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In 1989, Secretary of Housing and Urban Development (HUD) Jack Kemp was in full boosterism mode. Speaking at a national housing convention shortly after his swearing in, Kemp, a former US representative and NFL quarterback, sung the praises of programs that allowed public housing tenants to purchase their buildings and become homeowners. For Kemp, these “urban homesteaders,” mostly low-income black women, proved that “poor folks can become managers, producers, entrepreneurs . . . if only government helps clear obstacles.” Homeownership transformed welfare recipients into workers and taxpayers by harnessing “the greatest engine of growth ever devised — entrepreneurial free enterprise.” HUD’s small-scale experiments in resident ownership, Kemp insisted, represented “one of the most dynamic movements in America since Rosa Parks moved to the front of the bus and helped launch a crusade.” After all, “equal access to homeownership was what the American dream was all about.” If Kemp was particularly rapturous in his praise, he wasn’t alone in imbuing homeownership with an alchemical power. For more than forty years, supporters in both major parties have offered homeownership as a solution to the myriad problems facing low-income families. More individual private housing, not affordable public housing, has long been cast as the way to attack poverty. Yet with the retrenchment of public housing funding, these families were exposed to the kinds of predatory lending practices that tanked the housing market in 2008. Now, the last vestiges of federal low-income housing assistance are on the chopping block. Donald Trump’s proposed budget slashes nearly $2 billion from public housing, eliminates the $3 billion Community Development Block Grant, and cuts low-income housing vouchers by at least $300 billion. Meanwhile, Jeb Hensarling, Republican chair of the House Financial Services Committee, is proposing substantial cuts in the Federal Housing Administration’s low-income homeownership programs. While these proposals reflect the far-right takeover of the Republican Party, they are also the culmination of a decades-long, bipartisan reorientation of federal housing policy that has left unfulfilled the promise of the 1949 Housing Act: “a decent home and a suitable living environment for every American family.”

The Rise of Urban Homesteading In the two decades after World War II, as white working- and middle-class families reaped the benefits of federal housing policies and moved into single-family homes en masse, African-American families were essentially shut out. Some purchased homes the only way they could, through highly exploitive contract deeds. Others relied on a discriminatory rental market. The poorest turned to federally funded public housing. This racial bifurcation had far-reaching effects, engendering urban disinvestment, residential segregation by race and income, a vast and self-perpetuating racial wealth gap, and a homeowner political identity that prevented effective redress. By the 1960s, the Black Freedom Movement’s demands for fair housing legislation and vast federal investment in low-income urban neighborhoods had reached a fever pitch. Yet liberal policymakers proved unwilling and unable to offer a substantive remedy. It was only after urban rebellions rocked cities throughout the country that federal officials took action. In 1968, Congress created several new Federal Housing Authority (FHA) programs to extend homeownership in neighborhoods that had long been “redlined” by lenders and insurance agencies. The new programs lured investors with interest rate subsidies and a full guarantee against losses, creating a system ripe for abuse. Contractors, realtors, and federal officials made windfall profits by repeatedly turning over shoddily rehabbed houses to aspiring homeowners. HUD was left holding tens of thousands of abandoned units, winning the label “nation’s largest slumlord.” But HUD wasn’t alone. By the early 1970s, the problem of housing abandonment was rampant. One expert estimated that there were nine million abandoned units nationwide at the end of 1973. That same year, officials in Philadelphia and Wilmington, Delaware launched what would become a second federal experiment in low-income homeownership: urban homesteading. For a nominal fee, municipal governments began offering city-owned abandoned properties to applicants in exchange for a commitment to rehabilitate and reside in the property for a specified length of time, usually three to five years. Dozens of cities adopted the concept, and in 1978 Congress authorized HUD to contribute federally owned properties to local homesteading programs. By 1986, homesteaders nationwide had won the title to ten thousand properties, most of them single-family houses. Initially, urban homesteading was introduced as a way to revitalize declining neighborhoods and restore property to city tax rolls, not boost low-income homeownership. Operating under the logic of American real estate, revitalization required reversing white flight by attracting middle-class and affluent white suburbanites back into the city. Boosters in government and the media used arresting language to describe the effort, cheering homesteaders who signed on to “resettle our new frontier — the inner city” and “carve . . . communities out of the urban wilderness.” In Wilmington, DuPont lawyer Daniel Frawley emerged as the program’s poster boy. Business Week described him as “tall, lean, and blond,” someone who “fit the image of the hardy pioneers who settled the west more than a century ago.” When Delaware senator Joe Biden introduced federal homesteading legislation, he celebrated Wilmington’s impending gentrification, characterizing homesteaders as “people like my classmates from law school, young married couples who are willing to come back into the city, and middle class suburbanite types who are coming back in, and they are going to build it back up.” The implication was that poor, black residents — rather than public and private disinvestment — had caused urban decline. Wilmington’s liberal white mayor, Thomas Maloney, touted homesteading as a way to “get people back into these neighborhoods who are concerned about clean streets and good schools.” He may have been referring to the absentee landlords and speculators whose profits derived from renting poorly maintained housing to low-income residents. But another possible target — the residents themselves — is just as likely, given the broader discourse around homesteading. As a practical matter, homesteading was beyond the reach of most low-income families. Average rehabilitation costs in Philadelphia, for example, ran between $12,000 and 14,000 ($50,000 to 60,000 in 2016 dollars). Despite a variety of support services, including low-interest loan funds and technical assistance, a 1983 program evaluation found that most homesteaders earned close to or above median income. The few policymakers who sought to make homesteading available to low-income families pitched homeownership as a means to rehabilitate the poor. Homeownership epitomized “our most prized national characteristics — the spirit of self-help [and] individual enterprise,” one official said. Homesteading might spark those characteristics among low-income urbanites, another opined, “mak[ing] it possible for the poor once again to become self-sufficient members of society.” And while local administrators preferred to hire professional tradespeople to complete renovations, elected officials insisted that the hard physical labor required of low-income homesteaders — their so-called “sweat equity” — was an essential component of homesteading’s rehabilitative potential.

Victories From Below Low-income activists put forward a more radical vision of homesteading. In 1978, members of the North Philadelphia Block Development Corporation launched a “walk-in homesteading” program — a euphemism for squatting. A few hundred members occupied HUD-owned houses, sat in at HUD’s regional office, and confronted HUD secretary Patricia Harris in Washington. Their confrontational actions secured program reforms that made low-income homesteading more feasible. Galvanized by NPBC’s success, the Association of Community Organizations for Reform Now (ACORN) took the squatting campaign nationwide, organizing actions in a dozen cities and putting up a tent city behind the White House. In a 1982 congressional hearing, ACORN squatters portrayed themselves as “the very backbone and guts of this nation,” the “silent majority of low- and moderate-income people.” They contrasted the meager resources dedicated to homesteading with the vast FHA and income tax subsidies for homeowners. They rejected the logic of gentrification and insisted that poor urban residents could themselves create urban revitalization if provided the proper tools. Squatting campaigns sometimes paid off. ACORN’s efforts yielded federal reforms that facilitated low-income homesteading. Activists in several cities won new or improved homesteading programs. In New York, ACORN squatters formed a Mutual Housing Association and used city grants and foundation funding to turn more than fifty buildings into cooperatively owned affordable housing. ACORN also participated in a broad grassroots alliance, National People’s Action, that helped push through the federal Community Reinvestment Act (CRA) in 1977. The CRA required banks to invest in underserved communities, including with mortgage funding. A report from the Harvard Joint Center for Housing Studies found that by 2008, the CRA had spurred more than a trillion dollars of bank lending to resource-starved families and communities.

Neoliberalism Ascendant Urban homesteading and the CRA enabled some low-income families to own their own homes. But the programs did not fundamentally challenge the logic of the housing market. With the status quo intact, the discourse of low-income homeownership and homesteading was readily enlisted in the emerging neoliberal campaign to dismantle public housing and deregulate financial markets. In the 1980s, free-market evangelists from the Heritage Foundation, the American Enterprise Institute, and the National Center for Neighborhood Enterprise seized on the idea of urban homesteading to advocate privatization. Jack Kemp, first in Congress and then as George H. W. Bush’s HUD secretary, celebrated the potential of homeownership to end the “culture of poverty.” While public housing “discourages work and saving,” Kemp argued, homeownership “encourages stable and intact families, creates a longer outlook on life and the future, and gives the poor new reasons to work and save.” Kemp and other privatizers hailed experiments in resident ownership of public housing. They cited tenant leaders like Kimi Gray of St Louis and Bertha Gilkey of Washington, DC as proof that homeownership could give low-income residents “a real stake in the free enterprise system.” Like other austerity and privatization schemes, resident ownership of public housing was also touted as a civil rights measure. Representative Dick Armey included homesteading, along with enterprise zones and school vouchers, in his Minority Opportunity Restoration Act. Texas congressman Steve Bartlett insisted that low-income families “ought to have a right to buy their own homes . . . just like other people in this country.” When some Democrats proposed limiting resale of privatized public housing units, an effort to ensure that they remained affordable, Kemp responded: “Isn’t it time we give poor people the same access to wealth and financial security and a stake in our democratic capitalist system — that we want for our children and our families?” That access would further dwindle in the coming years as privatization continued apace. Bill Clinton’s urban agenda prioritized “increasing access to capital among low income and minority communities” through deregulation and public subsidies to private investors. Promising an “ownership society,” the Bush administration opened the door even wider to deregulated investment. To make matters worse, Congress and HUD simultaneously encouraged the demolition and private redevelopment of public housing. By 2008, urban policy scholar Edward Goetz estimated that more than 220,000 public housing units had been torn down and thousands more had been sold or converted to other uses. Rather than gaining ownership (or moving into decent new public housing), former tenants faced displacement. Federal low-income housing assistance shifted to Section 8 housing vouchers, which subsidized low-income families seeking shelter in an inadequate and increasingly expensive private rental market. Meanwhile, the celebration of homeownership conspired with rampant deregulation to fuel predatory lending and the subprime mortgage crisis of 2008. Perversely, critics attacked ACORN and the Community Reinvestment Act for allegedly encouraging risky loans to low-income homebuyers. Yet as then–President and CEO of the Federal Reserve Bank of San Francisco Janet Yellen found, the CRA had actually “increased the volume of responsible lending to low- and moderate-income households.” Even in the wake of the Financial Services Modernization Act of 1999, which cleared the way for predatory lending, low-income buyers who participated in ACORN’s homeowner counseling program had a 0.035 percent foreclosure rate, compared to a staggering 13 percent for all subprime borrowers. And ACORN was one of the earliest and most persistent critics of financial deregulation and predatory practices, sounding the alarm and organizing struggling homeowners to fight back long before political elites woke up to the dangers. Just as poor residents had been blamed for the policy failures of public housing in the 1970s and 1980s, low-income homeowners — the canaries in the coal mine — were blamed for the policy failures that torpedoed the nation’s housing market in the twenty-first century.