Historical systemic racism in the Twin Cities: Housing & real estate

Historical systemic racism in the Twin Cities: Housing & real estate, by Coach Chris

I’ve lived in the Twin Cities since I was in the 4th grade. I love it here. I’ve lived in the suburbs, I’ve lived in Uptown MPLS, Lauderdale, and now in the Midway neighborhood in St. Paul. I’ve always thought of Minnesota as a great place to live. For me, it always has been. Only recently have I begun to see more sides to the story. I just wasn’t looking before. Because of my privilege, I didn’t have to. Like many white folks right now, I’m trying to grow and learn as a person, and recognize the many-layered systems that I’ve unknowingly benefitted from at the expense of others.

One of the most interesting (and also terrible) pieces of Twin Cities history that I’ve come across recently is the way that systemic racism in the housing & mortgage industry in the early & mid 1900s perpetuates racial disparity today.

This is my own (simplified) version of these events. I’ll post some more comprehensive articles and references you can peruse on your own time, at the bottom.

The gist of it: Housing & mortgage lending policies and decisions in the early 1900s shaped the drastic income inequalities we still see today between white & BIPOC families today in the Twin Cities. 

In the early 1900s, the housing market was absolutely booming. The Home Owners Loan Corporation decided to be super helpful and map out, neighborhood by neighborhood, how “risky” each area was for mortgage brokers. Any sensible mortgage lender would want to stay away from high-risk clients, right? What a helpful idea this neighborhood risk index will be! The HOLC was a federal program.

The “risk level” of neighborhoods was mostly based on the amount of non-white residents living there. In other words, the more non-white people who lived there, the higher the risk level assigned to the area. They called it “racial encroachment.” Lovely.

Here’s a real gem example from the HOLC’s neighborhood categorizations:

St. Paul District D3, just north of downtown St. Paul:
“Italians , colored people, Jews of the lower strata and other people of foreign descent of the lower classes reside here. Ownership is not to exceed 25%…. Very heavy racial encroachment throughout the entire district is prominent. The only redeeming feature is its accessibility to the downtown district.”

So mortgage lenders, being the “prudent” people they were, used these heavily race-based risk designations as an easy out to avoid lending mortgages to minority families in the neighborhoods where most minority communities were. 

These minority families couldn’t just move to a “better” area either — there were specific Racial Covenants in the land ownership deeds that effectively banned non-Caucasians from owning the property or getting a mortgage. According to MinnPost, the language of these bans varied. Some said the lot “shall not at any time be conveyed, mortgaged or leased to any person or persons of Chinese, Japanese, Moorish, Turkish, Negro, Mongolian or African blood or descent.” Others simply banned non-Caucasians.

Here’s a little exceprt from the 1924 National Association of Real Estate Board’s Ethics Manual:

Making it pretty clear that in their eyes, some races just existing in a place brings the value down 🙁

Let’s pretend you’re a black family in the 1920s, and you’ve saved up enough to buy a house in the Twin Cities. Well…good luck with that. Nobody will lend to you in the predominantly black neighborhoods because it’s “too risky.” Nobody will lend to you in a “more desirable” neighborhood, because you’re black. 

So you keep renting. And you never get the chance to buy property, which is one of the most important ways that generational wealth was created and transferred through families in the 20th century. Investment into your community plummets over time. The white neighborhoods see property values continue to grow, while property values in your neighborhood waste away. Why do property values matter? Property taxes are based on property values. Property taxes fund most public schools, for one thing. The schools that need the most resources, get the least, since their tax base is so much smaller. Poverty just keeps generating more poverty, especially when any ways for a family or community to escape the cycle are intentionally removed. It’s a Ripple Effect…but not the good kind. 

Eventually these Racial Covenants became illegal, but the damage was done. You can still see the effects of this intentional segregation and white supremacy today. Just look at some of the “Redlined” neighborhoods on the HOLC’s map from back in the day. They’re still some of the poorest and most racially diverse neighborhoods in the Twin Cities today. And it was by design, to keep the white neighborhoods white, and wealthy. 

The home ownership rate of white families is still about double that of black families in the Twin Cities — around 77% for white families, and 38% for black families. Those racist policies from the 30s-50s have affected generations of BIPOC families in our state and around the country. Minneapolis is still extremely segregated. There’s other variables to the homer ownership equation too, as with any complex issue. But it’s certainly a piece of the puzzle.

What does this have to do with our gym? Well…human beings go to our gym. At RECF we care about other human beings. So we work to understand their struggles, so we can help. Our amazing state has some amazingly big issues, and we want to be part of the solution.

Sources & resources:

MinnPost article about HOLC & housing issues in MN

Mapping inequality: See the actual HOLC neighborhood risk designation and descriptions

Summary of home ownership gaps & causes



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