By Samantha Friedman

In the United States, where you live is largely tied to the color of your skin and your ethnicity.

Does this surprise you? Did you imagine residential segregation to be a thing of the past in America?

Well, just take a look at the typical metropolitan area, particularly in the Northeast or the Midwest. You'll find whites living in neighborhoods that are mostly white, minorities living in neighborhoods that are mostly minority, and very few neighborhoods that could be called truly integrated.

Boston is no exception. According to Census 2000 data, the Boston metropolitan area is 80 percent non-Hispanic white, 7 percent non-Hispanic black, and 6 percent Hispanic (with the remaining

7 percent comprising all other races). If Boston were completely integrated, each of its neighborhoods would have the same racial/ethnic composition as the overall metropolitan area.

They do not. In fact, 66 percent of blacks and 59 percent of Hispanics would have to move before every neighborhood mirrored Boston's overall racial/ethnic composition. These levels of residential segregation are slightly higher than the national average. Across all U.S. metropolitan areas, 65 percent of blacks and 51 percent of Hispanics would have to move in order to achieve an integrated residential distribution.

Obviously, widespread racial/ethnic separations of any kind tend to exacerbate divisions and misunderstandings among people, and undermine fair treatment. But my research demonstrates that residential segregation leads to another, less-discussed result: It dramatically affects the financial health of minorities, even those fortunate enough to own their own homes.

I'm a quantitative sociologist, which means I examine data, often that collected by the U.S. Census Bureau, for interrelations among quantifiable variables. Currently, I'm looking at the impact Americans' race and ethnicity have on the neighborhood and housing quality they enjoy. The data are adjusted so that differences in resources, like income and level of education, don't affect the results.

Americans routinely misjudge the depth and breadth of racial inequality in the United States. Public-opinion surveys show that over 50 percent of white Americans believe racial equality has already been or is about to be achieved (something only about 25 percent of black Americans believe). About 40 percent of whites believe blacks earn as much as or more than whites.

The reality is very different. The black poverty rate is actually more than double that of whites, and the black median income hovers around 60 percent of the median income of whites.

My research shows that blacks are more likely than whites to live in less-desirable neighborhoods. This is not just an urban phenomenon. Even in the suburbs, blacks and Hispanics are significantly more likely than whites to report poor neighborhood conditions—the presence of trash, buildings with bars on windows, and abandoned buildings, for instance. Blacks and Hispanics often don't have open spaces within a half block of their housing units. Their low-quality neighborhoods often include greater levels of social disorder.

I've also found that, when it comes to housing, minorities are doubly disadvantaged. First, they are less likely than whites to own their own homes.

Second, if they do become homeowners, they are more likely than white owners to live in low-quality housing—buildings characterized by crowded conditions, for instance, or plagued by structural or maintenance deficiencies, like interior or exterior water leaks, cracks in the walls, or rodent infestations.

These poorer conditions have a big impact on the racial/ethnic disparities that exist in wealth. That's because blacks and Hispanics accrue a larger share of their wealth from their housing than whites do. In 2000, black and Hispanic homeowners held 61.8 and 50.8 percent, respectively, of their net worth in their homes. Non-Hispanic whites held only 32.3 percent of their net worth in their homes.

The effects of this dependence are long-lasting. If most of your wealth is wrapped up in lower-quality—and, as a result, lower-value—housing, you will increasingly lose ground in your quest for financial security. So will the generations that follow you.

The students who take my urban sociology class come in just as skeptical as the general public about the reports of racial/ethnic inequality in America. They always ask me about affluent minorities: Are they as segregated? Are their neighborhoods and homes inferior in quality to those of their white peers?

Unfortunately, the answer is yes. Even affluent minorities who own their own homes in the suburbs tend to live in segregated areas and report poorer neighborhood and housing conditions than affluent whites do.

So, if money can't buy minorities access to equal-quality living environments, what's the barrier? The answer, plain and simple, is discrimination.

In countless research studies, the success of white, black, and Hispanic home buyers has been compared. Often, pairs of buyers are matched on all characteristics, including income, occupation, credit history, and wealth; the only difference is their race or ethnicity.

According to a 2002 national study sponsored by the U.S. Department of Housing and Urban Development, black home buyers received consistently unfavorable treatment in 17 percent of their inquiries. For Hispanic home buyers, the figure was 19.7 percent. This, sad to say, is nearly forty years after the passage of the 1968 Fair Housing Act.

Is there any hope for progress? I believe there is, though it may be waning. In 1977, Congress passed the Community Reinvestment Act (CRA), which prohibits redlining, or the systematic, unfair targeting of lending, home-mortgage lending in particular.

The CRA mandates that bank regulatory agencies—such as the Federal Reserve Board and the Federal Deposit Insurance Corporation—evaluate the effectiveness of lenders in meeting the credit needs of the communities they serve. The regulators take a lender's effectiveness into account when deciding whether to allow it to make a change in its business practices—to purchase or merge with another institution, for instance, or open or close a branch office.

Since its enactment, the CRA has brought $1.7 trillion in new loans to economically distressed areas. In 1995, its regulations were revised slightly. Now a lender is evaluated on its lending to low- and moderate-income borrowers regardless of where they live, as well as its lending in low- and moderate-income neighborhoods.

Because black and Hispanic households are more likely than white households to occupy the lower end of the income distribution, the revised criteria may help minorities purchase homes in predominantly white neighborhoods, which generally are higher quality and offer more access to social and economic advancement.

Working with data from Census 2000 and the 2000 Home Mortgage Disclosure Act, I've found the CRA may, in fact, help to reduce segregation. In metropolitan areas where a relatively greater share of loans is made by CRA-covered institutions, minorities are more likely to purchase homes in predominantly white neighborhoods.

Yet the opportunity for using the CRA to chip away at residential segregation is lessening. The act doesn't cover independent mortgage bankers, brokers, insurers, and financial institutions, all of which are backing more and more mortgage loans.

Residential segregation is a long-standing, complex social problem. Without meaningful and consistent intervention, including the stronger enforcement of existing fair-housing laws, blacks and Hispanics will continue to be unable to access the same neighborhoods and housing as whites, regardless of their income or education level.

And their financial health will suffer as a result.

Samantha Friedman is an assistant professor of sociology.