Mapping Prejudice: The Effects of Racial Covenants on Wealth

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Students at St. Kate’s are engaging with the WTDN in a variety of classes. Here’s how our students are thinking about the issues related to housing inequality and housing segregation. Their work demonstrates “thinking in progress”. 

Mapping Prejudice

Welcoming the Dear Neighbor? at St. Catherine University has been inspired by and working in partnership with the University of Minnesota’s Mapping Prejudice Project. The Mapping Prejudice Project was created to show the effects of discriminatory practices throughout the use of digital maps and visualizations. Throughout the use of these interactive visualizations one can see how racial covenants have impacted the lives, access to housing, credit, education, and wealth of people of color.

What are racial covenants?

During the twentieth century, racial covenants were used by real estate developers as tools to prevent people of color from buying, leasing or occupying a property. They were most often just a few lines of text inserted into warranty deeds. 

As the Mapping Prejudice website describes, racial covenants were made unenforceable by the Supreme Court in 1948. The Minnesota Legislature prohibited use of racial covenants in 1953, and the Fair Housing Act passed by Congress in 1968 banned these racial restrictions.

Example of a racial covenant used in Hennepin County

Why do racial covenants matter today?

By the time that covenants were abolished, the damage was already done. It is important to address the question of why racial covenants matter today because people of color are still facing the consequences of these actions today. Not only have racial covenants caused segregation, but they have also affected economic opportunity for people of color. If we want to achieve racial equity, we must continue to explore the ways that discriminatory practices such as racial covenants continue to affect minorities today.

How have discriminatory practices affected POC wealth?

Discriminatory practices such as racial covenants and redlining have affected people of color’s wealth. For example, the average white household today has nearly ten times the wealth of a black household. The reason goes back almost a century to the practice of redlining, also known as restricting the lending of loans or insurance in certain neighborhoods based on race. Moreover, as Amy Scott writes in this Marketplace article, these practices have contributed to the foreclosure crisis of the 2000s and the gentrification of today which has prevented black communities from building generational wealth.

Homeownership is a major step towards upward mobility and financial stability because buying a house is an investment that can appreciate in value over time. As the Mapping Prejudice website describes, since most families accumulate wealth through homeownership, the disparities in homeownership significantly contribute to the racial wealth gap and perpetuate residential segregation.  Therefore, families with a house in a nice area can pass on this asset to the next generation and continue to accumulate generational wealth. The children of home owning families have the privilege of being able to inherit their family home, sell it to pay for college tuition, or put the money into savings. This is how the homeownership gap can contribute to racial disparities in other fields as well. 

However, families of color were systematically denied the opportunity to access this source of wealth through racial covenants and other discriminatory real estate practices. White families that bought homes in covenanted areas saw their values increase over time while families of color were excluded from buying homes in these areas and faced obstacles that prevented them from accumulating wealth, as Greta Kaul writes in this Minnpost article. A study by Sood, Speagle, and Ehrman-Solberg (2019) found that Houses that were covenanted are now priced 4-15% higher than properties which were not covenanted. Racial covenants have had lasting detrimental effects on the homeownership rates of people of color in Minnesota. As reported by MNCompass, Minnesota has a larger gap in homeownership rates between non-Hispanic whites and households of color than the US as a whole. The gap is even larger when the homeownership rates of individual racial and ethnic groups are shown.

Source: MNCompass

As this bar graph above shows, when we break down the homeownership rates by racial and ethnic groups, the greatest disparity is between black and white Minnesotans with over a 50% difference in homeownership.

Source: MNCompass

This line graph is showing the homeownership rate by race in Minnesota over time from 1990 to 2019. The homeownership rate for people of color dropped after the Great Recession in 2008, while white homeownership was minimally affected. Homeownership rates for people of color have not recovered since the Great Recession and have actually decreased for the last five years for black households, as reported by Cody Nelson for MPR News. Many households of color ended up losing their homes to foreclosure and had to enter the rental market. Researchers have found that this indicates poor economic security in Minnesota, citing the racial disparities in a number of different indicators and the lack of a black middle class in the state.

Household Income

Above, the visual on the top shows the median household income in Minneapolis neighborhoods 

from 2008 to 2012 (in 2012 inflation-adjusted dollars) while the visual on the bottom is a map of racial covenants in Hennepin County. Areas with the greatest proportion of people of color in their population tend to be areas that did not have racial covenants, particularly neighborhoods in North Minneapolis and neighborhoods around Downtown Minneapolis like Cedar Riverside. We also noticed that Linden Hills is the neighborhood with the highest median income (almost $200,000) and also had a large number of racial covenants. 

Above, we also placed the visual of median household income (left) side by side with a visual showing the proportion of residents of color (right) in Minneapolis neighborhoods. Interestingly, the neighborhoods with the highest median household incomes also have the lowest shares of people of color in their population. One particular neighborhood in the southwest stands out: this is the Linden Hills neighborhood (marked on the map) which had quite a few families of color until 1910, when there was a concerted effort by some white residents to oust families of color out of the neighborhood. This article by Kristen Delegard and Penny Petersen of Mapping Prejudice tells this story in more detail. The Linden Hills profile on Minnesota Compass tells us that today, this neighborhood is 90.4% white and is known as an enclave for affluent families and little diversity in terms of socioeconomic status. These are the enduring effects of racial covenants. 

Median income vs. median rent 

This visual shows how median rent can be correlated to median income. The color of each point also shows the proportion of residents of color living in that neighborhood. The neighborhoods that have lower values for both median income and rent (towards the lower left of the plot) consist of neighborhoods with a higher proportion of residents of color. The seven neighborhoods with a median household income over $100,000 and median rent of over $1,000/month all have low proportions of residents of color. This visual provides evidence of systemic inequality because neighborhoods with lower median income and rent values tend to have a larger share of people of color than wealthier and more expensive neighborhoods.  

Cost burdened renters vs owners

This visualization shows the proportion of owner and renter households that are cost-burdened in each neighborhood. Households spending 30 percent or more of their adjusted gross income on housing expenses are considered to be cost-burdened. This graph shows that neighborhoods with more residents of color are more likely to have more cost-burdened owner and renter households than neighborhoods with more white people. The neighborhoods with more people of color and more cost-burdened households tend to be relatively large in size, showing that there is a large population of people of color who are struggling to pay for their housing. Both this graph and the previous graph (median income vs. median rent) further show how racial wealth and income disparities due to systemic measures used to racially segregate neighborhoods persist, even today.

Conclusion

Racial covenants have contributed to the wealth gap in Minnesota and have negatively affected the homeownership rates of households of color, especially black households. People of color were especially hit hard by the Great Recession and the foreclosure crisis which turned many homeowners into renters. Cody Nelson from MPR news reported how families of color are hit hardest whenever there is an economic recession, and our data visualization confirmed that families of color are still disproportionately more cost burdened than white families. In addition, our visuals confirm the information reported by Greta Kaul from Minnpost, that neighborhoods that had racial covenants now have high median household incomes and are predominantly white. This is due to exclusionary real estate practices like racial covenants, redlining, and racial steering. If we as a society want to tackle the racial wealth gap, we must first look to the past where the root of the problem lies, and start from there.

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