Housing After World War II

World War II had a great effect on unifying the United States in a time when racism and segregation was prominent. Although African-Americans were finally getting the opportunity to integrate into the military, when GI’s returned home the racial lines reappeared.

When the GI’s returned, many of them had no place to live. The Federal Housing Association (FHA) responded to this by providing low rate loans for GI’s so that they could purchase homes. Instead of the normal loan process at the time, when the buyer would have to put down a large majority of the loan, these new loans had the buyer putting down only 3% while the bank covered the rest.

The only problem with this is that the loans were not evenly distributed among GI’s. The banks only provided loans for certain areas that they deemed economically viable or low risk. These characteristics of viability and well as riskiness where for the most part based on the racial demography of an area. Therefore a white neighborhood would be labeled as green while a colored neighborhood would be redlined. This lead to whites living suburbs thanks to the help of the low rate loans, while minorities were left high and dry in public housing.

Due to their “financial risk rating” minorities did not receive, the same privileges and whites. For property owners in the white community this was a positive thing because in their eyes, minorities “undermined property value”. Therefore, when minorities began to move into white neighborhoods a phenomena known as blockbusting began.

Blockbusting occurred when minorities moved into a white neighborhood and the whites began to sell their homes at below market value. Realtors then sold these houses to non-white families at inflated rates. The problem with blockbusting is that self-induced. The only way that it can arise is by the fear that others will resell their house to a non-white family and therefore lower the property value of your house.

These processes that arose after World War II increased the separation between whites and non-whites through exclusiveness in the housing market.

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