This is part two in our series which attempts to examine one of the most pernicious of all social myths: that property values in a white neighborhood automatically have to go down when Blacks move in.

What really happens, as study after study has shown, is that houses usually go up in price at least as fast in racially mixed areas as in areas where almost everybody is white.

Nevertheless, the belief that the opposite is true nourishes a potent force in keeping the number of integrated middle-income neighborhood still relatively small.

Continuing the article “It Pays to Stay When Blacks Move In” (MONEY magazine, November 1973), we find: Real estate agents have historically seen themselves as guardians of what they conceive to be community standards. From 1924 until 1950 the code of ethics of the national Association of Realtors warned members that they “should never be instrumental in introducing into a neighborhood…members of any race or nationality …whose presence will clearly be detrimental to property values.” The Fair Housing Act of 1968, landmark legislation prohibiting real estate against from discriminating against prospective house buyers, has caused the realtors to change their stance. The association now has its own equal opportunity committee. But old habits resist change. A report called “Segregation in Residential Areas,” published this year by the National Academy of Sciences, notes “evidence that the brokers have continued their screening responsibilities, but with greater care in order not to be caught.”

Terry McGinnity got caught. Last November McGinnity, who runs a real estate office with his father in southwest Philadelphia, refused to let a Black woman see a townhouse priced at $23,900 in a white neighborhood. “It is pretty much fundamental that whites want to live with whites.” McGinnity told me, and showing the house to a Black prospect “would have been extremely upsetting to the people in that community.” In 1971 an essay written by McGinnity on America’s moral values earned him an invitation to the White House and praise from Vice President Agnew. Six months ago in municipal court McGinnity was fined $800 on charges of discrimination in housing. “In retrospect I think I did the moral thing if not the legal thing,” he says.

White homeowners’ fears are still being fed by an old sales scheme called blockbusting. A blockbusting real estate agent solicits sales by warning white owners that Blacks will soon move into their neighborhood; houses not sold right away will plummet in price, the agent asserts. In panic, owners accept unnecessarily low prices from the agent, who promptly resells the houses – usually at inflated prices – to Black families. The former owners mistakenly blame Blacks for their fleecing. The Fair Housing Act outlaws blockbbusting, as well as “racial steering,” the more subtle channeling of whites and Blacks into separate areas.

Brokers, however, are not the only ones helping perpetuate the myth about property values. Mortgage lenders invoked it until quite recently as justification for imposing tougher requirements on Blacks than on whites. The federal government itself has not always been blameless. Until 1949 The Federal Housing Administration, which insures mortgage lenders against losses, urged the use of restrictive covenants to keep out “inharmonious racial groups.” The 1938 edition of the FHA’s underwriting manual, issued to lenders as a guide, stated: “If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial group.”

Most middle-class communities remain far from integrated. While Chicago’s 1970 population was 32.7% Black, for example, Blacks headed fewer than 3.3% of suburban Chicago households. A national sampling by MONEY correspondents turned up disappointingly few neighborhoods where it can truly be said that blacks and whites live easily together, maintaining a racial balance. The Crenshaw district of Los Angeles, once an interracial model, is now about 70% black. Sheridan Heights in Indianapolis, totally white three years ago, is over 10% black now; property values have climbed, but school busing to foster integration has aroused hostile feelings. A section of Detroit called Golf Club has gone from about 15% black in 1970 to perhaps double that. In Dallas more segregated areas exist today than did ten years ago.

There are, however, some communities where whites and blacks are living side by side in handsome houses, enjoying good schools and low crime rates. By chance, design or a combination of both, the proportion of blacks to whites in these communities has become nearly stabilized. Shaker heights, an older Cleveland suburb, is a good example of a community that has worked hard to integrate without changing its character. In Seattle the combination of modestly priced houses of sound construction and a lakeside community almost within walking distance of downtown has spontaneously integrated an inner-city section called Madrona, where young professionals both white and black, are buying and refurbishing once-stately older houses. The developer of Columbia, Maryland, emphasized from the start in 1967, that housing in the carefully planned new town would be open to all races. Together with a large majority of whites, middle-income black families have streamed in, mostly from nearby Baltimore and Washington.