Housing segregation and the American Dream: Reflections on the Supreme Court’s historic decision in the Texas housing case

Stephen Menendian

Assistant Director and Director of Research

This post originally appeared on the Berkeley Blog.

Housing remains the centerpiece of the American Dream. Housing is not only a place to live, but is also a conduit and hub to an array of public and private resources, from neighborhood and community schools to businesses, parks and services.

An overwhelming amount of research affirms the deeply held beliefs of most Americans of the importance of growing up in the right neighborhood. Importantly, the benefits of residing in more affluent neighborhoods also extend to families living below the poverty line. Although these families have fewer individual resources, they benefit from the pooled resources of their neighborhoods and communities, such as more amenities, services, and supports.

But the American Dream is in danger of becoming a nightmare.

Houses in the Back Bay neighborhood of Boston (Photo from Wikimedia Commons)

During the 20th century, public policy and private discrimination created and maintained patterns of residential segregation that, unfortunately, persist to this day.

By most measures, our major metropolitan areas are as segregated today as they were since the 1940s and 50s, a generation before the passage of the Fair Housing Act. And income segregation has dramatically worsened in the years since that act was passed. Wealth and income inequality and the hollowing out of the middle class have exacerbated these trends.

Industrialization, two world wars and suburbanization transformed American residential and economic life. Millions of black Americans moved to the north and west, and millions more white Americans took advantage of the new opportunities made possible by both federal housing subsidies and the new highway system to build or buy a home in the suburbs. Once patterns of white flight ran their course, accompanied by exclusionary controls, most African Americans were left in the cities.

Last Thursday, the Supreme Court acknowledged this historical reality, and recognized its continuing role in shaping the structures of opportunity in its landmark decision in Texas Department of Housing and Community Affairs et al. v. Inclusive Communities Project Inc., et al. Given the centrality of housing to life chances and upward mobility, the Supreme Court’s decision to affirm the disparate impact standard for housing equity is a vital and significant victory.

The significance of this case was the reason the Haas Institute, along with the Economic Policy Institute, authored and filed an amicus brief, submitted to the Supreme Court in defense of the disparate impact claim. (Our brief was cited in the majority opinion by Justice Kennedy in highlighting the persistent patterns of segregation.) Had there been an adverse decision, the consequences could not have been more profound.  The Fair Housing Act is the most important federal civil rights law addressing the issue of housing segregation.  Although the traditional anti-discrimination provisions of the act have been important in promoting housing choice for millions of Americans, only disparate impact claims are capable of reaching and disrupting many of the structural forces that promote segregation.

Across this nation, there are numerous mechanisms that exclude many Americans from accessing the American Dream, whether they are designed to do so or not. In Texas, the Department of Housing and Community Affairs approved the vast majority of Low Income Housing Tax Credits for units in low opportunity and non-white neighborhoods. In Dallas County, only 6 out of 162 projects were sited in white neighborhoods. In other places, exclusionary zoning mechanisms are used by local municipalities to maintain local property values with the effect of denying far too many Americans a piece of the American Dream. Only disparate impact claims are capable of reaching most of these exclusionary mechanisms. It is these forces that increasingly drive segregation in the 21st Century.

The forces of globalization and de-industrialization are changing the American landscape. The creative economy benefits from close proximity to other professionals. The best paying jobs of the 21st century have moved from the suburbs to the cities. New tech incubators benefit from close proximity to each other, and from researchers and other professionals. In the San Francisco Bay Area, many tech startups have moved from Silicon Valley into “the city,” where they cross paths with other entrepreneurs, marketing teams and potential funders.

Now, the patterns of urban change that defined the 20th century — the movement from urban centers to the suburban and exurban periphery — is reversing and contracting. The American Dream will not be a pleasant dream if wealth and income are concentrated in city centers and the poor are displaced to the farthest peripheries of our regions. Gentrification looks like integration in the short-run, but seen on a longer time horizon, it is the displacement of poor communities, and many people of color, from opportunity.

The demand for urban residential housing by millennials and young professionals is leading to rapid gentrification in many of our major urban metropolises. This pattern is most advanced in places like New York and San Francisco, but it is evident, to some extent, in even rust-belt cities. Gentrification is pushing out long-time low-income residents, and changing urban communities.

The Fair Housing Act is not capable of forestalling these dangers entirely, but it is the most vital and important tool we have, and the Supreme Court’s historic decision affirming its role in promoting integration and uprooting exclusionary controls will hopefully lead to more vigorous enforcement and expanded opportunity for millions of Americans.

The ideas expressed on the Haas Institute blog are not necessarily those of UC Berkeley or the Division of Equity & Inclusion, where the Haas Institute website is hosted. They are not official and not of one mind. Thoughts here are those of individual authors. We are committed to academic freedom, free speech and civil liberties.