On paper, the 1970s were poised to be the most inclusive decade for homeownership and economic participation of all kinds. The Civil Rights Act had just passed in 1968, including a segment known as the Fair Housing Act, and the second-wave feminist movement was in full swing. However, written and unwritten policies allowed mortgage lenders, homeowners, and real estate agents—who were still predominantly white men—to discriminate against prospective buyers of color, single women, and other marginalized groups.
Most notably, redlining, a practice of denying loans and other services to residents of specific geographic areas, continued to thrive. Zoning maps could provide ways for banks and other entities to blacklist communities of color because the restrictions were officially based on geography rather than race. It’s not unlike the current conversation about gerrymandering. As Malia Jones, a demographer at the University of Wisconsin-Madison, put it in a 2017 ProPublica article: “When we are talking about geography we are also talking about race.”
The Future Is Female
Women, specifically white women, had more opportunities. After the passage of Roe v. Wade in 1973 and during the time period in which birth control became more widely available, American women increased their participation in the workforce—even when they had young children. In 1970, three years before Roe, 37 percent of women with children under 6 were in the workforce. By 1980, that number climbed to 45 percent. College completion increased and the age of first marriage for women trended upward.
“While these changes may not be directly attributable to Roe v. Wade, they occurred shortly after its passage—and they’ve continued unabated since then,” notes sociologist Constance Shehan. Correlation doesn’t prove causation, but the tie between increased access to reproductive healthcare and economic power for women is difficult to dispute.
Higher incomes and increased ability to plan made it legal and practical for women to own their own homes or co-own a home with their spouse. However, due to the racism that pervaded the real-estate industry, it was primarily white women who were able to benefit from these changes.
Marked Change in the Market
Amid these rapidly evolving social conditions, the housing market was experiencing its own major shifts. In 1972, Fannie Mae and Freddie Mac, entities which buy mortgages from lenders and either hold these mortgages in their portfolios or package the loans into mortgage-backed securities (MBS) that may be sold, were newly public companies. They began aggressively purchasing conventional mortgages, which expanded the secondary mortgage market, in turn stabilizing interest rates across the country and making way for a national mortgage market.
In the early ‘70s, The National Association of REALTORS® (NAR) became the largest trade association in the U.S. with more than 400,000 members. It initially opposed the Fair Housing Act and continued to allow local associations to bar women and people of color from becoming REALTORS®. In part due to pressure from real-estate agencies led by people of color, NAR changed its tune and, by the mid ‘70s, it became a strong advocate for policies that expanded protections against housing discrimination, diversified its membership, and welcomed professionals of different cultural backgrounds.
One such policy was the Equal Credit Opportunity Act, a 1974 law which made it illegal for lenders to discriminate based on “religion, race, color, national origin, age, sex, marital status, receiving income from a public assistance program, or exercising any right under the Consumer Credit Protection Act.” After that, lenders could legally consider only income, credit score, and existing debt load when assessing a credit application. In particular, this opened up financial opportunities for single and married women who had experienced blatant discrimination prior to the passage of the law. In the same year, the Real Estate Settlements Procedures Act stopped kickbacks as part of the mortgage or lending process and allowed homeowners to understand the full scope of their mortgage. Both these acts transformed consumer access and rights when it came to receiving and understanding mortgage loans.
Access increased in other ways, too. For example, under the National Manufactured Housing Construction and Safety Act, manufactured or mobile homes became recognized as low-income housing (ensuring access to loans) and were held to safety regulations for consumer protection.
All For One, One For All?
Despite these gains, president Richard Nixon’s policy priorities were largely in contrast to the slowly democratizing housing market. His administration ended the Housing and Urban Development renewal programs and other public housing efforts, citing corruption. However, blame quickly turned from the shoulders of federal agencies to the poor people who found themselves residing in unsafe dwellings.
Local entities pressed on despite pushback and losses. The “dollar houses” program in Baltimore, through which residents could purchase city-owned homes for $1 and, in turn, were responsible for making repairs to the homes with the help of subsidized loans, successfully revived parts of that city. It was discontinued in the mid ’70s, but in the few years it was active, an estimated 183 homes were sold, moving people who might never otherwise have been able to become homeowners into their own homes.
Other efforts saw mixed results. The Contract Buyers League (CBL) of Lawndale in Chicago sought restitution for black families who fell victim to predatory lending practices. According to a 1972 Atlantic article, “200 buyers saved close to $2 million in principal and interest from renegotiated contracts,” and the CBL influenced policies at entities like the First National Bank of Chicago. However, at least 3,500 Chicago buyers were part of the two class-action lawsuits CBL brought against companies that used exploitative contract buying practices. Eventually both lawsuits were defeated.
Real estate policy advocates also had mixed success in advocating for consumers, and economic anxiety contributed to higher interest rates and lower purchasing activity. By 1980, inflation had driven interest rates up to 12 percent, compared to 8.5 percent in 1970.
On Unequal Terms
These historical conditions aren’t a thing of the past. In part because of 20th century housing policies, black Americans hold a measly $5.04 in wealth for every $100 in wealth held by white Americans, according to Census Bureau analysis reported in the New York Times. In a study of 100 cities by the Urban Institute, only three had a homeownership gap of less than 20 percent between black and white Americans. Many cities have seen the homeownership rate falling among families of color while white homeownership increases. Overall, white homeownership has largely recovered since the 2008 recession while black homeownership has stagnated or fallen further.
Resolution, if it comes, will take time. NAR and other groups continue to advocate for major reforms to Fannie Mae and Freddie Mac and a restructuring of the secondary mortgage market to ensure reliable and affordable sources of mortgage capital for consumers. The hope is that, slowly but surely, structural changes like these will make it possible for a greater number of Americans of all demographics to take advantage of the more equitable homeownership market only hinted at in the 1970s.