small repair loans as well. And so it means that the housing is in greater distress, is in greater disrepair. The lack of investment means there are fewer jobs. So these neighborhoods look depressed. But people coming through the neighborhood don't understand the public policy decisions that have been made that have created these conditions.

CHANG: Yeah.

TAYLOR: All they see are African Americans are living in these neighborhoods. The buildings are overcrowded. They're in disrepair. And so that becomes conflated with race.

CHANG: Right. We've been talking up until now about financial hurdles facing Black Americans who want to accrue property wealth and the disinvestment that flows from that. But there have been other kinds of barriers blocking Black people in this country from owning homes. Let's talk about racially restrictive covenants. Briefly explain what those were.

TAYLOR: So when property is sold, it's a rider included in the deed that says, this property can only be sold to other white people. And it would list who would be excluded from sale. Sometimes it was Jewish people, different immigrant or ethnic groups, but primarily it was a tool to exclude sale from African Americans.

And the reason that covenants became popular is because there was an initial effort by city governments to use what was called racial zoning, where city government could come up with racially designated blocks within a community and say, white people live here; Black people live there. But a 1917 Supreme Court decision said that that was a clear violation of the Fourteenth Amendment, and so the real estate industry shifted to using racially restrictive covenants as a way to keep African Americans legally locked out of white communities.

CHANG: And, you know, even after racially restrictive covenants are deemed unenforceable by the Supreme Court in 1948 and even after redlining gets abolished by the Fair Housing Act in 1968, the imprint of these racist policies and practices remains. So I'm curious. How do you see the government and the private real estate industry working together still to keep Black Americans from owning homes?

TAYLOR: Well, this is part of the problem. I mean, you can't have 35, 36 years of legal discrimination and then declare it over and expect that the legacy, the history and the impact of those policies and practices just wither away overnight.

CHANG: Yeah.

TAYLOR: They have lasting effects that continue to mark African Americans as irresponsible homeowners, neighbors. It is used to designate African Americans as, quote, unquote, "subprime." It helps to constitute Black people as credit risks. And all of these factors into the differential treatment of African Americans in the housing market. And so this is an underlying explanation for what I describe as predatory inclusion, which is to say that no longer are African Americans being excluded from the market. Now they are being included.

CHANG: Yeah.

TAYLOR: But this entire history of exclusion creates the basis upon which Black people are now included but on different terms with subprime loans, for example, paying higher interest rates, paying more fees because of the cumulative impacts of these policies and practices over these several decades, reconstituted their neighborhoods as risky, reconstituted them themselves as credit risks. And with risks come the legal pretext for treating Black consumers differently. So you can be included, but you have to pay an additional price to do so.

CHANG: Keeanga-Yamahtta Taylor is a professor at Princeton University and author of "Race For Profit: How Banks And The Real Estate Industry Undermined Black Homeownership."

Thank you very much for lending us your time.

TAYLOR: Thanks for having me. Transcript provided by NPR, Copyright NPR.