No place has played a more important role in creating segregation than Los Angeles. With its fast-growing neighborhoods and enormous real estate industry, the city shaped the divided neighborhoods and political arguments that drive America today.
The reason has a lot to do with California. Residential segregation is not natural, normal, or historical. It was an early 20th century marketing invention by realtors, a way to sell homes. Like many American innovations, it first blossomed in California.
There were no racially segregated neighborhoods in American cities at the beginning of the 20th century. JB Loving, a black real estate agent in Los Angeles, proudly reported in 1904: “The negroes of this town” did not “break up into any town, they scattered and bought houses” in the best neighborhoods. Japanese and Mexican-American residents were also dispersed into many areas.
Where you could live, in LA and in cities nationally, depended on where you could afford life – not your ancestry.
In 1917, an African American resident described a very different Los Angeles due to racial restrictive alliances: “We were surrounded by invisible steel walls. The whites surrounded us and made it impossible for us to get beyond these walls. “
Power was at the center of this change. Newly formed, all-white real estate management companies, including the Los Angeles Realty Board, the largest in the country, organized the industry and controlled the vast majority of property sales. It took a cartel whose members were protected as “realtors” to control whose money could buy a house – to restrict America’s free market.
In 1905, pioneering real estate agents in Berkeley and Kansas City, Missouri began entering into racial agreements to sell home land in high-end subdivisions, but LA soon became the national leader in applying such deed restrictions. Covenants were immediately marketed on luxury developments: the Beverly Crest subdivision was advertised as “permanently restricted … for certain people”; similar language was used for Beverly Hills, Hillhurst Park, and Bel-Air.
Civil subdivisions quickly followed. Harry Culver, who was to become the national brokerage president, carved Culver City out of a 200 acre field of barley. Twenty blocks south of Exposition Park, a vice president of the Los Angeles Realty Board imposed permanent “iron racing restrictions.”
Racist restrictions soon seeped into working class subdivisions in the region. Eastmont, City Terrace, St. Francis Wing in Highland Park, and the new town of Torrance promoted “permanent race restrictions” to help “the working man.”
In 1913, racial restrictions were so widespread, lamented the Los Angeles Housing Commission, that Mexican Americans could only get an apartment if “restrictions were not placed on every new piece of land sold.” Here was a strange new kind of American town.
To ensure such agreements could be enforced, the LA Realty Board funded the case, which set a national precedent in 1919 when the California Supreme Court ruled that an African American could buy a contracted home but not live in it.
This decision opened the floodgates. In the early 1920s, when the city’s biggest building boom began – 1,400 subdivisions added in two years – race restrictions were the norm.
As the fastest growing market in the country, LA became a role model – not only for restricting individual districts, but also for completely new suburbs. Realtors have conspired with local officials to make arrangements for all subdivisions in Glendale so that only one African American owns property there. Advertisements in the Los Angeles Times of 1925 boasted that “the people of Eagle Rock are all white races.”
Equally devastating for minorities, realtors began recording contracts for existing homes as well. In Pasadena, where African Americans had lived for generations, real estate agents launched petitions for racial restrictions that would take effect once 75% of owners signed up. This “Bundplan” became the standard in existing neighborhoods nationwide.
People of color, who were practically excluded from 95% of the apartments, had to pay 20% more for the same quality unit in the cities across the country. By the 1920s, the “invisible walls” of America’s racial ghettos were well established.
When realtor officials drafted the Federal Housing Administration’s racial policies during the Depression – helping run the FHA and create their then-secret red-lining cards – they institutionalized the racial segregations that realtors had already created.
When the US Supreme Court unanimously ruled in the Shelley vs. Kraemer case in 1948 that the judicial enforcement of racial alliances violated the 14th Amendment, brokers were threatened like never before. The LA Realty Board immediately proposed a constitutional amendment that would repeal the 14th Amendment. It would “reassure negroes that they enjoy areas restricted to occupation of their race”. In the same year South Africa introduced apartheid.
Following the advice of their attorneys, Realtors ceased pursuing the change and turned to calmer means to continue the apartheid. The Supreme Court had not ruled alliances illegal, only courts would not enforce them. The developers have therefore made hundreds of thousands of new agreements to threaten minority buyers, including in the new suburb of Lakewood, which had a population of 67,000 in 1960 – and only seven black residents.
The most common way real estate agents kept their neighborhoods all white was through “racial steering” – lying to minority buyers that a home had just been sold and banned or banned any agent who sold to a minority him out of business. This was so successful that the San Fernando Valley Fair Housing Council knew of only one black family who could find a home in the white neighborhoods that dominated the Valley between 1950 and 1960.
Half of all brokers worked in California by the mid-20th century, and these methods were national standards.
It was hardly surprising, therefore, when civil rights activists – frustrated that segregation had only increased after the 1948 Supreme Court ruling – pushed for state and local fair living laws to end this organized discrimination. When California passed the Rumford Fair Housing Act in 1963, which banned housing discrimination based on race or ethnicity, realtors were on the defensive.
The argument that brokers invented to maintain segregation has driven American politics ever since.
In 1964, at the height of the civil rights movement, brokers were politically isolated when they urged voters to approve a California constitutional amendment, Proposition 14, to permanently protect residence discrimination. No prominent politician, not even the Conservatives Barry Goldwater or Ronald Reagan, would support them for fear of appearing racist. In order to perpetuate discrimination, Realtors developed a new idea of American freedom.
By naming the owner’s right to discriminate against “freedom of choice” and linking it to freedom of conscience and religion, brokers elevated that single narrow right to an absolute right regardless of the rights of buyers or tenants. In supporting Proposition 14, you assured the electorate, it did not mean that you were biased, but that you believed in individual freedom. Brokers invented color-blind freedom.
White Californians voted overwhelmingly in favor of the broker’s proposal in November 1964, on the same ballot that Lyndon Johnson used to crush Goldwater in the presidential race. So overwhelming was the victory that even after Proposition 14 was ruled unconstitutional, Reagan made the brokers’ message his own. The brokers’ use of the libertarian language of individual freedom to maintain social conformity has united the Conservatives ever since.
America is still influenced by this idea of freedom today. When the federal fair housing law was finally passed in 1968, it was dramatically weakened by the shadow of Proposition 14. Racial segregation has continued informally, but almost as strongly. Only strong government action could have overcome the legacy of racially exclusive suburbs and organized prejudices. But the popularity of their redefinition of freedom has long prevented such actions.
Brokers’ idea of freedom as a personal right without regard to the rights of others has helped polarize debates about guns and fueled discussions about face masks and vaccinations during the pandemic.
“Freedom of choice,” proclaimed by brokers on billboards on Los Angeles freeways half a century ago, now divides America.
Gene Slater is the author of the forthcoming Freedom to Discrimination: How Realtors Conspired to Segregate Housing and Divide America. He is co-founder and chairman of CSG Advisors, which advises public institutions on affordable housing.