Marketplace Morning Report: Unlocking The Gates – Racial Covenants Go National

Release Date: February 13, 2025

Host: David Brancaccio

1. Introduction

In this episode of Marketplace Morning Report, host David Brancaccio delves into a compelling narrative about the pervasive racial discrimination in American housing. Titled "Unlocking The Gates: Racial Covenants Go National," the episode explores how discriminatory housing practices in Minnesota set a precedent that influenced national policies, perpetuated by affluent business owners and politicians.

2. Retail Space and Real Estate Market Overview

Before transitioning to the main feature, the episode begins with an analysis of the current retail real estate landscape in America.

• Vacancy Rates and Demand:

  • David Brancaccio introduces the topic by highlighting that only 4.1% of retail space in America is vacant, a figure at an historic low, according to a report from commercial real estate firm JLL (00:01).
  • Henry Epp elaborates on the robust demand for retail space, noting that rising rents are driven by this strong demand. However, the construction of new retail spaces remains sluggish due to high costs.

• Challenges in Retail Development:

  • Keisha Virtue from JLL explains, “Material costs, labor costs, land costs, all” contribute to the expensive nature of building new retail properties (00:38).
  • Brandon Svak of CoStar adds, “If I'm gonna have a higher return by building multifamily, by building medical office, that's where I'm going to choose to allocate my time and resources” (00:49), indicating a shift in developer priorities towards more profitable ventures.

• Impact of Store Closures:

  • Henry Epp discusses the potential increase in retail space availability due to numerous store closures from major chains like Walgreens, Party City, and Macy’s (00:57).
  • Brandon Svak attributes previous store stability to a post-pandemic consumer spending surge, which masked underlying business weaknesses (01:11).

• Retail Adaptation:

  • As consumer spending becomes more selective, Angie Solanke from Colliers observes that retailers are enhancing their operational strategies to be more adaptable, allowing for flexibility in store sizes and locations (01:35).
  • Henry Epp concludes that this adaptability may lead to the emergence of discount retailers like Five Below or Dollar General occupying spaces vacated by larger chains such as Walgreens (01:48).

3. Main Feature: Unlocking The Gates – Racial Covenants in American Housing

The core of the episode presents an in-depth investigation into the history and national expansion of racial covenants in housing, focusing on personal narratives and historical contexts.

• Personal Story and Historical Context:

  • David Brancaccio introduces Lee Hawkins, Marketplace special correspondent, who uncovers his family's experience with racial discrimination in housing. Hawkins' family secured their home in a Minnesota suburb through a clandestine real estate deal that permitted black families to purchase property during a time when such actions were fraught with hostility (02:36).

• Mapping Racial Prejudice:

  • Lee Hawkins recounts his discovery of Mapping Prejudice, an organization that identifies restrictive covenants explicitly preventing the sale of properties to people of color. 03:10.
  • Penny Peterson, co-founder of Mapping Prejudice, discusses the origins of these covenants:
    • Penny Peterson: “You gave me the name of Mr. Hughes. Interestingly, after the Hughes bought it in 1946, a guy called Richard Nelson, who was living in Maplewood, started putting covenants around it” (03:36).
    • She further explains the involvement of influential figures like Edmund G. Walton and HB Scott, a wealthy land agent, in institutionalizing these discriminatory practices through the Seven Oaks Corporation (04:03).

• Legislative and Societal Endorsement:

  • The episode highlights how these covenants were not only legally enforceable but also publicly advertised, lending them an air of legitimacy despite being violations of the 14th Amendment.
  • Thomas Frankson, former lieutenant governor of Minnesota, played a pivotal role in normalizing these covenants, particularly through developments like Como Park in Ramsey County (04:03).

• Enforcement Mechanisms:

  • Michael Corey, associate director of Mapping Prejudice, elucidates the legal enforcement of these covenants:
    • “Theoretically, you could take someone to court if they violated the covenant, and they would lose the house. The house would revert back to the original person who put the covenant in” (05:17).

• National Spread and Federal Policies:

  • Keisha Virtue explains how these discriminatory practices transitioned from local to national levels:
    • “This is the moment when these national realty boards are being formed. And so all of these people are in these rooms saying, hey, we've got this innovative technology. It's a racial covenant. And when you get to the era of the New Deal, like, these are the people who are on the boards that are, like, setting federal policy. And a lot of this stuff gets codified into federal legislation. So it starts as a private practice, becomes the official policy of the U.S. government” (05:42).

• Legacy and Continued Impact:

  • The episode underscores the enduring legacy of these covenants in shaping housing patterns and racial disparities in home ownership across the United States.

4. Conclusion and Future Outlook

David Brancaccio wraps up the episode by connecting historical injustices to contemporary efforts aimed at rectifying racial disparities in housing:

• He references the involvement of Thomas Frankson in establishing racial covenants and hints at upcoming discussions with Minnesota’s current lieutenant governor regarding modern initiatives to address these longstanding issues (06:05).
• Listeners are encouraged to access the full report, "Unlocking The Gates," which is available for streaming at marketplace.org.

Notable Quotes

• Keisha Virtue, JLL:

  • “[Material costs, labor costs, land costs, all.]” (00:38)
  • “This is the moment when these national realty boards are being formed. ... So it starts as a private practice, becomes the official policy of the U.S. government.” (05:42)

• Brandon Svak, CoStar:

  • “If I'm gonna have a higher return by building multifamily, by building medical office, that's where I'm going to choose to allocate my time and resources.” (00:49)
  • “Certain businesses that maybe had business models that were lacking or store fleets that were underperforming were able to mask that because of this large overall boost in consumption.” (01:11)

• Penny Peterson, Mapping Prejudice:

  • “It is a violation of the 14th Amendment. Let's be clear about that. But within a few years, these things are not only recorded, but Walton is advertising in the newspaper about covenants. So it's totally respectable.” (04:03)

• Angie Solanke, Colliers:

  • “I think the retailers are getting much more sophisticated on their store operations, allowing them to be more nimble in going larger or going smaller and adapting to what's available in the marketplace.” (01:35)

Key Takeaways

• Historical Foundations: Racial covenants were systematically implemented in the early 20th century to exclude people of color from certain housing markets, with significant support from influential individuals and organizations.

• Legal Enforcement: These covenants were legally binding, enabling communities to enforce segregation through the courts.

• National Policy Integration: The practices, initially local, were adopted nationally and integrated into federal housing policies during the New Deal era, perpetuating racial segregation in housing.

• Continued Impact: The legacy of these covenants continues to influence racial disparities in home ownership and economic opportunities in the United States today.

• Future Efforts: Contemporary leaders are acknowledging these historical injustices and are working towards policies that address and rectify these deep-seated disparities.

For a comprehensive understanding of the historical and ongoing impact of racial covenants in American housing, listen to the full episode of "Unlocking The Gates: Racial Covenants Go National" available on marketplace.org.