The Data Driven Real Estate Podcast #7 – Fair Housing Insights with Dr. Karyn Lacy

By August 14, 2020Data, Podcast, PropertyRadar
Dr. Karyn Lacy on the Data Driven Real Estate Show

On a recent CalMatters Podcast (Gimme Shelter), we were inspired by an interview with Dr. Karyn Lacy, a sociologist with the University of Michigan.

Dr. Lacy eloquently shared the history of the suburbs and how they evolved after WWII. It was SO good, we wanted more!

Dr. Lacy  is a data-driven professional that has spent years studying black middle-class families in the Washington DC area for her book, Blue-Chip Black.

We learn how she approached her research, where she found the data, data that was and was not available, and the techniques she employed to write an incredibly interesting book on race, class, and the middle class. We learn about the federal government’s role in segregation as well as local examples of discrimination via developers, agents, lenders, city governments, and banks.

Have questions or feedback? Each show is posted on the Data Driven Real Estate Podcast #7 in our community. Catch pre-show research and continue the dialogue online after the show.

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Show Topics

  • 00:46 Dr. Lacy’s background and how she ended up as a demographer and sociologist
  • 03:56 How much of Dr. Lacy’s work is qualitative vs quantitative?
  • 04:48 Is quantitative data for research easy to come by for research on segregation?
  • 5:55 The missing data on segregation that Dr. lacy had a difficult time finding and the incredible commitment to find it
  • 09:02 How Dr. Lacy’s research butted up against existing academic understanding
  • 10:40 Is being a flip-floppers always a bad thing?
  • 11:16 The concept of the American identity and the difference in minority vs European immigrant experience
  • 13:23 The role Class plays in how Black Americans process identities
  • 15:44 The data Dr. Lacy used to identify the areas and families she used in her study
  • 17:33 Was public records data part of the process?
  • 21:33  FHAs role in segregation and the suburbs?
  • 22:30 The Home Loan Corporation, residential security maps, and how appraisers used the color-coated maps
  • 23:13 What is redlining and HOLC’s role?
  • 24:41 How the FHA took the security maps and systemized racist policies
  • 25:00 The reason FHA justified using these practices and the goal of keeping race and classes segregated
  • 28:03 How white families have benefitted from homeownership starting after WWII
  • 28:47 What was Levittown and why is it important in the conversation of segregation?
  • 30:50 Were the developers of Levittown racist or were they falling in line to comply with needed FHA guidelines to get the funding?
  • 32:29 What William Levitt said in response to why as innovators they were not selling homes to Black families
  • 33:24 How prices increased when Black families moved into all-white suburbs
  • 34:30 Blockbusters and their role in stoking fear and furthering segregation
  • 36:24 Different professions who played the role of blockbusters
  • 37:07 An example of how a local bank redlined in the Boston area
  • 39:24 Public housing and how FHA incentivized white flight into the suburbs with subsidies
  • 42:38 What is steering? Dr. Lacy firsthand experience in real estate while undercover
  • 44:14 How studies by HUD have shown Black families are shown fewer homes, steered towards specific communities, and/or told homes are not available 46:31 What housing discrimination looks like today
  • 48:51 What does the future of the suburbs, housing and integration look like?
  • 51:03 The concept of whitopias and what it will affect
  • 51:33 The education outcomes of those that have and those that do not and impacts we’ll see in 2021
  • 52:55 How low-earth Internet may change the shape of the suburbs and choices in housing
  • 53:52 An impact of remote work and diversity that not many people are talking about
  • 55:32 Are their cities that are doing a thoughtful job on integration and urban planning?

Show Transcript

Aaron Norris [00:00:02] Hello, everybody. Welcome to the Data Driven Real Estate Podcast, the podcast for real estate professionals dedicated to driving business success using data. I’m your host, Aaron Norris here with co-host Sean O’Toole. And our special guest today is Dr. Karen Lacy. We first stumbled upon …now, Karyn, do you like to be called Dr. Lacy or Karyn? Any preference?

Dr. Karyn Lacy [00:00:25] Yeah, definitely. Dr. Lacy is fine.

Aaron Norris [00:00:27] I like that. You’ve worked really hard for that title. I always like to ask. We stumbled upon some of your work on a CalMatters podcast, Gimme Shelter, and we’re fascinated with your conversation and your knowledge on all your research on the suburbs. So we’re really excited to talk to you today. I guess the first question. Your background in study. You’ve got a B.A. in Urban Studies and Black Studies, a Master’s in African-American studies and sociology and then a PhD in sociology. I would just how did you stumble into this career and why this passion?

Dr. Karyn Lacy [00:01:02] Well, I’ve always been interested in cities, and I always wondered how we could make cities better. And, Initially, I thought that I was going to be an urban planner and it went to college that required us to spend winter term doing an internship. So I worked for an urban planning office in a small city and I did not enjoy it. Before I had taken on the internship I thought that cities were not so attractive because people were unimaginative and they had people who really had good ideas that in cities would look better, functioned, function better. And one thing that I learned in the internship is that there is a lot of red tape. There’s a lot of bureaucracy. And even when you come up with a really good idea, it’s very hard to push that idea for a city council to convince a city manager. So there’s a hierarchy that this idea has to travel through. And most ideas don’t make it. And, so in that sense, the internship was really useful because it helped me to realize what I did not want to do.

Aaron Norris [00:02:35] It’s very funny. I almost went back to school for urban planning as well from an arts degree and. Yeah, and lived in New York City. And I stumbled upon all this research. I was I loved the subway system and was just really curious how the five bureaus came to be and New York being so diverse. Like, how do these specific populations end up in very specific portions of town? I just, I just loved it. And then when I moved back to California and started getting involved in the city and the county, I had the same exact experience. And I shut that down real quick. Yeah.

Dr. Karyn Lacy [00:03:07] God bless urban planners. And they may they don’t get enough credit for the ideas that they come up with and the work that they put into trying to bring them into refrigeration.

Aaron Norris [00:03:18] So then you started just to focus on the sociology instead?

Dr. Karyn Lacy [00:03:23] Well, I have always felt like a sociologist. I have always been sort of attentive to patterns and thinking about why we see the kind of outcomes that we do. You know, when I was a little kid, I didn’t know there was a word for it. Were people who didn’t learn that until I got to high school? But it’s not like a natural fit. And it has been in a lot of ways.

Sean O’Toole [00:03:56] A lot of your you know, you’ve done research on foreclosures in the suburbs and all these things, I was looking through some of your papers. How much of your research you do is qualitative vs. quantitative?

Dr. Karyn Lacy [00:04:13] I mean, if not a person or almost all of it is qualitative, I do work at the University of Michigan,  which is the quantitative powerhouses. Most people know. And we have exceptional graduate students. So, I am involved in a few projects that quantitative graduate students are working on with me. They run the data and then we have the analysis, we put it together. So it. It’s a good marriage.

Sean O’Toole [00:04:48] Yeah, for sure. How accessible or how often is getting good data, you know, a problem in doing, you know, your research. You know, obviously on the qualitative side of it, I’m doing interviews and other things. But on the quantitative side is access to data problem or is it generally pretty good?

Dr. Karyn Lacy [00:05:13] Well, I’m glad you asked that question, because a lack of access to data was the motivation for Blue Chip Black, the book I wrote about the D.C. suburbs. I started out training as a demographer, which is a person who uses datasets to analyze research questions. And I was interested in how middle-class Black people decide where to live. Much of their literature on residential segregation suggests there is a lot of discrimination in the housing market. There’s racial steering. There’s redlining. And the literature suggested that even if you are a middle class or upper-middle class, you’re still going to have a hard time getting into your neighborhood of choice. And was that was what I was really interested in exploring, and I was having trouble finding the data that included the variables that would allow me to do that. And in consultation with my dissertation advisors, we decided that I should just go down there and start to interview people about how they made their housing decisions and also to engage in ethnographic observation, which is. To the extent that you can, trying to become sort of a member of a committee or an organization to see how that institution works from their perspective, so you go down and sort of try to live the way that they do. Going to the same grocery store is that they do you driving through all the traffic they do in the D.C. metro area. You go and you shopping malls, all the things that that a person who lives in that community would do in everyday life. I tried to do as well.

Sean O’Toole [00:07:09] Wow. So that’s a that’s a huge commitment.

Dr. Karyn Lacy [00:07:13] It really is. It’s it’s exhausting. At the end of the day, you write field notes about what you saw and try to figure out what it means.

Aaron Norris [00:07:23] How long were you there and how many people did you have to interview?

Dr. Karyn Lacy [00:07:27] So it’s there for two years and my goal was to interview 30 couples. So 60 people altogether and I interview the spouses separately. But in the end, there were six people who I was unable to interview because the timing was never quite right where their schedule or because the spouse just did not want to participate. So I ended up with 54 interviews that I had to transcribe. And then also all the field notes from my activations, which included going to community meetings and town halls and community events. The. um, that is in suburban communities that tend to have an annual block party. So I went to that. They do cleanup’s in their communities every year, though. So, again, whatever it is that they were doing, I tried to do it as well.

Aaron Norris [00:08:35] So that’s extensive for two years. You really committed.

Dr. Karyn Lacy [00:08:40] That’s not unusual for an ethnographic project. Although I appreciate you guys recognizing how much effort it takes to pull off that kind of study.

Aaron Norris [00:08:52] There was you know, I was reading the introduction. I haven’t finished your book yet, but I did buy it. And I am posting a link to it on our Web site. So Blue-Chip Black: Race, Class and Status in the New Black Middle Class. And in the introduction, you said, it was sort of sweet. You were talking about data collection and some of the data was missing or it was up against one of your professors. Can you talk a little bit about the process? Because it seems like some of the things that you were researching butted up against the data that did exist. Can you share a little bit about that?

Dr. Karyn Lacy [00:09:23] Yes, that is true, and normally that’s a good thing, because what academics are interested in is is building on our existing knowledge base and taking that knowledge in new directions. So generally, if you find something new, that’s a good thing, right, for the publication of a book or an article. The problem is that what I found ran counter to what one of my dissertation committee advisors had found. And I did not want to tell her that she was wrong. So in the department, we have colloquium sessions and graduate students present their work. And I tried to present it without saying that she was wrong. And she finally said, “just say that I was wrong.” Then she, I was worried for nothing. She really didn’t care at all. She’s not the kind of person who is sensitive about being challenged about her work.

Aaron Norris [00:10:31] I guess I appreciate that, because it was the honesty of the data. The data was able to speak, I thought was pretty cool.

Sean O’Toole [00:10:40] I’ve always had a problem with this idea that, you know, flip-floppers are bad, right? Like, not to make it political, but like this idea that flip-floppers like it should all be our goal to, like, learn new things and change our opinion based on better data, like every day.

Dr. Karyn Lacy [00:10:57] It shouldn’t be. Yes. And it also should be the case that academics are not so sensitive about someone finding a more nuanced interpretation of their work, that should be fine as well. But that isn’t always the case. So the issue with my dissertation advisers work is that she had written a wonderful book called Ethnic Options, which is a study of third-generation white people and how they think about their identity. And the idea was that over time, white ethnic immigrants who came to this country exchanged their culture of origin, whether they were Polish or German or Irish, for an American identity to become a part of the American mainstream. And the sense was that they would do that voluntarily because, who would want to be a part of America? And what she found is that as discrimination against those groups declined over time. So you were no longer penalized if you were Irish in terms of where you could work or who you can marry or where you live. That those immigrants took on a white American identity that was not distinguished by ethnicity. Was it that sort of prevailing view in Washington from interviewing white ethnic, third-generation Americans is that they actually did care a lot about having an ethnic identity. They thought being just white was really boring. They called it, quote, “plain vanilla.” So they were attempting to latch on to some kind of ethnicity. And often they were wrong. So there is a Polish woman who said that she celebrated her identity by eating sauerkraut. It’s not representative of Polish culture. So it didn’t really matter for them whether the ritual that they embraced was an authentic representation of the identity that they claim. The point was that they wanted to be something.

Sean O’Toole [00:13:17] But that’s interesting. Yeah.

Dr. Karyn Lacy [00:13:21] But she.

Sean O’Toole [00:13:22] Go ahead.

Dr. Karyn Lacy [00:13:23] She argued that Black people don’t have any identity options. Right. That because of the way race is defined in the U.S. and the search for meaning attached to it. Black people are just Black and that’s it. And what I found in Blue-Chip Black is that, that isn’t at all the way Black people, and particularly Middle-Class Black people think about their identity. They don’t see themselves as defined solely by race. In every context.

Sean O’Toole [00:13:57] That’s it. Yeah, I get that. You know, it’s it was interesting for me. My name’s Sean Patrick O’Toole, right. It’s super Irish.

Dr. Karyn Lacy [00:14:04] Yeah.

[00:14:05] I’m only three sixteen’s Irish. Like, I am a true mutt and I’m more Irish than anything else. And so it’s it’s a really interesting, you know, saying like, you know, to identify as Irish. I’m very little Irish. Right. But my name is very Irish. And so there’s all these little things and nuances. And yeah, it’s. Yeah.

Dr. Karyn Lacy [00:14:32] And certainly I certainly tell other people when they hear your name, are going to realize that you are Irish, even though it may not be a salient identity for you. On an everyday basis.

Sean O’Toole [00:14:45] Yeah. Yeah.

Aaron Norris [00:14:48] How did you stumble upon this area in D.C. where you were aware of this already? There’s two neighborhoods in the book that you talked about. I believe one was in Virginia and one in Maryland, correct?

Dr. Karyn Lacy [00:15:00] That’s correct.

Aaron Norris [00:15:01] And the one in was, I can’t remember the name, the two different areas. But you were specifically studying upper middle-class Black families and where they chose to live. But that’s how you found this. How did you even find these two neighborhoods so close together?

Dr. Karyn Lacy [00:15:18] Well, that’s another instance where data is really important. I knew I wanted to find a sample of Middle-Class Black People because I wanted to understand how if you have enough money to live wherever you want. What are your choices as opposed to people whose choices are constrained by financial limitations? So then the question was, where do I work? Do I find these mysterious Black people? So I went to the census and started to look around at different census tracts to figure out. What tracts would meet my criteria and for comparative purposes? I needed one tract that was majority Black and another tract that was predominantly white that all had the same characteristics. So the same median monthly mortgage payments. The same percentage of college graduates. The same median income. That sort of thing. And through that process, I was able to identify two community names, one in Prince George’s County, which is majority Black suburb, and the other in Fairfax County, which is a predominantly white suburb. So you can see here, too, that even though I was planning to do an ethnography and to do interviews, I still had to rely on a dataset. The census in order to get started.

Aaron Norris [00:16:51] So interesting. Now, where did you live in that two years? Did you live in D.C. and sort of travel out or did you spend time in each of those neighborhoods?

Dr. Karyn Lacy [00:16:59] So this is where it being a poor graduate student makes life interesting. I lived on a lot of couches. So fortunately, our friends in D.C. let me say some of the time with them, and I do have an aunt and uncle who also live in the area. So a lot of living out of a suitcase.

Sean O’Toole [00:17:28] Yes. You know, one of the things we really focus on making public records data more available. So county assessor, county recorder. And there’s quite a bit of information there. You know, that would be useful for you. Did you use that type of public records at all or primarily just census data?

Dr. Karyn Lacy [00:17:52] We get started, I mainly use the census data because I wanted to be sure that I had the right communities for my research questions before I started the equally hard process of convincing people to participate in this study. So I definitely wanted to be sure I had the right communities. I got started in P.G. County because of the contact that I had already. But it was a lot harder to get started in Fairfax County. Initially, I tried snowball sampling, which is when you start out by asking people you’ve already interviewed if they have friends or contacts in the neighborhood that you hope to interview. And I did get a few leads for residents of Fairfax County from that. But when I called them, they didn’t want to do it. Their friends who I’d already interviewed and said that here’s a person you should contact. I’ll do it. And when I contacted them, they were like, oh, no, I’m not going to do that. So. So I was really sad and thought that going to graduate, I’m going to be a baby for the rest of my life because I only have half of a comparative study. And I got to the point where I would tell anyone when I feel sorry for every stranger on the streets of D.C., because I would tell them this sob story about how I had no contacts in Fairfax County. And one day I went to a bank in downtown D.C. to open a student account and the manager there started asking me questions. What do you write in anticipation about? And I told her and I told her that I wanted to interview people in Fairfax County. Nobody would talk to me. And just by luck, she happened to live in the track that I wanted to study. And she said, you not only could you interview me, I’ll also introduce you to some of my neighbors. And from there, it just took off. So you never really know where you can find the right contacts for your research.

Sean O’Toole [00:20:09] And that’s the snowball started with the one the one banker, and then snowballed into completing your thing. You know what, I am thankful for hungry, you know, grad students and the rest, because otherwise these things wouldn’t happen. Right. Like most of us wouldn’t go go through that, right, without having that kind of angry desire. Right.

Dr. Karyn Lacy [00:20:35] Well, most people who have full time jobs, even if they have the desire, they lack of time, it’s very time consuming to do that, to observe all day and then to come home and right up field notes. Most people who work full time this is a real impossibility to do something like that.

Sean O’Toole [00:20:55] Love to jump in, too. You know, you talk about the history of suburbs. You know, listen to CalMatters. You know, I thought some of that was really fascinating. And, you know, a you know, even I’m familiar with Levittown and some of these things, but I thought you brought a lot of interesting and I’d love to jump into that with maybe your, I don’t know if he’ll start with, like what you think the top takeaways, you know, should be for folks to understand about suburbs and how they originated.

Dr. Karyn Lacy [00:21:31] Okay, I’m sure. Yeah. I think the most important thing for people to understand is the FHA’s role in segregating America, that the Federal Housing Administration is really the architect of residential segregation in America’s suburbs. And I say that because most people think that if they want to buy a house, you identify a neighborhood or maybe two, you find a realtor, you search your house and then you just move in, and that’s not at all the way that housing searches work historically for Black people who wanted to buy a house. So it’s important to understand that for decades, the FHA influence where people live through the policies that the organization promoted. And I think they’re most consequential policy was the adoption of the HLOC, the homeowners loan corporations, residential security maps, and those maps represented the HOLC’s assignment of a rating to every block in every city in the country. And there were four categories, green and blue neighborhoods, which the HOLC felt would always appraise well. For the HOLC, the motivation was to create and standardize appraisal system that appraisers. So that appraisers at different parts of the country would be using the same criteria to evaluate properties. So, you know, 4000. This is 1933, so a four thousand dollar property in Wisconsin would reflect the same characteristics as a four thousand dollar property in Ohio. So the green and blue neighborhoods were the best ones, the yellow and red neighborhoods were the worst neighborhoods and all Black neighborhoods were assigned the red designation. Which is where the term redlining comes from. So even Black neighborhoods, they had brand new housing stock because the people living in those homes were brown. We’re still with signed the red designation. And then the FHA came along and decided those residential maps are a great way to fulfill their plan to segregate every community in America by race. So the HOLC was really interested in just appraisals, so they weren’t doing something malicious with their residential security maps. But the FHA did, so the FHA actually took the racist practices that were employed by lenders in real terms at the time and converted that into federal policy.

Aaron Norris [00:25:00] Did anybody given a reason why that was done at the FHA level?

Dr. Karyn Lacy [00:25:06] Well, the FHA today says that they were principally concerned with property values. The FHA doesn’t actually loan money directly. They insure the loans that lenders grant to home seekers. So they were very concerned with property values, but their premiss was racist in their underwriting manual, they said if a neighborhood is to retain stability, it is necessary that properties should continue to be occupied by the same social and racial classes. So they were instructing lenders that it’s not necessary for you to grant loans to Black people to live in green or blue neighborhoods. And the federal government is fine with that. And as a result, for the next thirty-four years, at least, 1968 is when the Fair Housing Act was passed. But we certainly know that there’s still a red lining going on today. For at least the next 34 years, from 1934 to 1968, Black home seekers were shut out of predominantly white neighborhoods in the suburbs, were typically classified as green or blue. So what we have is communities that were designated exclusively for white home seekers that were funded through taxes paid by everyone. So I often hear even in some of the articles that I see, I’ve seen recently in response to Trump’s comments about the suburbs. I see white suburbanites saying, I earned this, I deserve to be here, in part because that’s the way we conceived of homeownership in this country. Right. But the people who work hard and who are successful are the people who deserve homes that people who are poor don’t deserve a nice home. Right. But there’s little awareness that that community exists for an option for you if you’re white because of all the work that the FHA did for 30 years. To exclude Black people and increasingly Latino people. So it’s useful to think about the way our communities would look if the FHA had made a different choice. Right. If they had decided to promote racial integration instead of racial segregation. And had they done that, we would see Black people accumulating wealth at the same rate that white people have done. For the last eighty years since the FHA came into existence.

Aaron Norris [00:28:03] I was talking to my father about this very thing, his family was in Brooklyn at the time after World War Two. My grandfather got a V.A. loan in New York and we were talking about what that meant to our family over, you know, for the last 60 years. What that equity buildup has meant as far as education of family members of wealth within the family and it is very important to understand that history. And I was interested in going down the rabbit hole, I don’t think I’ve ever prepared more for an interview in my life. Just so you know. I started reading a lot about Levittown and then affordable housing. I really didn’t appreciate where affordable housing started. And it wasn’t, it didn’t start necessarily as a low-income play. It was a really, really a function of World War Two. Can you talk about that a little bit?

Dr. Karyn Lacy [00:28:47] Yeah. I mean, in there to the FHA is relevant because Levittown, which is was the largest at the time. Nineteen forty-seven, the Long Island, Levittown was the largest suburban development ever constructed by a developer. And that development would not have been possible without the backing of the FHA, the FHA insured loans, Levittown home seekers. So the Levitts could take certain risk without risking financial loss. And they built homes that cost about seven thousand dollars, which is in today’s dollars would be about eighty-four thousand dollars. So it was an affordable home. And for most New Yorkers, moving to Levittown was cheaper than paying rent.

Sean O’Toole [00:29:44] One of the things you know, one of the other big pieces of the history of Levittown, right, was a use of a restrictive covenant that basically said that the house could not be used or occupied by any person other than members of the Caucasian race. And I always thought that was, you know  just a you know, the developer, the Levitts, you know, you know, basically bringing their own ideals or norms or what they thought would sell best or protect their community the best of the rest. But I’m wondering now, based on this thing with the FHA, if maybe some of that wasn’t to to ensure that, you know, they could get the folks coming to Levittown to get loans. But then maybe did they, well, you know, did one lead the other? Was it, were the Levitt’s racist and didn’t want Blacks in their community or were they reacting to these FHA rules and the ideas there?

Dr. Karyn Lacy [00:30:50] So the Levitts took their lead from the FHA. And as I said, the first Levittown was constructed in 1947, restrictive covenants or outlawed in 1948 by the Supreme Court, who said that restrictive covenants were unenforceable as law and contrary to public policy. But the FHA dismissed that ruling and continued to accept applications from homeowners who were seeking to buy a house in homes in communities governed by restrictive covenants until 1950. So for two years after the practice was rendered illegal, the FHA continued to say, we’re fine with you engaging in this discriminatory practice. The Levitt brothers actually were asked about why they refused to sell homes to Black people, especially because they had been innovators in so many other ways in terms of the construction of large scale suburban developments at a very rapid pace. Right. They were having prefabricated walls and flooring and crews shipped into the community instead of building houses one at a time. They would snap together more than 30 houses a day, which were in 1947 was phenomenal.

Sean O’Toole [00:32:27] Today it’s phenomenal.

Dr. Karyn Lacy [00:32:29] But what they said when they were ask about selling homes to Black people, William Levitt said, we can solve a housing problem or we can try to solve a racial problem. We can not combine the two.

Aaron Norris [00:32:44] There’s a there’s a video on YouTube, “Crisis in Levittown” it. I think it’s a documentary shot in 1957 about the, it was a newsreel of the first Black family, I guess, that moved into Levittown. And they’re interviewing the white families. They keep winning it, leaning into this concept. It’s going to lower the values of our property. And I guess talking about this in the way that we are when it comes to the appraisals, was that truly possibly a fact? If for some reason that the zone would change at that point, 1957, did those districts with the HOLC still exist as far as the colors?

Dr. Karyn Lacy [00:33:22] Designations did still exist. But the what the data show is that the first Black family to move into a majority white community actually raises the property values because that family pays a premium to move into that community.

Sean O’Toole [00:33:47] They are opening up new demand.

Dr. Karyn Lacy [00:33:48] Right. I mean, basic law prices, supply and demand. And the more people you have that want into a place. Right. That should, unless that one Black family chases away so many white families. But I just. Well, see that.

Dr. Karyn Lacy [00:34:02] Yeah. Well, then. So they. So the first problem is that the Black family is being overcharged for that home. And then that benefits existing white residents because their property values go up as a result. So, I mean, it would be a twisted policy, but you could advocate that every majority-white community try to recruit one Black family. I’m joking. I’m joking of I’m joking. I was probably a joke in poor taste, but it is the case that their property values go up as long as one Black family moves in. The problem is that, that one Black family moving in gets constructed as the beginning of neighborhood transition. I think this is what Trump was alluding to initially when he said the suburbs would be destroyed. But it’s not because the family is is Black. It’s because blockbusters tend to to follow that one Black family into the community, and they would knock on the doors of white residents and say, gee, you know, there’s a Black family that moved in down the street from you and your home is going to lose its value. You should sell it before it’s worth nothing and you’re penniless. And that strategy worked with a lot of white people who were frightened about losing their only asset or their most valuable asset, and they would sell in. Once one person started to sell, another person would. And then you get a domino effect. And that’s what made the Black community transition over to Black, the developers intervention to cause that outcome. So what we hear in popular culture is that a Black family moves in, the neighborhood goes down. But there is an intervening variable, which is a blockbuster who comes in and then causes that kind of sell-off.

Aaron Norris [00:36:09] You say blockbuster.

Dr. Karyn Lacy [00:36:12] Blockbusters.

Aaron Norris [00:36:12] I’m not familiar with that term, what is that?

Dr. Karyn Lacy [00:36:14] Blockbusting is the process that I just described, which is the deliberate racial turnover of a community for profit.

Aaron Norris [00:36:24] I guess I mean, who would that be? Is there a role besides just causing trouble? Is it a Realtor looking for business? Is it an investor looking to get a home cheaply? Is it. Is there a specific role that person plays?

Dr. Karyn Lacy [00:36:36] So investors and Realtors who are interested in profit because as the neighborhood is transitioning, transitioning, you make money, you force white homeowners out and you sell the homes that they abandoned to Black people at a very high price so that you turn over a profit. But there is and this is a fairly widespread practice. There’s a book called The Death of a Jewish American Community. I think the authors are historians, but I’m not quite certain about that. But in any case, what they describe is a consortium of banks in the Boston area got together and decided that they were going to redline and they were only going to sell homes to Black people if they were only going to provide mortgages for homes for Black people, if they agreed to move into this one section of Boston that they had cordoned off and designated as appropriate for Black people from Mattapan. The problem is that that community already had people living in it, they were Jewish and they had synagogues and Jewish supermarkets and all kinds of cultural practices and institutions in that community. And the bankers pushed them out and put Blacks in. And for years, that community was a majority Black community, it’s now becoming gentrified and transitioning as many predominantly Black communities and large cities are. But that’s a very clear and disturbing example of how the banks in a city might all form a coalition to enforce redlining practices.

Aaron Norris [00:38:42] So you had federal policy coming into play. You had local policy. It’s it’s so fascinating to see all the different pieces to how we know where we’re at today. Also spent quite a fair amount of time researching, you would probably appreciate this as an urban planner, a lot of the 50s concept of affordable housing. The stuff in Chicago, I live close by the one in the Harlem area. Just very stark, 1950s like a le Corbusier, a Bauhaus movement. Man, buildings almost look scary. What did we learn about the housing that they were building at that period of time?

Dr. Karyn Lacy [00:39:24] Well, initially, we are an image of public housing now is counter to what public housing was at its inception. So initially, to get into public housing, you had to pass a moral test, right? You had to be upstanding. You had to have a job. You had to demonstrate that you had a moral compass in order to get it. And it was you had to apply. There was a long waiting list and it was it was hard to get an apartment in public housing. But then the FHA helped to initiate white flight in central cities by subsidizing the suburbs and in the process, they really caused a lot of harm in central cities. And that’s when you start to see the public housing transition to a home for lower-middle-class, working-class people who are trying to be upwardly-mobile to places for the working poor.

Sean O’Toole [00:40:41] It’s really I mean, it’s it’s stunning to me how. We touched a minute ago on like Realtors and investors played a role in blockbusting. And I don’t think most folks realize, right. The National Association of Realtors, I think’s been around since 1908. And they have this, you know, code of ethics. But past versions of their code of ethics include a Realtor should never be instrumental in introducing into a neighborhood members of any race or nationality whose presence will clearly be detrimental to property values. So it was like the code of ethics was to keep, you know, folks out of neighborhoods to not hurt. So, I mean, it was really systemic. And that stayed in the Realtor Code of Ethics and tell 1950.

Dr. Karyn Lacy [00:41:35] Mm hmm. Yeah. I mean, it’s. It’s still the case among some Realtors that. Well, let me say this, Realtors build their clientele based on their reputations. They find a house for someone, the person is happy, and then that person recommends them to a friend. Right. Well, if you as a Realtor develop a reputation as the person who brought Black people into a predominately white neighborhood, it’s possible that you won’t have very many clients going forward. I’m not justifying what Realtors have done. I’m saying that from their perspective, they’re trying to grow their business and they’re trying to make money. And everyone from the FHA to developers to lenders are saying discrimination is fine. So why would you do the right thing?

Sean O’Toole [00:42:38] To be fair, the you know, the code of ethics does not say that anymore. It clearly says they should not do that. But but I believe that it’s still happening. In fact, you went undercover to be to just go see this in person. And what was that experience like?

Dr. Karyn Lacy [00:43:01] It was it was jarring, I mean, in part because I’m a very bad actress, so I was very nervous. But also because I you know, at that point I’d been in graduate school for three years. I had read a lot of the literature on housing discrimination and I had residents in P.G. County, in Fairfax County, most of whom were saying that they didn’t encounter any discrimination when they were looking for their house, that they wanted a house with the fireplace or they wanted a house where all their kids would have their own bedroom and they had that. And so because they had found that they wanted they were content and they they had no idea how many fewer houses they were shown compared to their white counterparts. Right. Or they have no idea whether they were steered into communities that had a higher composition of people who look like them than their white counterparts. Right. So there is no way for them to draw those comparisons. HUD’s audit studies help us to do that, because they sent out people who were assigned fictional identities and so you’d have a Black auditor in a white auditor. And they were assigned the same kinds of jobs in the same income and the same educational attainment. So the only difference between them is race. And they would go out into session to apply for a home or an apartment that was listed. And it’s through those studies that we found. But there’s still quite a bit of discrimination with Black people told homes are not available even when they are on them or being shown fewer homes or only being directed to homes in communities where there are other Black people or communities where there’s a concentration of poor people. And we wouldn’t have known those things without the audit studies. So, while that in mind, I walk into this Realtors office to pretend to buy a house, and at that point I’d never bought a house that I was also nervous about that when I had been able to be exposed as a very naive home seeker. So I gave my speel that, you know, I was my fiancee and I are going to move to the area. He’s has finished up medical school. He’s starting the residency. We want to live in this community, which is the one that I was studying and the Realtor was actually really nice. You know, he told a lot of jokes. He told me you wanted to look for a house where the people are either getting a divorce or somebody die because those are really good deals, which is true. So that was good advice. Then he was also engaging in racial steering because even as I insisted that I wanted to live in the neighborhood that we were sitting in, he kept directing me to get a large map in his office and he drew his finger from where we were up to another community, which I knew had a lot more Black people in the housing stock was much older. And he said, you want to live here because here is where you would know who your neighbors are. Which is an interesting.

Aaron Norris [00:46:28] That’s an interesting way to put it. Yeah.

Dr. Karyn Lacy [00:46:31] Yeah. And I said, well, we want to live here. And he said, you can’t afford to live here. But the problem is, I had never given him a price range and I had not said whether we would get money from our parents for the down payment. I never mentioned price, but he looked at me and determined that the neighborhood was out of reach for us. So in the process, I actually was like, this guy is nice. He’s trying to help me, even though I have read all about stuff about housing discrimination. So I can see how the average person who hasn’t read any of the stuff that we have, any of the literature that we have would come out of that interaction, not thinking that they had been discriminated against because the guy was nice.

Aaron Norris [00:47:16] The racism has just got a lot more subtle.

Dr. Karyn Lacy [00:47:21] It has.

Sean O’Toole [00:47:21] It’s an interesting I’m a big science fiction reader. I don’t know, professor Lacy, if you if you’ve read Neal Stephenson at all and maybe Snow Crash and Burb Claves.

Dr. Karyn Lacy [00:47:34] I have not yet. I should, let me write it down.

Sean O’Toole [00:47:37] Yeah. So it’s a you know, it’s a dystopian or at least I’ll I’ll take it as dystopia and look into the future. And so basically it has the suburbs becoming a franchise, a franchise nations. So they have their own constitutions, they’re city-states. And, you know, I think the underlying theme is, is that I don’t necessarily mean this on race. And, you know, I think class is probably another conversation we can be having here about differences. But race, certainly class, etcetera. And he basically said, you know, the theory is the book is in the future. It basically we come to decision we can’t all get along. And so instead, we have the suburbs become their own little nations of like-minded people. And I always thought that was just a fascinating, you know, take I mean, our goal here has been to try to, you know, to try to have integration, you know, I certainly think that’s a good goal, but I guess, you know, I’d like to ask you what you think the future of, you know, suburbs and housing and integration or maybe how we get there?

Dr. Karyn Lacy [00:49:01] Yeah, well, there is a nonfiction book about that process that you’ve just described called Whitopia, which is written by a journalist. He’s a Black journalist who spent, I think it was two week in each of these communities that he calls whitetopias, which are the suburbs in distant communities. They’re really exurbs where white people who lived in California and other places where there’s growing diversity are attempting to escape people of color, both Black people and Latinos, and also attempting to distance themselves from poor people. So they have literally moved out to the boondocks and started these exclusive gated communities that contain only people like them. And that’s a real-life example. That’s not, that’s not fiction. I recommend that book, too. It’s a really good treatment of that of those communities. So I recommend that book. But I think we’re just going to see further divisions by social class where people who are wealthier and have the money to cordon them off from everyone else continue to do that.

Sean O’Toole [00:50:26] What do you think the long term impacts of that are? What’s the, you know, so, yeah, I mean, I think that is happening, continues to happening. You know, I probably live in one of those communities, so, you know, it wasn’t out of some desire to escape anything, just. You know, appeal to me, I’m not even sure why. So what? What do you think the impact of that is versus, you know, say, my choosing to live in the city with greater integration?

Dr. Karyn Lacy [00:51:03] It’s going to affect everything. And I think we’re going to see inequality skyrocket because if, for example, the best schools in 30 years from now are in whitopias. What about everyone else? What kind of education are the kids who can’t afford to live in those communities going to get? Right. How are they going to be prepared for a changing job market. They probably are not. There’s a lot of discussions now because of the pandemic about what’s going to happen if the schools don’t open. And I’ve seen reports where middle and upper-middle-class parents are creating these learning pods, where they’re pooling their resources and then hiring experts to teach their kids. So at the end of the academic year, in 2021, their kids are probably not going to be behind. But what about the kids whose parents can’t afford to hire a teacher to create a learning pod? Those kids are going to be behind next year and they’re going to be behind by a lot.

Sean O’Toole [00:52:16] But also, when they create that learning pod. Right, they’re going to have a lot more choice in what is taught and what is not taught. Even those kids that get that better education, it’s going to be a very selective education.

Dr. Karyn Lacy [00:52:28] It is probably very value-laden. Yes.

Sean O’Toole [00:52:33] You know, I actually think, you know, it’s interesting you brought up Covid in, you know, because it’s changing where people work. Right. We’ve really seen this, you know, if you look at most of the population in the US, right. You know, rural areas have been dying and urban areas are just exploding. Right. And, you know, not only work from home, but one of the things I’m also fascinated in about right now is new low-earth orbit, satellite Internet. And what that’s going to do is bring high-speed Internet to rural communities. And I think that’s going to be pretty awesome for rural communities. But we might see an acceleration of these, you know, burbclaves or Galt’s Gulches or Whitopias or whatever, where people go, you know, no longer have to be in the city, no longer have to work together, no longer have to. And they can go off and find their own space that’s idyllic in their own mind, and I think that has a lot of interesting implications for the future of integration, race relations, etc.. Any thoughts on that?

Dr. Karyn Lacy [00:53:52] It does. I heard a report that Google is going to allow their employees to work from home through next July. I mean, there are a lot of implications from that. One is that, you know, even people who live in homogenous communities often work in environments with better, more diverse. Right? So at least in the workplace, they’re exposed to people from different cultures and who may think differently than they do. But now I’m under the pandemic when you don’t even have that. It concerns me how. What will happen to the racial progress that we’ve made so far, when people don’t have to manage those kinds of cross-racial interactions.

Sean O’Toole [00:54:45] It’s much easier to vilify the other when you don’t actually have to talk to meet and, you know, spend time with the other and realize that they’re really not very different at all.

Dr. Karyn Lacy [00:54:57] Exactly. Exactly. So it’s. Let’s say it’s definitely a concern.

Sean O’Toole [00:55:04] Yes, go ahead, Aaron

Aaron Norris [00:55:06] Are there any cities that have done some work, an improvement on the topics that we’ve been talking about that you’ve been excited about? The right approach at the right time?

Dr. Karyn Lacy [00:55:22] Hmmmmm.

Aaron Norris [00:55:22] Well, that says a lot.

Dr. Karyn Lacy [00:55:25] It shows. Well, there are some cities, so Shaker Heights is one such community. It’s a suburb in a suburb of Cleveland that was featured in Kamau Bell’s CNN special on Sunday. And I’ve actually known about that community for some time, but they’ve been very proactive about managing residential integration in their community in Ann Arbor, which is where the University of Michigan is. At one time, you could not post a for sale sign there because they didn’t want to create the kinds of sell-offs that we were talking about a few minutes ago when we were discussing blockbusting. So there are some communities that have made attempts to both. Recruit white people who are interested in living in a more diverse community. And then to make it possible for them to stay there and still maintain the property values there. But they’re few and far between.

Sean O’Toole [00:56:36] You know, you certainly don’t want to head down a path where we all have to live in the same thing and there aren’t incentives to work hard and get ahead and the rest. You know, we started off this conversation on urban planning and, you know, you know, praise for urban planners and how hard their job is. But I also wonder, you know, to what degree, you know, you know, even back in the foreclosure crisis, I really felt like some of the problems in the foreclosure crisis came back to urban planning. Right? the McMansions out in the cornfields that we saw here in California that, you know, just really made no sense, even from like a heating and air conditioning, but side of things and like the lack of thought and to, you know, OK, you’re gonna have some larger homes, you need to have some apartments. You need to have some smaller homes with, you know, smaller pieces of the property so you can hit different price points and income levels rather than having one on this side of the tracks and one on that side of the tracks, which seems to always be the case. You know, we’re fairly close. I’m fairly close to Reno. Right. And up on the mountains towards Tahoe is where all the higher end homes are. And then down kind of on the other side of the valley and to the north is where the lower-income stuff is. And that really feels to me like a failure of urban planning.

Dr. Karyn Lacy [00:58:10] Yeah, yeah, it’s definitely an aspect of the crisis that there’s there, too, there is the federal government is complicit there, too, because they allowed lenders to engage in predatory lending, granting mortgages without any documents to support the income that the homeowner reported. And those predatory loans were concentrated in minority communities. So there, too, you see that people of color were selected for differential treatment in the lending market as well.

Sean O’Toole [00:58:56] So we worked with the San Jose Mercury on a pretty large study of that in the Bay Area, Silicon Valley. And it was a really interesting thing where, you know, they looked through at the Hispanic community and how much harder the Hispanic community was hit generally than the other communities and basically the same geographic area. So I was shocked. I didn’t really think that there would be a difference there. And I didn’t really understand the mechanisms for why there would be a difference. But using our data, there clearly was.

Dr. Karyn Lacy [00:59:43] Yeah. Yeah. It sounds like you guys you read the paper I read about the foreclosure crisis in the journal American Behavioral Scientist. But there, too, I also discovered that in California, the hardest hit people were Latino and Asian homeowners, in part because they bought homes in bull markets and very expensive markets. And when the housing market crashed, their property values just plummeted. So I think the public narrative is that despite by people seeking homes that they couldn’t afford caused the crisis. And it’s actually much more complicated and nuanced than that. You’re right.

Sean O’Toole [01:00:33] Well, yeah, I mean, let’s. The 2008 crisis didn’t happen on Main Street. It happened on Wall Street.

Dr. Karyn Lacy [01:00:40] Exactly.

Sean O’Toole [01:00:41] I don’t think that personally there’s any debate about that. And I think it was backed by politicians. Dick Kovacevich, you know, the Wells Fargo guy went in and pushed for the Commodities Futures Modernization Act, the repeal of Glass-Steagall. And those things that basically let lenders make loans without recourse and add the Fed pushed that because it kind of saved the economy after the dot com crash. Right? And, you know, we’ll do anything to save the economy. You know, as a country. And we’re seeing maybe a little bit of that right now. But that was clearly what caused the housing crash. And a lot of people got sucked up into this sale that, you know, real estate only went up and, you know, the plenty of blame to go around on that one. But I don’t I personally don’t think any of it belongs to folks that bought into that dream of homeownership.

Dr. Karyn Lacy [01:01:42] Yeah, yeah.

Aaron Norris [01:01:44] Well, we’re at that hour mark.

Dr. Karyn Lacy [01:01:47] That went by really quickly.

Aaron Norris [01:01:49] I know, we didn’t even get to all the questions. That’s typical. But is there any work? What’s next for you? Are you going to move somewhere else for two years and work on…

Dr. Karyn Lacy [01:02:01] Unlikely. Unlikely. I so my dream project would be, this can’t happen because the IRB at my university, really at any university would never approve it. But I would like to conduct an experiment where, you know, you recruit a group of people to live in a community for five years, a racially diverse group of people, to live in a community and interact as neighbors for five years and see what happens.

Aaron Norris [01:02:38] Interesting.

Dr. Karyn Lacy [01:02:39] Well, you can’t do it legally. You can’t make people. You can’t make people move where you want them to. But it would be interesting to see how they how they get along for five years.

Sean O’Toole [01:02:52] I don’t know. I think with a little financial subsidy. Right. You could say, hey, we’re looking for five volunteers of different racial backgrounds to move into this community. And I don’t know that that seems doable to me.

Dr. Karyn Lacy [01:03:09] OK. If you guys are and I mean, you got to go with me.

Sean O’Toole [01:03:12] All right. I’m happy to try to help you figure that out. Okay. I think it’s fascinating. Right. Like, you know, some of those experiments don’t go well. I remember all the people put into that the space habitat thing. What was the name of that?

Aaron Norris [01:03:31] The Sphere?

Sean O’Toole [01:03:32] That like, yeah, they had the sphere. They put all the folks in and it just turned to pure chaos.

Aaron Norris [01:03:36] But I didn’t know that.

Sean O’Toole [01:03:41] Yeah. They wanted to simulate like what a group. You know, you take a group of people together that all look like they’re they’re awesome together. And in like a situation like Marx writes, they’re in a bubble and they can’t leave and they have to work together and cooperate.

Dr. Karyn Lacy [01:03:59] Interesting. How long do they remain in the bubble?

Sean O’Toole [01:04:01] Boy, I’m trying to remember the details. Well, we should actually try to show that.

Dr. Karyn Lacy [01:04:10] There is the NBA, NBA, which is in a bubble. So that’s one example of that concept. Yes.

Aaron Norris [01:04:18] Sounds like a reality show. Maybe we just found how we get this funded.

Dr. Karyn Lacy [01:04:21] If you guys are in I’m in.

Aaron Norris [01:04:27] All right. Dr. Lacy, is there any way that people who would like to follow you and your work in the future where you’d like them to connect?

Dr. Karyn Lacy [01:04:35] Yeah, they could follow me on Twitter at Karyn Lacy.

Aaron Norris [01:04:42] OK.  will definitely mark that. Thank you.

Sean O’Toole [01:04:45] Thats Karyn with a Y. Right?

Dr. Karyn Lacy [01:04:47] It is.

Sean O’Toole [01:04:48] K A R Y N L A C Y with no E, Aaron.

Dr. Karyn Lacy [01:04:53] That’s correct.

Aaron Norris [01:04:54] I caught that once. I’ll go back through and check everything on the website and post all the links to some of the fun books and videos that we found. And we’ll link to your Twitter account for sure. Thank you so many times today.

Dr. Karyn Lacy [01:05:06] Thank you guys for inviting me. I really enjoyed talking with you.

Sean O’Toole [01:05:09] Thank you. Appreciate it.

Aaron Norris [01:05:11] Thank you for listening to the Data Driven Real Estate Show. You can find show notes and links to some of the resources mentioned in the show at click that join the community and you’ll be forwarded to our community where you can even ask questions for upcoming guests. Ask questions of current guests. We monitor there and we’d love to engage with you. Please don’t forget to like favorite subscribe and share on any of your favorite platforms. That helps us out a great deal. Thanks for listening and we’ll see you next week.