The Ghosts of the HOA: Racially Restrictive Covenants, the Fair Housing Act of 1968, and Modern Economic Disadvantages

If you’ve ever lived in a neighborhood with a Homeowners Association (HOA), you’ve likely encountered rules about everything from mailbox colors to the height of your grass. But beneath these seemingly trivial regulations lies a history far more sinister—one rooted in segregation, exclusion, and economic disparity.

Racially Restrictive Covenants: The Blueprint for Segregation

In the early 20th century, as cities expanded and suburbanization took off, developers and homeowners created racially restrictive covenants—clauses in property deeds that explicitly barred nonwhite people, particularly Black Americans, from buying or renting homes in certain neighborhoods. These legal agreements, often enforced by HOAs, were a direct response to the Great Migration, during which millions of Black Americans left the Jim Crow South in search of economic opportunities in northern and western cities.

A typical covenant might read: "No person of any race other than the Caucasian race shall use or occupy any building on the premises, except that domestic servants of a different race may reside in quarters designated for their use."

These covenants weren’t just social preferences—they were powerful tools of systemic exclusion, preventing Black families from accumulating wealth through homeownership. They reinforced racial segregation and contributed to economic disparities that persist today. Even after the Supreme Court ruled them unenforceable in Shelley v. Kraemer (1948), many neighborhoods found other ways to maintain racial homogeneity, from informal agreements to outright violence and intimidation.

The Fair Housing Act of 1968: Progress and Its Limits

In the wake of the Civil Rights Movement and just days after the assassination of Dr. Martin Luther King Jr., the Fair Housing Act of 1968 was passed as part of the Civil Rights Act. This landmark legislation made it illegal to discriminate in housing based on race, color, religion, sex, or national origin. In theory, this was supposed to dismantle the legacy of restrictive covenants and open doors to homeownership for Black Americans.

But policy on paper does not always translate to equity in practice.

Modern Parallels: The New Barriers to Homeownership

While no one is outright writing "no Black people allowed" into housing contracts anymore, the effects of historical housing discrimination still echo through modern economic disadvantages. Let’s break down some of the modern-day barriers that serve as the new racially restrictive covenants:

1. HOA Policies & Gentrification – While HOAs no longer enforce racial exclusion directly, their power to set high fees, enforce arbitrary rules, and impose fines disproportionately affects lower-income homeowners—many of whom are Black and Latino. In gentrifying neighborhoods, HOAs can price out long-time residents by increasing costs under the guise of "neighborhood improvement."

2. Predatory Lending & Redlining 2.0 – Although redlining was officially banned, banks and lenders continue to disproportionately deny mortgages to Black and brown borrowers or charge them higher interest rates. Even with similar credit scores and incomes, Black homebuyers face higher barriers to homeownership, making it harder to build generational wealth.

3. Property Tax Disparities – Black homeowners often pay higher property taxes than their white counterparts due to biased property assessments. Higher taxes, combined with HOA fees, create financial burdens that can push families out of their homes.

4. Evictions & Housing Instability – The COVID-19 pandemic laid bare the stark economic inequalities in housing security. Black and Latino renters were more likely to face eviction, mirroring the same systemic forces that kept previous generations locked out of homeownership.

While we no longer see "Whites Only" signs in neighborhoods, economic barriers continue to function as the new face of housing discrimination. The ghosts of racially restrictive covenants still linger, shaping the financial landscape for Black Americans today. The challenge now is recognizing these modern-day obstacles for what they are—and dismantling them, brick by brick.

Because a home should be a place of stability, not a battleground for economic survival.