Governor Charlie Baker is hoping to bridge the racial homeownership gap in the state of Massachusetts. While his plan is promising, it’s not enough.
Massachusetts has the sixth highest racial homeownership gap in the country. White people are almost twice as likely to own homes as Black people. In Boston, the average net worth of a Black family is $8, and $247,500 for a white family.
Governor Baker proposed to spend $1 billion of COVID-relief funds on affordable housing and $300 million to expand homeownership opportunities to first-time homebuyers in communities hurt most by the pandemic. This is a great start, but does not address the root causes of the Black-white homeownership gap. As Mehrsa Baradan succinctly said, “Wealth is where past injustices breed present suffering”. So let us look back to the origins of this stark racial disparity.
The Origins of the Racial Homeownership Gap
In the 1990s, economists at the Boston Federal Reserve authored a paper confirming that racial discrimination in lending practices was rampant throughout the 20th century in Massachusetts. The researchers evaluated mortgage market data and scrutinized lenders’ claims that lower mortgage rates of Black people were due to weaker credit histories. The data showed a denial rate for Black and Hispanic applicants that was two to three times higher than the denial rate for white applicants. In fact, high-income minority applicants were more likely to be turned down than low-income white applicants.
Nationwide, Black Americans have historically been disenfranchised by both public and private institutions in the housing market. Racist lending practices began in the 20th century, and explicitly existed in law for at least 35 years: drastically curtailing the ability of Black Americans to accumulate generational wealth.
From the 1930s to the 1960s, the Federal Housing Authority (FHA), established in 1934, provided mortgages only for “non-risky” homes. The federal government reinscribed and sponsored racism by calculating this “risk” by race. Black neighborhoods were “redlined” and banned from receiving federally insured mortgages. Redlining went beyond FHA-backed loans; the real estate industry also prevented Black families from accessing private loans, justifying these decisions as measures to mitigate “mortgage risk.”
Restrictive covenants and predatory agreements further excluded Black Americans from the market. The mid-20th century saw white homeowners and Homeowners Associations enacting racially restrictive covenants – contractual agreements to not sell to Black people – which further prevented wealth accumulation. White real estate agents also sold homes to Black families “on contract,” an exploitative agreement that combined the responsibilities of homeownership with the disadvantages of renting. These predatory housing contracts, actively used in the 1950s and 60s, allowed buyers to pay large down payments for homes and make monthly installments at high interest rates, but buyers could not gain ownership until the contract was paid in full. At the same time, the contract seller could evict the buyer at any time and held the deed. No laws existed to protect the buyers. Predatory contracts thwarted Black Americans’ aspiration to acquire homes through predatory inclusion: strategically allowing Black Americans to participate in homeownership, but on unfair terms that precluded building generational wealth.
Although the Fair Housing Act of 1968 ultimately outlawed such exclusionary laws, this was no immediate fix and racist lending policies exist to this day. Most recently leading up to the Great Recession, major banking institutions like Wells Fargo doled out a new predatory loan: subprime mortgages. Large banks steered Black borrowers into these dicey mortgages, which led to vast amounts of foreclosures.During the height of the housing boom in 2007, large financial institutions charged Black Americans and Latinos higher rates and fees on mortgages, even though they qualified for stronger deals. Several banks were later charged and tried by the U.S. Justice Department, ultimately agreeing to settle and pay out millions of dollars.
Today’s real estate industry and homeowners’ associations still perpetuate racial housing inequity by lobbying for exclusionary zoning that prevents density and bans rent control measures, displacing residents. The 21st-century real estate lobby combined with the power of homeowners associations are an ongoing form of settler colonialism.
In order to Professor Keeanga-Yamahtta Taylor puts it well: “The quality of life in U.S. society depends on the personal accumulation of wealth, and homeownership is the single largest investment that most families make to accrue this wealth. But when the housing market is fully formed by racial discrimination, there is deep, abiding inequality.”
The Path to Reparations
If Black households were historically denied the ability to acquire wealth, one might believe, as Governor Baker does, that providing Black households with mortgages now could reverse-engineer the resulting inequity. But the sheer amount of wealth accumulation lost by Black Americans who were legally excluded from obtaining one of the only assets to achieve economic mobility in the 20th and 21st century is on a far more drastic scale that demands transformative policy solutions that explicitly serve Black Americans.
In the past few years, local and state governments have begun trying to address the nation’s racial homeownership gap. Just this summer, two Boston City Councilmembers issued an ordinance calling to assess reparations and their impact on the civil rights of Black Bostonians. The cities of Amherst and Cambridge Massachusetts are researching reparations, as is the State of California.  The city of Evanston, Illinois is providing reparations to Black families (and their descendants) who faced government-based housing discrimination.
Many critics of race-based reparations argue that there is no operational precedent and that it is too complex for the government to administer this kind of compensation. However, recently, Harvard Kennedy School Professors Cornell Brooks and Linda Bilmes show how the U.S. government actually has a long history of providing reparations to many people, just not to Black Americans. From providing funds to Japanese Americans who were victims of internment in the 1940s to the families of 9/11 victims, the U.S. has in total provided trillions of funds in federal settlements in its history.
Governor Baker’s down-payment assistance and discounted mortgages to lower-income households, however, are race-neutral. His policies do not explicitly target loans to Black families, nor do they account for the wealth lost over decades of racist housing policies. The race-blind approach does little to actually close the racial homeownership gap. Instead, the State Government needs to directly link monetary value to these historical wrongdoings and pass legislation that pays reparations to descendants of Black families in Massachusetts. The State of Massachusetts could begin by analyzing the present value of land in 20th century Massachusetts. Economist William Darity has provided several comprehensive methodologies to enumerate reparations from slavery, Jim Crow laws, and segregation. One technique that could apply to housing-based reparations is calculating the difference between average Black and white per capita wealth and providing direct reparations to close the gap.
Ta-Nehisi Coates wrote, “It is as though we have run up a credit-card bill and, having pledged to charge no more, remain befuddled that the balance does not disappear. The effects of that balance, interest accruing daily, are all around us”. Without paying reparations to Black families and their descendants who experienced housing discrimination, the balance will not disappear. 
 Akilah Johnson, “That Was Not A Typo” Boston Globe, 12/11/2017. https://www.bostonglobe.com/metro/2017/12/11/that-was-typo-the-median-net-worth-black-bostonians-really/ze5kxC1jJelx24M3pugFFN/story.html
 Nik DeCosta Klipa, “How the Baker administration wants to use COVID-19 relief funds to close the racial homeownership gap,’ Boston.Com, 7/7/2021. https://www.boston.com/news/local-news/2021/07/07/baker-covid-19-relief-funds-racial-homeownership-gap/
 Explained: The Racial Wealth Gap, Netflix, 4/23/2018.
 Larry Bean, “Landmark Boston Fed paper confirmed racial discrimination in Boston’s mortgage market,” Federal Reserve Bank of Boston, 10/7/2021. https://www.bostonfed.org/news-and-events/news/2020/10/landmark-boston-fed-hdma-paper-recapped.aspx
 Notably, this paper was released at the same time the State of Massachusetts repealed rent control, spurring statewide evictions and displacement of Black families.
 Ta-Nehisi Coates, “The Case for Reparations,” The Atlantic, May 22, 2014, https://www.theatlantic.com/magazine/archive/2014/06/the-case-for-reparations/361631/.
 Keeanga-Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, Justice, Power, and Politics (Chapel Hill: The University of North Carolina Press, 2019). p. 261.
 “Amherst Creates Fund To Pay Reparations To Black Residents”, WBUR, 6/24/2021. https://www.wbur.org/news/2021/06/24/amherst-reparations-fund-approved
 Brandon L. Kinglonger, “Cambridge City Council To Explore Reparations for Slavery, Restitution for War on Drugs”, The Harvard Crimson, 9/24/21. https://www.thecrimson.com/article/2021/9/14/city-council-sept-14/
 Madeline Holcomb, “California passes a first-of-its-kind law to consider reparations for slavery”, CNN, 10/1/20 https://www.cnnphilippines.com/world/2020/10/1/california-law-reparations-for-slavery.html
 Rachel Treisman, “In Likely First, Chicago Suburb Of Evanston Approves Reparations For Black Residents”, NPR, 3/23/2021. https://www.npr.org/2021/03/23/980277688/in-likely-first-chicago-suburb-of-evanston-approves-reparations-for-black-residents
 The policy recommended solely assesses reparations for housing discrimination. This does not include the reparations that should be evaluated towards Black Americans impacted by two hundred years of slavery, ninety years of Jim Crow laws and sixty years of segregation. This analysis also does not include the failure of the US federal government to provide previously enslaved people property ownership after slavery, which also contributed to initial loss of wealth accumulation.