Prop 14: The California Fair Housing Massacre of 1964

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In 1964 Prop 14 wrote discrimination in CA state constitution defeating the Rumford Fair Housing Act. How did this happen, and how does it continue to impact California real estate?

I’m thrilled to welcome Don Saunders, my friend, retired real estate broker, and fellow San Francisco Association of Realtors Past President (1997 for him, 2017 for me) to help us understand the fair housing massacre of the 1963 Rumford Act by 1964’s state ballot initiative known as Proposition 14. Prop 14 was sponsored, written, and supported by my state trade association now known as the California Association of Realtors.

Prop 14 Headlines from 1964 newspaper clippings

The outcome of that November 1964 election truly changed the course of American history in ways that impact us to this day.

Why Did You Publish This?

“Being American is more than a pride we inherit. It’s the past we step into and how we repair it.” These are the words of poet Amanda Gorman, and they have resonated with me since she graced the steps of our nation’s Capitol, and inspired millions to meet this challenge.

As a gay man raising a non-binary kid in one of America’s most progressive cities, working in one of America’s most historically racist industries has been an eye-opening experience. This is my very small attempt at attempting to repair some of my industry’s past actions, and I hope you’ll join me in that effort.

Rumford Fair Housing Act 1963 press clippings

Coming Soon (later in February 2021) in Episodes 109 and 110

Episode 109 begins with a powerful statement from the 2021 President of the California Association of Realtors, Dave Walsh. One community activist and four Realtors then discuss the progress, setbacks, and impacts of racism in the bay area. It’s a lively roundtable that tells a more complete story than you’ve likely heard or told yourself about housing racism in the bay area. Yes, even in tree-hugging progressive San Francisco we have a deep history of housing racism.

Episode 110 takes a hard look at the words Realtors use in 2021, from the dog-whistle of “bad neighborhoods” to what we can do as individual Realtor Brokers and Sales Agents in 2021 to be anti-racist in our work representing our clients. From challenging conversations with clients to gentrification and digital racism, Episode 110 wraps up our three-part series with a very special guest to help us listen and understand better.

 

Vimeo Video of CA Fair Housing Massacre of 1964 With Subtitles

Full Episode Transcript (automated, via rev.com)

– Welcome to Escrow Out Loud.

The SF real estate podcast

from Jackson Fuller Real Estate.

Experts on San Francisco real estate since 2002.

Podcast notes with links available at

jacksonfuller.com/podcast.

– Hi.

Welcome to Escrow Out Loud,

and the first of our three part series

exploring racism in San Francisco

and California real estate.

I’m Matt Fuller, your podcast host.

and broker of record for Jackson Fuller Real Estate.

In honor of black history month,

I’ve been working on a three-part podcast series

about racism in California real estate.

Part one, today’s episode,

begins with acknowledging and seeking to take accountability

for my industry’s role

in promoting discrimination in housing.

And to help me tell this story,

my guest today is a retired real estate broker

and a guy I miss seeing on the daily

as part of the San Francisco real estate community.

We work together at Zephyr Real Estate.

Please welcome my friend

and an incredible real estate broker, Don Saunders.

– Thank you.

– How are you Don?

– I’m doing great, man.

It’s good to talk to you.

– You sound very chill and retired.

How’s retirement treating you?

– Retirement is great.

I wish this pandemic was over

so we can at least travel a little bit,

but other than that, it’s going great.

– Yeah, I said my biggest accomplishment

in 2020 was just surviving.

So looking forward to traveling again someday too

although I still have to work, I’m not retired like you.

All right, so–

– You’re not old, that’s the problem.

– Right?

(laughs)

So Don, our story today is about a state ballot proposition

that I wasn’t even aware existed

until I started doing research for this episode,

and is the 1964 state ballot proposition

that was sponsored

by the California Real Estate Association.

And that is an organization that’s now known

as the California Association of Realtors.

And that’s an organization to which I belong.

I have actually served on their board of directors

for several years as a past director now.

And are you still a member Don?

– I’m not a member, but when I was a member

I also served on their board of directors

for probably five years, six years.

– Yeah, you’re being very modest.

You were a thing in real estate when you were active.

– Well, thank you.

– It’s true.

So essentially if generally the way membership

and real estate works

is if you’re a member of a local association,

you also are a member of the state

and then the national real estate association.

It’s the triple layer cake.

So, but to understand what our real estate association

did in 1964, we need to back up just a little bit further.

And that takes us to the Rumford Act.

The Rumford Fair Housing Act that was passed in 1963,

and there almost begins our story.

But Don, will you start us off

by giving our listeners a reminder

about what the state of residential housing was around 1963?

– Well, you know, we can go back

even a little bit further Matt to 1948,

when the Supreme court said it was illegal

for owners to determine who they wanted to sell to

or didn’t wanna sell to.

And this was in 1948,

it was a case Shelley versus Kraemer, I think it was.

And then in 1963, Rum product came in

and this was in California.

Rumford was a representative from Berkeley, I think.

And he put in the The Fair Housing Act of 1963

which said it was illegal to discriminate buyers

because of their race, ethnicity, marital status,

sex, et cetera.

And this was adopted in 1963 over the opposition

of the California Real Estate Association

which is now CAR, California Association of Realtors.

– If you don’t go through it really slowly

it’s kind of hard to miss what happens

because looking backwards from 2021

it’s just like, whoa, this really happened.

– Yeah.

– So, you’re right, Rumford was from Berkeley.

He owned a pharmacy here

and he was the first black legislature from the Bay Area

elected to the state assembly.

And he was a heck of a hard worker.

He did a hundred things

and he worked really hard

to get The Fair Housing Act passed in 1963

over the opposition from our association.

And in the act of getting,

you know, past our association did do a pretty good job

of kind of gutting the law

and managed to get single families.

And in fact, you know, everything less than five units

was excluded from this.

So it didn’t touch single families

in any way, shape or form,

but our association was still incredibly upset

that it passed in 1963.

So we immediately turned around and as any organization

or individual can in California,

you can get a constitutional amendment on the state ballot.

And so we actually wrote a constitutional amendment

and we spent our members’ money, 10,000 bucks at least

and $1963 to get enough signatures,

to get it on the ballot.

And then once we got it qualified for the ballot

we asked our members to actively support it

and we asked our members to ask their clients

to actively support it.

So it’s kind of mind blowing to me,

you know, that this was the doing of our association.

So do you wanna talk a little more

about Prop 14 and what it did

– Well, yeah, I think it was interesting too

just following up on what you said.

When the association of realtors

violently opposed to the Rumford Act

started asking for signatures

to get the amendment on the ballot,

they needed, I think 480,000 people to sign the petitions.

They had over a million.

And another kind of a fun fact is

Proposition 14 was supported by Ronald Reagan,

who later became governor and our president.

– As I was doing research for this,

you can just see so many of individual

and societal trajectories

throughout the seventies and eighties

that pretty much started right from these events

and you know, rippled across America

in really incredible ways.

So yeah, so our association,

you know, sponsored Proposition 14,

that would provide and park the quote,

neither the state, nor any subdivision or agency there of

shall deny limit or bridge,

directly or indirectly, the right of any person

who is willing or desires to sell, lease, or rent

any part or all of his real property

to decline to sell, lease or rent such property

to such person or persons as he

in his absolute discretion chooses.

So there are two opinions

about what this ballot initiative meant.

And on the one side we had

the California Real Estate Association.

And let me read a quote from the 1963 president

of the California Real Estate Association

’cause this pretty much encapsulates the argument

that our association is using.

Quote, The Rumford Act now makes it illegal

to refuse to sell, rent, lease

or otherwise deny or withhold any housing

because of race, color, religion,

national origin, or ancestry.

“We fought this Rumford forced housing bill

“with every ounce of our strength,” Wilson said.

“We contend that all Americans

“should have their right to refuse to rent, lease or sell

“to anyone and for any reason.

“The law takes away part of his right

“to decide for himself,” period, end of quote.

So on the one hand on we have housing freedom

kind of reminds me of the mask argument.

Housing freedom on one side,

we will have no forced housing bills.

And then on the other side

we had folks like our Governor Pat Brown.

And what was the other argument?

– Well, I think Pat Brown’s argument was,

this was gonna make California look more like Mississippi

or the Southern States who were absolutely discriminating

and causing, you know, racial bigotry and the whole thing.

that was Governor Brown’s position on it.

– Yeah, and, you know, Governor Brown,

the Democratic governor at the time,

really campaigned hard against Prop 14.

If you go back and you look at his speeches,

he was in no way subtle about his disdain

and anger about Prop 14.

But as you mentioned, you know,

over a million Californians qualified to get it on the,

you know, signed the petition

to qualify to get on the ballot

more than double what they needed.

So how did the campaign for Prop 14 go down?

– Well, it was approved by every county in California

except Modoc County.

In Modoc County, it was defeated by only 19 votes.

– I don’t even know where Modoc County is.

– I don’t know either,

but the whole state of California

did support Proposition 14.

– County by County?

Every, Los Angeles County supported it.

The County and city of San Francisco supported it.

It was at a past 65% to 35%.

It was not even close.

– No.

– So November, 1964, 65 to 35 Prop 14 passes

and the California Real Estate Association

feels that is one housing freedom,

and most other folks would look at it and saying

we just wrote discrimination directly

into the state constitution.

Is this the end of the story?

Of course not, what comes next, Don?

– Well, you know, just as a couple of interesting things

that I picked up looking at those,

in East Palo Alto in 1954,

a white family sold their home to a black family

and this California Real Estate Association went nuts.

They actually had burglaries to scare the white homeowners

out of that area

so they could, you know, resell the properties.

This I think was kind of the start of block breaking,

I think it’s called.

– Yup, blockbusting, exactly.

Blockbusting, block-breaking,

call it what you want, it’s horrible behavior.

– Absolutely.

And this is, you remember, I don’t know if you recall,

East Palo Alto in late 19 hundreds was practically all black

because the white homeowners left

and then the California realtors

ended up selling those homes to black people

at exaggerated or higher prices

than what they were actually worth at the time.

– Yeah, and ended up creating a ghetto in the process

of folks not from the Bay Area, Palo Alto

as you’ve probably heard of them to Stanford

an incredibly wealthy community.

Steve Jobs’ family and widow continues to live there.

Lots of other tech titans,

and it’s divided by the one-on-one freeway.

And on the other side of it is East Palo Alto

which used to be just like Palo Alto

and tell the story that you described.

And by the time I moved to California in 2000

Palo Alto and East Palo Alto

looked nothing like each other.

– Very true.

Well, a lot of social scientists have said

one of the results of the Proposition 14

was the Watts riots in 1965.

The Watts riots basically started over something

that was very, very benign really.

The young man, young black man

was driving his mother’s automobile

with his brother in the car.

And he was stopped by a white policeman.

And the white policeman said he was driving recklessly

and they gave him field sobriety test

which he did not pass.

So the officer was gonna arrest him for reckless driving

and driving under the influence.

The passenger who was the driver’s brother,

went to get his mother and his mother came

and they both the driver and the mother

started resisting arrest.

It started with a verbal confrontation

and then became physical.

The young man, the driver got hit by a baton.

That’s basically what started the Watts riots.

This was basically a flashpoint

because the frustration, just the anger was built up

in the Watts neighborhoods because of one police brutality.

It was rundown area, dilapidated area,

90% of the people who lived there were renters

and they couldn’t get anything done,

you know, to fix up the properties

because the landlords wouldn’t do it.

They just kept charging rents.

So the whole Watts riot was basically

because of frustration as to how they were being treated

how they felt there was no hope for any other type of life.

And this one incident of a young man being arrested

rumors started flying around

that the police were kicking the women,

and one lady was pregnant who got kicked.

And the next thing you know

you’ve got a six day riot on your hands.

– Yeah, and I have to tell you

wrapping my head around the idea that my trade association

that I’ve probably been a member of

was a contributing cause

to an incredibly destructive race riot

has been really hard to wrap my head around.

And so I’ve actually been doing a lot of reading about it

and kind of coming to try to understand this

because I just kept looking for something

it was like, no, this really isn’t this bad.

And yes, it really is this bad.

And don’t take Don’s word for it.

There was actually as there always is

the state appointed a commission after the riots

to try and figure out what happened

and make recommendations so that it wouldn’t happen again.

And in the report itself from 1966, 67,

later in the sixties, it says, quote,

in addition many Negroes here felt

and were encouraged to feel that they had been affronted

by the passage of Proposition 14,

an initiative major passed by two thirds of the voters

in November, 1964

which repealed the Rumford Fair Housing Act.

And unless modified by the voters

or invalidated by the courts

will bar any attempt by state or local governments

to enact some of our laws.

So, you know, two thirds of the state

had basically just told

the minority population of California, F off, right?

Like go live in a slum.

Like we don’t want you near us.

And it wasn’t subtle and it wasn’t even close.

And I didn’t know this Don, but by the 1940s,

as far back as the 1940s,

95% of Los Angeles

and Southern California residential housing

was off limits to minorities

because of restrictive covenants.

95%.

– Yup.

– Right, like everyone, you know,

scratches their head and say,

how did inner city slums and ghettos come to be, right?

They came to be because 95% of the land

we had put restrictive racial covenants on.

– You know, there are still racial covenants

but they’re not enforceable anymore.

Back then they were enforceable.

And if you wanted to live in the large cities especially

you had certain areas that you could live in,

which were basically slums, ghettos,

whatever you wanna call them.

– Yeah, and then, you know, in addition to us

as a state having passed Prop 14 in 1964

the federal government itself was,

you know, doing all of this kind of

quote unquote, slum clearance

and busy building freeways,

right through the middle of neighborhoods

that were almost always black and brown neighborhoods.

So as a community, you know, Watts felt under attack

from pretty much everybody.

And if I was a member of that community

I think I would have felt the same way.

– Probably.

You know, they could build the freeways and everything

through those areas because those were the low income areas.

I mean, they’re not gonna build a freeway

through Beverly Hills, you know, places like that.

– Yeah, exactly.

And it’s not because

the people that live in the poor neighborhoods

want the freeway, but when you’re poor

and struggling to even get food on the table

you don’t have time to form a neighborhood association

and go to all of the community meetings

to outsmart the developer, right?

You’re just struggling to get by,

you know, leisure time is a luxury.

– Absolutely.

– And the Watts riots were devastating.

They lasted for six days

and 34 people died in the Watts riots.

There were over a thousand injuries,

4,000 arrests, involving 34,000 people

over a thousand buildings were destroyed.

And in $1960, there was more than $40 million in damages.

It wasn’t just a night of anger.

It was six days with the national guard,

you know, armed, and people died.

– Yeah, you know, it’s spread out from Watts also.

I mean, you know, I was reading

that white people driving through areas

where there was a large black population

were attacked just because they were white

and they were there.

I mean, it was just a whole lot of anger in 1965.

– Yeah, I’m not speaking to try

and justify any of the actions,

but I 100% understand the emotions.

In addition to being an underlying cause of the Watts riots,

there was a lot of other fallout from Prop 14 as well.

The governor who supported it at the time, Pat Brown,

had been elected in 1962 and then actively campaigned

for the Rumford Act and against Prop 14,

and he was up for reelection in 1966.

And as soon as Prop 14 did pass

it was immediately challenged in court.

And the challenges would take a couple of years

as they usually do

to get both to the state Supreme Court

and the U.S. Supreme Court.

So during this time, after it had passed

until we get the Supreme Court rulings it was a law

and people were still discussing it

and talking about legislative changes to it.

And he ran for reelection in 1966, opposed to Prop 14.

And his opponent, as you mentioned earlier in the podcast on

was none other than Ronald Reagan.

And Ronald Reagan was the Republican candidate

and in an effort to have his cake and eat it too,

not only was Ronald Reagan

opposed the Rumford Fair Housing Act of 1963,

a sitting that gave one segment of our population

a right at the expense

of the basic rights of all our citizens.

Not only was he opposed to that,

he also managed to be opposed to Proposition 14 in 1964,

just saying it was not a wise measure.

So he triangulates the minority communities

and manages to get himself elected as governor in 1966.

And as a time will tell he had two terms as governor

and that set him up for a run for the president in 1980.

And he defeated Jimmy Carter and became the president

and went on to have two terms.

And while all of that was happening Don,

you in your own life were a young man

about to embark on a career.

And you became a realtor in Southern California in 1978.

And while 1978 is more than a decade

later than what we’ve been recently speaking of

all of the fallout from it was still taking place.

So what was it like to come into this industry

as a black man in 1978?

– Looking back on it,

it’s more interesting looking back on it

than I was when I first got into it

because I had never run into,

you know situations like I ran into then.

So it was just basically working my way through them.

But I became a realtor, like you said in Riverside

which is Southern California,

basically a farming community with a university there.

But when I got my real estate license

and tried to find a job, I couldn’t

because no one was hiring a black real estate agent.

None of the white companies

were hiring a black real estate agent at that time.

Finally, a lady did.

She helped me, you know,

redo my resume, et cetera, et cetera,

and she told me that if I failed

it would reflect on her and she would probably lose her job.

Luckily I didn’t fail.

But even when I got into the business in 1978 in Riverside

you still had areas that were 90% or 95% black.

You had areas that were completely white

and you really didn’t have that much of an interaction

between the two.

And I think that was one of the reasons

that white real estate companies in Riverside

were adverse to hiring a black person

because they figured,

okay, a black person will not be able to relate

to white homeowners and the white homeowners

wouldn’t be able to relate to a black real estate agent.

But luckily that didn’t, you know, hold true.

I probably did 75% of my business

with white sellers and buyers as opposed to the other areas,

because I think, I don’t know, it’s just,

I think the white sellers, buyers, et cetera, et cetera,

trusted me because I worked hard.

So I didn’t really have a problem

working in real estate in Riverside.

I enjoyed it actually.

– 1978, none of the real estate companies wanna hire you.

But once you find someone that’s willing to hire you,

take a chance on you as it were, you do incredibly well.

You know, you’ve thought through your business plan,

you know, you’ve targeted the military base

does really well for you.

How long do you stick around in Riverside?

– I was in real estate there for four years.

– And was it basically a positive experience

once you got into the industry

or did you kind of often end up getting rejected

by white people because you were black?

– No, it was basically a very positive experience.

I had one incident, which was, I thought was really funny.

I don’t think the people thought it was funny,

but talking to the people over the phone,

they were interested in having someone come up

and take a look at their property

and possibly put it on the market.

And while we’re talking, I said,

I’d be more than happy to do it.

And, oh great.

So we set up an appointment and the lady says,

“Oh, by the way, we don’t wanna deal with any Negros

“or Chinese.”

And she used derogatory words for both races.

So I said, “Oh, that’s not a problem.”

And I got an agent who wasn’t Chinese, he was Japanese

but I figured they couldn’t tell the difference.

And we showed up at these people’s doorstep.

“Oh, hi, we’re from,”

the company was Forest Olson then,

was a Coldwell Banker affiliate.

This is, “Hi, we’re from Forest Olson.

“And I was talking to you on the phone.”

A lady slammed the door so hard.

I’m surprised it didn’t crack.

We just (indistinct) watch and laugh.

– I’m so proud of you for just going.

I think that makes it–

– Actually, it was fun.

I was the assistant manager in Claremont, Montclair

Forest Olson office for a year and a half, I think.

And actually it would, again

it was a very pleasant situation.

I enjoyed it.

The people were very nice,

you know nothing but good things to say

about the people there.

From Claremont, Montclair,

they promoted me to the actual manager

and I got an office in Anaheim,

which is part of Orange County.

That basically was where I did run into more,

you know, the racist attitudes and everything

than any place else that I’ve ever worked.

Orange County basically is still pretty much all white

and very, very–

– Republican.

– Republican, I didn’t wanna say that,

but since you did, that’s what I was thinking.

I was trying to think to go around it, but I did run into

you know, a few problems there, but nothing really

that made me rethink my career projection or whatever.

It was just, you know, things that had happened

and you worked with them or worked around them.

– Got it.

As a sales manager, you know,

in addition to the buying and selling

you were also, you know, recruiting and managing agents.

Did you have issues with white agents

not wanting to work for having issues working for you

as a black man?

– You know, I never did.

I did have one lady who,

you know, she was leery about it

and I didn’t know that at the time

because she did come to work for me,

but about a year, well, not even a year later,

she said, ” I was really worried how it would look

“if I was working for a black manager.

“And what I’ve discovered is it doesn’t make any difference

“as long as you know what you’re talking about

“and you can help me succeed then that’s great.”

And I felt really good about that.

– That’s an awesome story.

And I have no doubt that you did help her succeed.

– Yeah, she did very well.

She also got a manager job with our company

Forrest Olson at the time.

– When did you end up in Northern California?

– 1983.

Latter part of 83 earlier part of 84.

One of the guys that I actually worked for

in Southern California had come up to Northern California

and he was a vice president with Grubb Analyst

which was Grubb Analyst residential realtors

at that time.

And he was telling the person who was in charge of here

who worked directly for Hal Ellis,

that he knew an agent manager in Southern California

who would do a good job up here in Northern California.

So basically they recruited me

to come to Northern California.

And it’s a kind of an interesting story.

When I first came to Northern California

they were basically looking for an office to put me in.

One of the offices, they had me go take a look at

or they took me to look at, was in Orenda.

And I, you know, met the people in the office in Orenda.

And as I was leaving,

this elderly lady came up to me and she says,

“Confidentially, let’s go in the conference room

“so I can talk to you confidentially.”

And she says, “If I were you, I would not take this job

“since most of these people in Orenda

“come to Orenda to get away from Oakland

“to get away from, you know, the black population,

“the problems of the city, et cetera, et cetera.

“And I don’t think he would be happy here.”

So I turned Orenda down and I thank her to this day.

– Did you know that about Orenda,

having never lived up there?

– I knew nothing about Orenda.

– Yeah, I mean, ’cause as soon as you say Orenda,

you know, I wanna say that’s kind of our version

of Orange County.

– Yeah, I found that out later.

– So once you got to Northern California,

you know my experience of living in Northern California

is that we find ourselves morally superior

to Southern California, at least that’s what ourselves.

Any difference?

Was the racism the same as what you encountered

in Southern California, better or worse?

– You know, I can’t say I really had a racial problem

in Northern California,

even the lady in Orenda that wasn’t a problem.

She was really trying to be helpful

but I have never really run into a situation where

it’s become totally racial.

There was a lot of fallout from Prop 14

in terms of the damage it did to minority communities,

their ability to accumulate wealth, property ownership,

generational wealth transfers.

And you know, when you’re in the business in 78,

you’re still seeing, you know,

blockbusting is a business model.

Neighborhoods are incredibly segregated.

Like, do you wanna talk about kind of,

you know, the other impacts, outcomes?

You know, what damage done?

– Well, you know, you look at, well, the red lining

I kinda over-talked you there, I’m sorry

was also one of the things where

mortgage companies would not lean in certain areas.

And those certain areas were usually minority areas,

be they African-American

or I think we were Negroes back then,

Chinese areas, I shouldn’t say just Chinese.

I should just say Asian areas,

they were also red line.

So I think one of the major things

that came from this period and probably a little bit

is still prevalent today

is the values of properties in a minority area,

as opposed to the value of the same house in a white area.

I’ve read anywhere from 50% less value

as assigned to the same house in a black neighborhood

as it would be assigned in a white neighborhood

from 50% up to 72%, depending on the neighborhoods

and who’s doing the actual appraisals and things like that.

I think this is probably still a carry over from Prop 14.

In San Francisco, most of the neighborhoods are more mixed,

more diverse,

but you still have some neighborhoods

that are primarily one race or another.

And in those neighborhoods, if you had a three-bedroom

two bath home, single family, et cetera, et cetera,

it’s gonna be less than a home say in

Merced Manor, which is primarily a white neighborhood.

– Yeah, you know, I mean, historically in San Francisco

minority communities were able to find housing

South of what’s now Interstate 280.

And if you look at property values

kind of South of 280 versus North of 280,

you’re 100%, right?

I mean obviously the California housing shortage

and the incredible, you know, upfront on prices

makes the San Francisco numbers a whole nother story

but still, you know, to this day

historically black neighborhoods like the Bayview,

same house that you can find over in the sunset

on the West side of town,

one of them is 995, the other one is 1,000,004.*

– Yes, yes.

And it’s interesting, even on this side of 280

you know, like Merced Heights, Ingleside Terrace,

those were primarily black neighborhoods

or African-American neighborhoods, whatever.

And then you’ve got Forest Hill and

oh, what’s the neighborhood right across.

– Laguna Honda?

– No, no, the really nice neighborhood.

– Saint Francis Wood?

– Saint Francis Wood.

Things were like Saint Francis Wood

was 99.9% Caucasian at one time.

And that’s why Ingleside Terrace was developed

because that was developed

so that the black people could live there

in Ingleside Terrace.

And there are really nice homes in Ingleside Terrace

but the price differential is quite a bit different

and that’s like right across a couple of streets.

– Yeah, you know, and it really,

the only difference is which side of Ocean Avenue

are you on?

– Yes, yes.

– So I didn’t know that was the genesis

for those neighborhoods.

I mean, obviously I knew Saint Francis Wood

and those neighborhoods had racially restrictive covenants,

but I didn’t know that was kind of the response.

And yeah, you know I mean,

even in San Francisco, it was very much the law of the land.

– Yeah, absolutely.

– Willie Mays, I believe tried to buy a house

in Forest Hill.

– Yes, I think still there’s the stereotype

that black people bring the values down

in white neighborhoods.

So if a black person moves into a white neighborhood

the whole neighborhood value is gonna decrease.

I think that’s one of the reasons

I spend so much time working on my yard and my house

and everything,

because I don’t wanna bring the values down

in the neighborhood.

It’s funny in a way, because I think,

you know, when someone owns something

be you black, white, or whatever,

you’re gonna take better care of it, or more care of it.

One of the things, when, you know,

they had the slums over off of alimony,

it was because they weren’t owned by anyone.

And while they were owned by the city basically,

and the people who lived in them were tenants

and the tenants didn’t take care of them,

so you had an instance slum.

But if they had sold the properties to individuals

I think that would have taken away the, you know,

the slum, it would, people would have pride of ownership.

And without pride of ownership

then people just kind of tend to let things go.

– Yeah, and it’s not just housing, right?

I mean, how do you treat the car you rent

versus the car you own?

– True.

– Or is that just me?

(laughs)

– No, I think when you’re renting a car

you don’t care what you do in it or whatever.

But when it’s your car,

then you make sure you check the oil,

tires, et cetera, et cetera, keep it clean.

You know, it’s the same with the home.

– Exactly.

Except hopefully they don’t have tires

although some houses do,

we’re not even gonna get into that one.

So, Prop 14 and our association

led this argument back in the 1960s

that is reverberated to today that,

you know, it wasn’t racial discrimination.

It was housing freedom.

And that’s really what as a trade association

we’ve been fighting for.

And I wanna go back to that original argument

because it’s a false argument.

And if we look around, America has a social contract

and the social contract says,

I as an individual, I’m willing to give up some of my rights

in exchange for some communal rights

that are really good for me and you and everyone

and the comments, right?

It’s a, win-win win-win win.

And this isn’t just abstract, right?

Like, I mean, we think of them as just for granted,

but the sewer system, right?

I mean, that’s a social good.

If we didn’t have a sewer system

and everyone’s pooing in the street,

after a week, I don’t know if it’s even a week, right?

First one day.

Same thing, a public water system getting clean fresh,

San Francisco has the best water in the world

as far as I’m concerned.

Public streets, right?

That are paved.

Don’t have too many potholes.

Lights, gas and electric, right?

I mean, there are all of these common goods

that property owners support with property taxes.

And not only do we put those common goals

with property taxes, we still have to follow the rules

for using all of those common goods, right?

It’s not like, because we help pay for them

we’re somehow exempt from the rules.

So there’s this historic agreement already

that as a property owner,

I’m willing to give up some things

in exchange for some other good things

and let’s get going here,

’cause it’s a lot of other things, right?

Property owners are willing to accept property taxes

that pay for school and all of these other,

you know, common goods.

We might not be thrilled about paying them,

but we pay them.

Zoning, right?

If you live in a residential house

except for the city of Houston,

which I still don’t think has zoning

it was zoned to be residential

and that’s a police power, right?

Like it is a common law.

Like it’s everyone agreeing to say like

you can’t build a factory here or an airport there

or whatever you feel like building

because you have to take into consideration your neighbors

and their enjoyment of their life, right?

So we’re willing to put up with zoning

which is an incredibly restrictive police power.

We’re willing to put up with planning departments

and building codes

because people like things like life safety systems

and fire sprinklers and exit stairs and exit lighting.

So there is a history in America, pretty much since the

you could own real estate of there being an infringement

on your bundle of rights in exchange

for getting some social goods.

And let’s face it,

Prop 14 was an amendment legalized discrimination.

Governor Pat Brown knew exactly what he was talking about

and he was speaking the truth at the time.

And, you know, while our organization

tried to pitch this fight as housing freedom,

it wasn’t, right?

It was housing freedom

from selling your house to a black person.

That was really the the freedom that they were fighting for

unfortunately.

And I believe that ending discrimination

is a valuable social goal.

I’m willing to bet

that you probably agree with me on that, Don?

– Of course I do.

– And as a property owner and just a member of society,

I am willing and voluntarily want,

I would take that limitation on the bundle of rights

because ending discrimination

is a really valuable social good, plain and simple.

So I have a bunch of ideas about what CAR,

California Association of Realtors can do at this point.

– In 1967, the Supreme Court said Proposition 14 was invalid

but it was still used until I think 1974

when Proposition was repealed by Proposition seven,

and then it became more enforced.

But you know, this is 1974,

up until then it was still,

you know, like wink, wink, okay, yeah, we’ll do this,

we’ll do that.

You know, 1974 really wasn’t that long ago.

No, I was born in 1975,

so I prefer to think I’m not old yet.

But yeah, I mean, Prop seven in 1974

was when it was finally

stripped out of the California constitution

having finally been, you know,

ruled illegal by the federal Supreme Court as well

a couple of years prior.

And you’d kind of mentioned it just then,

you know, that that kind of gave rise

to this wink, wink, nudge, nudge behavior.

– Right.

– And I would argue that wink, wink, nudge, nudge behavior

goes on to this day.

– It does in a way, well, I should say in some cases it does

but there’s so many ways a buyer

or a seller can legally,

you know like bring legal vision on it

that it’s not as, you know,

nothing like it was back in the sixties and seventies

– We still have a long way to go.

I mean, neighborhoods and communities

and many places are as segregated today

as they were 50 years ago.

– Oh yeah, absolutely.

– So to the best of my knowledge,

the California Association of Realtors

has never issued a formal apology for our sponsorship

and writing of Prop 14 in 1964.

And one of the things

I would like the California Association of Realtors to do

is to, as a membership body vote

to take responsibility and accountability

for our predecessors actions,

and issue, you know a formal apology.

That said, words don’t buy houses.

– And I was gonna say

I think you’re gonna be waiting a long, long time

for the California association to give a formal apology.

– Prop 14 did financial damage to minority communities.

In America, real estate has historically been

the ladder for wealth in America.

And we worked really hard to make sure

that black people and minorities

were excluded from that ladder.

So my feeling is that at this point,

I know this crazy, realtors never loved taxes,

especially new taxes

but I think the state of California should take a look at

where it could find some new money.

And I think there’s lots of places to find new money.

I think you could look at,

for example, maybe a tax on companies previously

headquartered here that relocated to Texas, for example.

You could look at a new wealth tax,

maybe you know, the super wealthy

that are making more than 30 million a year.

You know, there’s a lot of places,

I sound like a politician already.

There’s a lot of things we could tax,

but you know if we’re serious about making amends

then it has to be more than just words.

And I think that we should find the money

to fund both a 0% financing program

for historically discriminated communities,

kind of similar to to the VA program

and also down payment assistance.

I think if you can bring the 1963 average down payment

in California was $4,000.

I think if you can find that,

we should work set up a fund that can help cover the rest.

And I actually think that our association

should help fund that fund.

In a meaningful way,

we’ve spent tens of millions of dollars on other things.

And I think that we would be well-served

to spend tens of millions of dollars on this.

So how crazy do you think I am, Don?

– Well, actually I think your ideas are great,

but you know I think, you know, like I was saying,

or you said actually,

when someone mentions the word reparations, people tune out.

When you mentioned the word tax, people tune out.

That’s gonna be a high hurdle to overcome.

People don’t really want more taxes

and they’re gonna fight tooth and nail not to pay anymore.

So I don’t know where these funds could come from

but I think your ideas are great.

– You know, let’s see the current state reps

in this area are like David Chiu, Phil Ting, Scott Wiener.

I can always bring them.

They’re actually legit politicians

and I’m sure they have tons of way

to come up with new taxes.

But I think the takeaway

I’m really getting from this Don

is that my marketing department

needs to come up with new words for reparations and taxes.

– Yes.

– And we just need to make it sound like

something fantabulous, which it would be in the long run

even if it has individual costs to people.

The social good would far, far far outweigh

the individual costs.

So we have covered an incredible amount of territory today.

Don, thank you so much for joining me.

And before we wrap things up,

is there kind of anything else that you wanted to mention

or make sure you say?

– No, I enjoyed the conversation.

I mean, we kind of skipped around a lot

and I think that’s basically my fault

because I have this idea

and then I was off on a tangent or whatever.

But I really did enjoy,

you know, the podcast and, you know, sharing ideas with you.

And I think your podcasts are great.

– In part two of our look at

racism in California real estate,

I have assembled in an incredibly talented

and diverse group of local agents and a community activist

to explore racism in real estate

at the local Bay Area level.

My friend, Dave Walsh, 2021 president,

of the California Association of Realtors

joins us for a few minutes in our next episode

with a powerful statement.

Here’s a preview.

– First, let me say thank you, Matt

for the invitation to speak on the Escrow Out Loud podcast.

This is an incredibly important subject

that you were discussing.

And it’s great that realtors like yourself and Don Saunders

are taking the time to engage these tough discussions,

given that we know the people of color

experienced crushing discrimination

that was sanctioned by all levels of government

in our country,

and specifically by many realtor associations.

– Welcome to Escrow Out Loud.

The SF real estate podcast

from Jackson Fuller Real Estate,

experts on San Francisco real estate since 2002.

Podcast notes with links available

at jacksonfuller.com/podcast.

(light melodic music)