1920s-1950s Appraisal Views on Racial Effects on Value

The following titles and descriptions are derived from Rose Helper, Racial Policies and Practices of Real Estate Brokers (Minneapolis: University of Minnesota Press, 1969), Chapter VII: The Real Estate Board, Part I. The page numbers shown are those given by Helper in the books from which she is quoting.

  1. Stanley L. McMichael & Robert F. Bingham, City Growth & Values (Cleveland: Stanley McMichael Publishing Organization, 1923) (carries an 'Endorsement,' signed by Herbert U. Nelson, Executive Secretary, NAREB, dated Chicago, Ill, Oct. 15, 1923.')
  2. Stanley L. McMichael & Robert F. Bingham, City Growth Essentials (Cleveland: Stanley McMichael Publishing Organization, 1928)
  3. Stanley L. McMichael, Appraising Manual (New York: Prentice-Hall, 1931; 2nd ed., McMichael's Appraising Manual, 1937; 3rd edl, 1944; 4th ed., 1951).
  4. Frederick M. Babcock, The Valuation of Real Estate (New York: McGraw, 1932)
    1. Helper says that Babcock "is credited with providing the mortgage risk rating grid for neighborhood analysis in the Underwriting Manual of the Federal Housing Administration." (Helper, 202)
    2. See Chapter VII, "Influence of Social and Racial Factors on Value":
      1. "Among the traits and characteristics of people which influence land values, racial heritage and tendencies seem to be of paramount importance. The aspirations, energies, and abilities of various groups in the composition of the population will determine the extent to which they develop the potential value of the land." (Babcock, 86)
      2. "Most of the variations and differences between people are slight and value declines are, as a result, gradual. But there is one difference in people, namely race, which can result in a very rapid decline. Usually such declines can be partially avoided by segregation and this device has always been in common usage in the South where white and negro populations have been separated." (Babcock, 91)
  5. Homer Hoyt, One Hundred Years of Land Values in Chicago (Chicago: University of Chicago Press, 1933)
  6. Arthur M. Weimer and Homer Hoyt, Principles of Urban Real Estate (New York: Ronald Press, 1939; 2nd ed., 1948; 3rd ed., 1954.
    1. "In the 1939 edition, the authors, discussing new and old residential neighborhoods, speak of restrictions against the sale and occupancy of property by 'persons other than of the Caucasian race' and call the clause on race in restrictive agreements a 'very common' one." The section in which these statements appear, 'Other Forms of Private Regulation,' is repeated in the next two editions with a few changes in wording. (Weimer & Hoyt, 286-287; Weimer & Hoyt, 2nd ed., 198; Weimer & Hoyt, 3rd ed., 315.) In the 1948 edition under 'Types of Deed Restrictions,' the reference to limitation of occupancy to Caucasians only of the 1939 edition has been changed to 'a restriction may prohibit certain groups of persons'; however, a footnote refers to limitation of occupancy to Caucasians, and a second footnote suggests that the Supreme Court decision about the legal unenforceability of the racial restrictive covenant can be circumvented by the device of private clubs." (Weimer & Hoyt, 2nd ed., 196-197.)
    2. "When the authors discuss causes of change in neighborhoods, their meaning becomes clearer. They state that 'the migration of families with certain readily distinguishable national, racial, or religious characteristics frequently stimulates the outmigration of previous residents in the area.(Weimer & Hoyt, 3rd ed., 370) The authors proceed to discuss neighborhood stability: 'Suburbs at a sufficient distance from the transition of uses or of inharmonious groups maintain a high character for very long periods of time, if not indefinitely. . . ." (Weimer & Hoyt, 3rd, ed., 371)
    3. "Since their book is a school text, there are questions at the end of each chapter for students to answer. At the end of Chapter VII of the second edition (1948), Question 5 asks 'In which of the following neighborhoods would you prefer to invest?' and describes various differences between the two neighborhoods. For example, for Neighborhood A, 'The area is zoned for single-family residences. No deed restrictions are in force.' For Neighborhood B, 'Deed restrictions have been established controlling the types of houses which may be built and restricting occupancy to members of the Caucasian race.'" (Weimer & Hoyt, 2nd, ed., 140)
  7. Arthur May ("former dean of the American Institute of Real Estate Appraisers"), Valuation of Residential Real Estate (New York: Prentice-Hall, 1942)
    1. "May explains that the essential criterion of the neighborhood is the residents' homogeneity in income level, race and ethnic background, and, to some extent, religion.' (May, 89; 2nd ed., 86) He states unequivocally that homogeneity of the neighborhood and stability of property values go hand in hand and that the mere threat of Negro entry had caused a drop of 25 per cent in an all-white neighborhood in some cities." (May, 1st ed., 90)
    2. "In discussing depreciation, he defines economic obsolescence as loss in value arising from decrease in owner-occupancy appeal and consequent lack of demand. He attributes this lack to six factors, the fourth being 'proximity to nuisances.' It is followed immediately by 'infiltration of minority racial or nationalistic groups.'(May, 1st ed., 145-146) He then develops more fully the idea that property values declien as a result of such infiltration when he says, 'The encroachment of the antipathetic racial or nationalistic group brings with it, first, the threat and, ultimately, the effect of decreased values.' (May, 1st ed., 147)
  8. Stanley L. McMichael, Real Estate Subdivisions (New York: Prentice-Hall, 1949)
    1. "One chapter of McMichael's Real Estate Subdivisions (1949) is devoted to racial restrictions in subdivisions. He asks, 'Can a subdivider of land so restrict sales of his lots that he can prevent, legally, the occupancy of such by non-Caucasians?' After pointing out that the entry of non-Caucasians into districts 'where distinctly Caucasian residents live' tends to depress real estate values, and that a remedy is necessary to protect 'the interests of subdividers, as well as the owners of property in selective sections of our great cities,' he proceeds to list eight suggestions 'to soften the impact of the blow that racial restrictions have received' from the Supreme Court decision of May 3, 1948. He speaks of 'ethical control' by subdividers and real estate brokers and points to the Code of Ethics by which members of NAREB are governed, quoting Article 34 in full.'" (212) He concludes the chapter with an endorsement of racial residential segregation as a protection of neighborhood homogeneity and harmony, hence of neighborhood and property desirability, and hence of real estate value. Quoting 'a student of the effects of various groups on real estate values,' he continues with the assumption that 'racial segregations are often advisable because persons of the same race have a tendency to possess similar tastes, traits and tendencies which encourage the harmonious relationships so important in making a neighborhood a desirable palce in which to live.'" (Helper, 212)
  9. James Downs, Principles of Real Estate Management (Chicago: Institute of Real Estate Management, 1950).
  10. Philip A. Benson, Nelson L. North, and Alfred A. Ring, Real Estate Principles and Practices, 4th ed., New York: Prentice-Hall, 1954.

This WWW page was created by Wendy Plotkin (wendy.plotkin@asu.edu) in 1998 and updated on 1 September 2003.