Racial Categories, Risk Assessment and Real Estate: Long-Term Impacts of US National Housing Act of 1934

• In Event: The Unpublished History of Sociology

Abstract

Racial categories have long shaped both real estate valuation and access to mortgage lending, particularly when properties are located in Black- or minority-identified areas or when homebuyers are identified as Black or minority. Homes in Black neighborhoods receive lower appraisals than comparable homes in White neighborhoods regardless of desirability or condition, and Black-owned homes are appraised at lower values than White-owned homes even when located in the same neighborhood. Investigative reporting further shows that “staging” a Black-owned home as if it were owned by White sellers can increase appraised value by as much as 100 percent, a practice that is becoming increasingly common. What remains largely unexamined, however, is how long these dynamics have been in place, how racial categories used in appraisal and loan documents developed, and where those categories originated in the first place; without addressing these questions, the persistence of housing discrimination into the present remains difficult to fully explain. Drawing on archival materials—including Home Owners’ Loan Corporation (HOLC) appraisal forms from 1937 and 1938, the Federal Housing Administration (FHA) underwriting manual from 1936, and National Association of Real Estate Boards materials from 1924—we show that racial categorization in housing has never been fixed. Instead, racial classifications vary across time, place, and institutional context, producing corresponding shifts in access to credit and property valuation as individuals and locations move across settings such as home, school, work, and incarceration. Finally, we trace how these categories were shaped, legitimated, and institutionalized through the influence of sociology and economics, including the work of Homer Hoyt, Robert Park, W.E.B. Du Bois, Jane Addams, and Charles Booth.

Author

• Waverly Duck, University of California-Santa Barbara