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8 Housing Segregation Laws Which Contributed To The Wealth Gap In America

8 Housing Segregation Laws Which Contributed To The Wealth Gap In America

Back in the 1900s, there were housing signs that read “Whites Only.” Imagine the generations suffering now because of how their families were deprived then. 

In this blog, I am going to share 8 different housing segregation laws that contributed to the wealth gap in America.

Like how even Banks gave the wrong information to African Americans discouraging them from buying homes.

Today we will look at how segregation inadvertently promoted racism in America today.


Know that owning homes and rental properties overtime contributes to wealth—families transfer income earned in the past through savings and investment to meet expenses incurred in the future. 

Look at the Rockefeller dynasty and the Walton “Walmart” accumulating wealth since before the 21st century, and you will get the idea.

However, most African Americans were denied this wealth through ridiculous housing laws that restricted them from becoming real estate owners, thus cutting off earnings and opportunities for their generations. 

Here are 8 of those laws that influenced the wealth gap, especially between African Americans and their White counterparts.

At number 8, we have the Home Mortgage Disclosure Act of 1975. This Act was to prevent racial discrimination, typically associated with lending. 

Although it meant well, it didn’t do much. After a handful of African Americans managed to collect loans, real estate agents proceed to make it challenging for them to acquire high-value homes. 

Notice I used the phrase “a handful of African Americans” and not every African American. I will tell you why in a moment. Let first see how these agents made it difficult for Blacks to acquire homes. 

Real estate agents showed European Americans high-value homes compared to African Americans who were directed at low valued homes instead. And you might say, “oh, that was in 1975”.

However, it might surprise you to know that a case study carried out in 2012 by Urban Institute revealed that White Americans heard positive comments about properties in predominantly White neighborhoods and negative remarks about that of Blacks. 

What did this do? 

Well, the handful of African Americans that manage to acquire loans were limited to buying low-value properties, thus accumulating non-valuable assets to build wealth, unlike their Whites.

A factor which made the median White Americans 12x richer than their Blacks counterpart today.

If you think this is all of it, then wait till you hear how both Banks and even Facebook contributed to ensuring this gap as we count down.

At number 7, we have a law that directly influences this wealth. The Home Owner Loan Act of 1933 gave way for the establishment of the Home Owner Loan Corporation, HOLC, which sought to refinance mortgages. 

What these HOLC guys did instead was to map out areas to invest in and sectors not to. They labeled some areas red and some green. In this green area, banks could invest; there was also home insurance. 

Mind you, the areas marked red, which was dominated by African Americans, was neglected for being “financially too risky and a threat to property values.” 

Only 2% of the allocated 120billion for refinancing that year was invested in predominantly Black neighborhoods.

This is one of the few laws that directly caused gaps in wealth. 

At number 6, recall how I said a handful of African Americans were handed loans? Yes, the Equal Credit Opportunity Act of 1974  that sought to prevent racial discrimination associated with lending looked like what worked. 

However, banks charged 8x more interest rates to non-Whites. Now, very few people would be willing to borrow at that risk just to own a property.

This Act wasn’t the only law that sought to tackle racial discrimination they were others like the Community Reinvestment Act of 1977.

This brings us to our number 5, the Community Reinvestment Act of 1977 also looked to discourage racial discrimination among lenders. What happened instead? 

Banks gave the wrong information to African Americans to dissuade them from collecting loans and thus investing, which added to that wealth gap.

We have seen the Home Mortgage Disclosure Act of 1975 down to the Community Reinvestment Act of 1977 and how they influenced wealth among Americans. 

If you think you have seen and heard enough, then wait till you see just how Facebook of all platforms had a part to play in all of this.

At number 4, we had the GI Bill in 1944. This Bill was to help veterans after World War II. Returning soldiers who mostly were European Americans could buy houses for cheap. What did this do? 

This made a whole lot of people purchase homes, leading to White neighborhoods. Now, racism was at its height then compared to now.

European Americans often riot just to show their displeasure of having non-Whites live in the same area as them. 

This limited the number of neighborhood African Americans that could own homes, thus pushing them to stay in ghettos instead where things were less complicated.

As time went on, more laws and institutions marginalized more African Americans, and at number 1, you will see precisely how this happens.

At number 3, we had the Housing Act of 1937, which was meant to improve the living conditions for families who couldn’t live otherwise due to low income. 

Although Franklin Roosevelt's intention was sincere, it did little to alleviate the housing conditions of African Americans living in slums. 

European Americans still got a larger share of the provisions. According to Roosevelt, this, unfortunately, only made the rich “richer” and the poor “poorer.” 

At number 2, there was Nixon's Fair Housing Policy (1971), which tried to promote desegregation by fighting against redlining and discrimination. 

Unfortunately, this policy was only effective in theory and was never vigorously implemented. This brings us to number one.

Taking the number 1 spot is the Fair Housing Act (1968). This act sought to tackle segregation in rental properties and the sale of homes. 

However, like that of Nixon, there was not enough power to enforce the law. People still choose the race they prefer to sell their properties to, and Facebook promoted this. How?

ProPublica carried out a study on Facebook in 2016. Their investigation revealed that Facebook still created racial options for sponsored posts. 

This allowed people to choose the race they want to advertise and sell their properties to. Imagine! Facebook only put an end to this in 2019.

From the Home Mortgage Act to the Fair Housing Act, we can see how each law contributed to the wealth gap in America today.

With all of this, we can say that this segregation limited non-Whites access to sufficient healthcare provisions. It also made African Americans and other minority races earn less compared to their White counterparts because of limited investment opportunities. 

And finally, lack of these high-value investments further reduced employment opportunities, which contributed to poverty, widening the wealth gap till today. Are things always going to be like this?

Tell us, do you think this gap will close someday, when, and why? Comment your suggestions below, and let's have a conversation.




https://aapf.org/housing-discrimination/ (Fair Housing Act)

https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america (Redlining)

https://www.lovemoney.com/galleries/amp/77379/from-rockefellers-to-rothschilds-how-five-oldmoney-dynasties-live-today (Rockfeller)

https://www.fdrlibrary.org/housing (Frank Roosevelt quotes)

https://www.investopedia.com/articles/insights/052416/top-10-wealthiest-families-world.asp (Walmart)

https://www.blackpast.org/african-american-history/redlining-1937/ (Relining and HOLC)

https://en.m.wikipedia.org/wiki/Housing_segregation_in_the_United_States (All the laws)

https://www.americanprogress.org/issues/economy/reports/2019/07/15/469838/racial-disparities-home-appreciation/ (Facebook investigation, Urban Institute Study)

https://www.epi.org/blog/housing-discrimination-underpins-the-staggering-wealth-gap-between-blacks-and-whites/ (12x stats)

https://www.americanprogress.org/issues/race/reports/2016/12/15/294374/the-united-states-history-of-segregated-housing-continues-to-limit-affordable-housing/ (Pushing African Americans into ghettos)

https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/human_rights_vol36_2009/fall2009/residential_segregation_after_the_fair_housing_act/ (conclusion/takeaways)