What are racial covenants? 

Racial covenants were clauses on property deeds that prevented the sale, rental, or other use of properties by certain minority groups. They were implemented in cities across the northern United States in the 1900s. A Supreme Court ruling in 1948 made them unenforceable, but in Minneapolis, which I’m studying, there’s evidence that they were still being written as late as 1962. They became completely illegal with the Fair Housing Act of 1968.

Racial covenants represent one of the first official forms of discrimination in US housing markets and predate redlining. Historians at the University of Minnesota refer to them as Jim Crow of the North. Covenants that had been buried in historical archives are now being painstakingly digitized—including in Chicago, Minneapolis and St. Paul in Minnesota, Seattle, St. Louis, Milwaukee, and Washington, DC. 

What are you learning about them?

I think we have all the individual covenants in Minnesota’s Hennepin County (where Minneapolis is located) from 1910 to 1960—about 24,000 of them. University of Toronto’s Aradhya Sood and I are linking the covenants to the individual census counts of people who lived in those residences between 1900 and 1940. This is time consuming and requires overlaying historical and present-day maps, as much of today’s grid didn’t exist in the past, or street names were changed as the city urbanized. 

Making these connections will allow us to answer many economic questions, including whether the covenants had any bite. Some historians have called into question the covenants’ actual effects, and there hasn’t been an exhaustive empirical analysis to see, but our research so far uncovers effects on demographics. We find that the share of immigrants and racial minorities was lower in areas where there were covenants, and house and rental prices were higher. 

We also see the involvement of real-estate developers. From 1910 until 1948, 70 percent of covenants in Minneapolis were on newly built housing units, with 30 percent added to existing deeds. Ten developers were responsible for a quarter of newly constructed houses and 68 percent of the covenants.

We’re not using covenants anymore in the US, but building projects continue to target certain demographics. For example, newly constructed high-rise towers with all these amenities (such as pools, gyms, and rooftop and common areas) are attracting a specific population. Developments may shape housing characteristics to make residents expect a rich community, or what they think constitutes a “good” one. 

The housing market overall is persistent. People tend to move infrequently, and segregation patterns are steady over time. One of the reasons Aradhya and I started collaborating is to understand the mechanisms at work, and in this research we are trying to understand why real-estate developers used covenants. Were they trying to get higher prices, because white families would pay more to live in a white neighborhood; or, regardless of profit, did the developers really believe people of different races shouldn’t live together? It’s important to understand the origins of segregation because, depending on what you learn, the policy prescriptions could be very different.

Milena Almagro is assistant professor of economics at Chicago Booth.

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