Endnotes for African American Family in Markham

20 miles south Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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11,704 Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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split-level and brick ranch Time, “A Lift in Living,” September 21, 1959, 28.

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Comparable communities listed in Time suggest that $13,000 is a reasonable estimate of the price of a house in Markham in 1960. "Blooming on the outskirts of dozens of cities are hundreds of new communities such as Park Terrace: Crestwood Forest (150 homes, $12,000-$60,000) near Atlanta; Lakeview Gardens (614 homes, $9,000-$19,000) near Memphis; Pontchartrain Park (725 homes, $14,300-$25,000) near New Orleans; Dunbar Estates' Westbury Houses (200 homes, $14,000-$20,000) in Long Island; University Park (400 homes, $11,000-$15,000) near Charlotte, N.C.; integrated (53% white, 47% Negro) Concord Park (139 homes, $12,700-$14,350) near Philadelphia." Time, "A Lift in Living," September 21, 1959, 28.

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Interstate 57 Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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400-home Time, “A Lift in Living,” September 21, 1959, 28.

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21.4% Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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map of Markham Dave Bartlett, "Markham, IL," The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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less expensive A less expensive home requires a lower down payment and lower monthly payments. For example, the FHA-required down payment on a $13,000 house in Park Terrace would be about $400 instead of the $2,600 to $4,000 required for a house in Deerfield or the $1,400 required for the average house in Park Forest. The FHA-required down payment on a home in the Eastgate subdivision of Park Forest would also be about $400, but this simulation argues that the family represented here would not be approved for a home in Eastgate because of lenders' racial attitudes. Leo Grebler, "Housing Issues in Economic Stabilization Policy," Occasional Paper 72 (Washington, D.C.: National Bureau of Economic Research, Inc. 1960). Table 16: Illustration of Minimum Down-Payment Requirements on New 1-and 2-Family Homes Bought with FHA-insured Loans, 1955-1958, 75.

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installment plan Park Terrace had a layaway system that allowed buyers to pay out the down payments as monthly installments. Frank Derrick, a postman who made $4,000 a year according to Time, was able to purchase a home by saving for the down payment on the installment plan and then getting a VA-guaranteed mortgage. Although the family in this simulation makes slightly less than Frank Derrick ($3,900 if the wife's income is included, about $3,300 if it is not), I argue that it is plausible to suggest that they could buy a home in Park Terrace when the racial character of the suburb is also considered. Time observed that African Americans often had to pay higher interest rates (1 to 2 percent) on mortgages than whites did, but also that "mortgage companies are beginning to realize that steadily employed Negroes are a good risk." Time, "A Lift in Living," September 21, 1959, 28.

The caveat to this, of course, was that steadily employed African Americans were a good risk if the loan was on a low-to-medium priced house in an area that had either peacefully integrated or was in transition to all-African American. Deerfield and Park Forest did not meet these criteria, but Markham did.

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many Negroes In 1960, 21.4% of Markham's population was African American. Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved on June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

Falling property values were often the result of a self-fulfilling prophecy as white homeowners, seeking to avoid perceived "influxes" of African Americans, increased the supply (and decreased the price) of housing in the area. Many lenders indicated that they would only lend to African Americans within an established African American neighborhood, or one that was in transition from white to African American. Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 224-226.

Concern for public relations also prevented lenders from making loans in areas that were not transitioning from white to African American. A banker from Cleveland was quoted in The Cleveland Press on September 8, 1956: "We do not finance the first Negro purchaser in a white area for public relations reasons. White resentment in the area would be great, probably resulting in account cancellations and discontinuance of other business. However, we do not insist that neighborhoods be 50 percent colored, or insist on any arbitrary statistical line before lending to Negro applicants. Depends on circumstances." Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 225

Park Terrace was an established African American neighborhood in Markham, making it likely that lenders would be willing to lend on homes in the area to reasonably qualified applicants.

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blighted area "Mortgage-lender policies tend to discourage minority homeseekers from competing in the general market while encouraging them to concentrate their purchases in the areas of good-quality housing that have become open to minority residence...Mortgage loans on existing houses seem to be generally available to nonwhites who can meet customary credit standards and whose properties are situated in areas that are not blighted, and are considered open to minority groups." Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 236; 313..

Lenders did not want to approve loans on slum properties with little value. They preferred areas that were affordable for African Americans but also of decent quality and well-maintained. Markham's Park Terrace subdivision qualified as having both good-quality housing and being open to minorities. The overall risk to lenders of loaning to the African American family in this situation would be much less in Park Terrace than in Deerfield or Park Forest, suggesting that this family had a reasonably good chance of purchasing a home in Park Terrace.

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Milton Lewis Milton Lewis was a sales manager in Park Terrace in 1959. Time, "A Lift in Living," September 21, 1959, 28.

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Frank This is not a direct quote from Milton Lewis, although portions of it are direct quotes attributed to him by Time in "A Lift in Living," September 21, 1959, 28. I have constructed the quote to fit the narrative, but the content is substantially the same as given in the source. "To the 400-home subdivision of Park Terrace in Markham last week drove a young, house-hunting couple. They cruised for a while, stopped off at the sales office, asked Sales Manager Milton Lewis to take them through the model homes. 'Certainly,' said Lewis, 'Of course, you folks are aware that Park Terrace is a Negro development.' They were not. 'They just stared at me,' says Salesman Lewis. 'They couldn't believe their ears.' The couple examined the model homes, walked through the neighborhood. Said the husband: 'I never dreamed that Negroes could live so well around Chicago. I always pictured them as living in slums.'"

Frank Derrick was a real homeowner in Park Terrace. The image on this page was taken from the same article that featured Frank Derrick as a homewner in Park Terrace, but it is not certain that the man on the lawn and the woman in the doorway are the Derricks. The simulation has Frank Derrick working on his lawn because the article reports that the Derricks had "a Zoysia grass lawn that is the envy of their neighbors." Time "A Lift in Living," September 21, 1959, 28.

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Markham Park Terrace Image scanned from Time, "A Lift in Living," September 21, 1959, 28. Although the image was included in the article that featured Frank Derrick as a homeowner in Park Terrace, it is not certain that the man on the lawn and the woman in the doorway are the Derricks.

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$20 $20 in 2004 dollars is $127.64. NASA, Consumer Price Index Inflation Calculator, http://www1.jsc.nasa.gov/bu2/inflateCPI.html

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block This is not a direct quote from Frank Derrick, although the content of it is taken from Time, "A Lift in Living," September 21, 1959, 28. "Postman Frank Derrick ($4,000 a year) lived on Chicago's South Side, decided to move to suburban Park Terrace. Says his wife Geraldene: 'We didn't have a down payment. But Frank was determined. He took out a $20 bill and anded it to the salesman and said, 'This is to show that I mean business.' We started to save for the down payment on the budget plan and finally got a G.I. mortgage.' The Derricks now have a brick, three-bedroom ranch house with two TV sets, an air conditioner, piano, a dog, two birds, a 1953 Chrysler, and a Zoysia grass lawn that is the envy of their neighbors. 'You know, a lot of Negroes never think too much about their houses and their lawns in the city,' says Mrs. Derrick. 'But when they come out here they really put all of themselves into their homes. It lifts them up.'"

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mortgage The family in this simulation would most likely be approved for a conventional mortgage at a higher interest rate than a government-underwritten mortgage.

The median family income of nonwhite families with FHA loans in 1956 was $5,319. $5,319 in 1960 dollars is $5,787. Even with the inclusion of the wife's income, the African American family in this simulation makes almost $2,000 less than this amount, making it unlikely that they would be able to secure an FHA loan. Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 220; NASA, Consumer Price Index Inflation Calculator, http://www1.jsc.nasa.gov/bu2/inflateCPI.html

Although the low interest rates associated with VA and FHA loans benefited borrowers, the higher interest rates on conventional mortgages benefited lenders, making them more attractive to them. Saul B. Klaman explains, “in the face of generally rising interest rates and yields, federally underwritten mortgages with less flexible rates became unattractive to investors with alternative uses of funds.” Federally underwritten mortgages suffered a competitive interest rate disadvantage compared to conventional mortgages. The FHA was legally able to increase the permitted maximum interest rate on FHA loans to make them more competitive with conventional loans (as it did for example in December of 1956 when it increased the interest rate from 4 ½ to 5 per cent. However, the VA had no authority to increase the interest rate on VA loans, which was at 4 ½ percent as 1956 ended. Federally-underwritten mortgages, although advantageous to borrowers, could be difficult to obtain depending on the status of the market at any given time. See Saul B. Klaman, The Postwar Residential Mortgage Market: A Study by the National Bureau of Economic Research (Princeton: Princeton University Press, 1961), 63 and 73.

The median family income of nonwhite families with conventional mortgages in 1956 was $3,835. $3,835 in 1960 dollars is $4,172.48. If the wife's income were included in this simulation, the family would make close to the median ($3,900). The wife's income is not included; however, the lower cost of houses in and the racial composition of Park Terrace suggest that lenders would consider an income of $3,300 sufficient to qualify for a mortgage. Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 220; NASA, Consumer Price Index Inflation Calculator, http://www1.jsc.nasa.gov/bu2/inflateCPI.html

Frank Derrick was able to purchase a home in Park Terrace with a slightly higher income ($4,000) than the family in this simulation. Time, "A Lift in Living," September 21, 1959, 28.

The median family income of nonwhite families with no mortgages in 1956 was $2,238. $2,238 in 1960 dollars is $2,435. Families without mortgages could usually only afford the least expensive housing available, which was typically overcrowded and often in slum areas. Davis McEntire, Residence and Race: Final and Comprehensive Report to the Commission on Race and Housing (Berkeley: University of California Press, 1960), 220; NASA, Consumer Price Index Inflation Calculator, http://www1.jsc.nasa.gov/bu2/inflateCPI.html

The African American family in this simulation has an income between the median for a conventional mortgage and no mortgage. In an area where many African Americans already lived and where relatively inexpensive housing could be found--such as Markham's Park Terrace--it is feasible to suggest that this family might be approved for a conventional mortgage at a higher interest rate than a government-underwritten mortgage. Time ("A Lift in Living," September 21, 1959, 28) observed that although "Negro mortgage money is often a stiff 1% or 2% more than for whites...mortgage companies are beginning to realize that steadily employed Negroes are a good risk." The caveat to this, of course, was that steadily employed African Americans were a good risk if the loan was on a low-to-medium priced house in an area that had either peacefully integrated or was in transition to all-African American. Deerfield and Park Forest did not meet these criteria, but Markham did.

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stable With 21.4% of its population African American by 1960, Markham was not in the same situation as Deerfield or Park Forest, where lenders were waiting to see if homeowners would panic sell in response to an "influx" of African Americans. If panic selling had occurred when African Americans first moved into Markham, lenders could be assured by 1960 that property values had stabilized. Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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upset Unlike Deerfield or Park Forest, lenders would have to be less concerned about public relations in Markham. The 78.4% of whites who lived in Markham in 1960 were accustomed to the fact that African Americans lived in their community. They were very unlikely to challenge the entry of another African American into the area. Dave Bartlett, “Markham, IL,” The Electronic Encyclopedia of Chicago (Chicago Historical Society, 2005), retrieved June 26, 2006, from http://www.encyclopedia.chicagohistory.org/pages/789.html

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