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The Economic Trauma of Housing Discrimination

June 20, 2019 |  Vol. 6 No. 14


This common, but little-known practice, took root in the period of the housing boom that followed World War II, and grew out of federal endorsed redlining policies that denied most Black homeowners access to the conventional mortgage loans enjoyed by their White counterparts.

-          Samuel Dubois Cook Center on Social Equity

Housing discrimination is as quiet as it is deadly. It can be pursued through violence and terrorism, but it doesn't need it. Housing discrimination is hard to detect, hard to prove, and hard to prosecute. Even today, most people believe that Chicago is the work of organic sorting, as opposed to segregationist social engineering. Housing segregation is the weapon that mortally injures, but does not bruise.

-         Ta-Nahesi Coates

In a recent installment of this column (March 28, 2019), I highlighted the Twin Cities Public Television documentary, Jim Crow of the North. Detailing the cutting-edge research of the University of Minnesota’s Mapping Prejudice project, this film is a deep dive into the history of racial housing covenants in the City of Minneapolis that date back more than a century.

Many experts have suggested that these treacherous policies and practices have decisively contributed to the ubiquitous racial inequities (among the worst in the nation) that plague Minneapolis, St. Paul, and the larger metropolitan area to this day.

Naturally, these restrictive covenants were not a phenomenon unique to the Twin Cities. Take, for example, our Wisconsin neighbor some 300-plus miles to the southeast. During his latest episode of the CNN documentary series, United Shades of America, comedian and social commentator W. Kamau Bell visits Milwaukee, a city’s whose own history of redlining has helped to render it the most segregated municipality in the United States.

Just a short distance south of Milwaukee is Chicago, a city whose shameful legacy of racist and rapacious zoning strategies are perhaps second to none. Famously, Dr. Martin Luther King, Jr., and other representatives of the Southern Christian Leadership Conference spent the better part of 1966 in Chicago to help wage the struggle against housing discrimination and de facto segregation, particularly on the city’s west and south sides (known both as the Chicago Campaign and the Chicago Freedom Movement). 

A new study published by the Samuel DuBois Cook Center on Social Equity at Duke University sheds new light on just how devious and destructive such practices were.

The report, The Plunder of Black Wealth in Chicago: New Findings on the Lasting Toll of Predatory Housing Contracts, expands on previous research to illustrate how African American homeowners in Chicago were defrauded out of today’s equivalent of at least $3.2 billion through what were called “home sale contracts.”

As Carlos Ballesteros of the Chicago Sun-Times writes, “Those contracts allowed the seller to hold the deed until the buyer paid off the home in full. Until then, buyers did not accumulate equity in the home and owners were allowed to evict them for missing a single monthly payment.”

The report estimates that from 1950 to 1970, somewhere between 75 percent and 95 percent of all homes sold to African American families in Chicago were done so via housing contracts. Not only were Black homebuyers preyed upon with contracts that provided absolutely no protection, but the prices they paid for these homes (as well as the interest rates) were substantially inflated.

The average sale price through home sale contracts was marked-up approximately 85 percent, meaning that African American homeowners paid nearly $600 more per month (in today’s dollars) “compared to what they would have if they paid the fair price for their home and had a conventional FHA mortgage.”

If this wasn’t reprehensible enough, 50 years after the Fair Housing Act of 1968, a story penned in the Chicago Reader by award-winning investigative journalist Rebecca Burns reveals that “the infamous practice of contract selling is back in Chicago.” In fact, a number of limited liability companies, often backed by Wall Street firms and other private equity companies, have not only resurrected this wicked, racist, and avaricious system in Chicago, but throughout the country.

One such company, the Texas-based Harbour Portfolio Advisors, has bought approximately 7,000 homes (in states like Illinois, Michigan, and Ohio) that it is selling or already re-sold through “contract-for-deed” arrangements.

Another, Vision Property Management of South Carolina, has 5,500 such homes. Collectively, these kinds of firms manage tens of thousands, if not hundreds of thousands, of properties that they have sold or are selling on contracts. And, according to the geospatial database company, Environmental Systems Research Institute, an overwhelming majority of these homes are located in majority non-White and/or majority Black census tracts. 

Noted author Ta-Nahesi Coates once wrote:

“If you sought to advantage one group of Americans and disadvantage another, you could scarcely choose a more graceful method than housing discrimination. Housing determines access to transportation, green spaces, decent schools, decent food, decent jobs, and decent services.”

When you put this in context — coupled with the revelation that more than $3 billion in wealth was plundered from Chicago’s Black community (over just two decades: the ’50 and ’60s) — it makes you wonder how much money was “appropriated” from African Americans across the nation during the same time, and for that matter, since. And this doesn’t even begin to address the slave labor of four million human beings over the course of 246 years, the “Black Codes” and nearly a century of Jim Crow laws.

Our Impact This Year

  • People Who Received Utility Bill Assistance


  • Children Enrolled in Head Start & Early Head Start


  • People Whose Utility Bills Were Lowered Through Home Weatherization


  • Workers Provided with Transportation Support Including Vehicle Loans, Repair Grants, and Transit Passes


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