Economic Pulse

Half a century ago, a dream of affordable housing turned sour in Sunset Park, Brooklyn

David Brancaccio and Jarrett Dang Apr 13, 2023
Heard on:
"Marketplace Morning Report" host David Brancaccio stands in what used to be his grandfather's bar in the Sunset Park neighborhood of Brooklyn. Jarrett Dang/Marketplace
Economic Pulse

Half a century ago, a dream of affordable housing turned sour in Sunset Park, Brooklyn

David Brancaccio and Jarrett Dang Apr 13, 2023
Heard on:
"Marketplace Morning Report" host David Brancaccio stands in what used to be his grandfather's bar in the Sunset Park neighborhood of Brooklyn. Jarrett Dang/Marketplace

What’s the quickest way to upend a neighborhood? In Sunset Park, Brooklyn, it was predatory real estate practices that would become a massive housing scandal in the early 1970s that helped usher in decades of blight, poverty and underdevelopment.

At the time, a conspiracy between unscrupulous real estate companies and workers at the Federal Housing Administration sought to pressure homeowners into selling their properties for cheap. Those homes, often in need of expensive repairs, were then re-sold at a markup via a U.S. government program intended to provide “affordable” housing to new — mostly Black and minority — homebuyers. The nationwide scandal, which prompted a Congressional investigation and over 100 indictments across nine cities, fueled years of economic decline in urban neighborhoods across the country.

The episode deeply scarred Sunset Park, where houses repossessed from new buyers unable to make their payments lay abandoned and vandalized, and much of the area’s wealth had long evaporated when the homes’ original owners — many scared off by racially-charged fearmongering from real-estate speculators — sold off their properties cheaply and in a hurry. “There was a lot of malicious intent involved,” said Majora Carter, a Bronx-based urban revitalization specialist, real estate developer, and a MacArthur “Genius Grant” recipient.

Someone who bore firsthand witness to those events unfolding was Hyman Fleischer — grandfather of “Marketplace Morning Report” host David Brancaccio — who owned a bar in Sunset Park that is now an appliance repair shop. In a 1972 New York Times article covering the scandal, Fleischer was quoted as having “recalled his surprise several years ago at the calling cards of real‐estate speculators that suddenly seemed to flood the neighborhood.”

To explore more about how the scandal unfolded and what it means more than 50 years later, Brancaccio visited his grandfather’s former bar with Carter.

The following is an edited transcript of their conversation:

David Brancaccio: You get to look at that New York Times article from all those years ago? It’s [been] almost 50 years.

Majora Carter: Unfortunately, it felt like it was written yesterday.

Brancaccio: It’s a complicated story. But if we boil it down a bit into steps, step number one was that there were residents here who were told the neighborhood is changing. And they were nervous, right? And then what happens in that situation?

Carter: They sell early and cheap.

David Brancaccio speaks with Majora Carter, an urban revitalization specialist, real estate developer, and a MacArthur “Genius Grant” recipient, in Sunset Park, Brooklyn. Jarrett Dang/Marketplace

The anatomy of a sprawling housing scandal

Brancaccio: They sell cheap. So there was someone wanting to buy up property here in Sunset Park?

Carter: Yeah, and understanding that playing on the fears of folks, you know, who are looking at their asset, this American dream, like literally just go to pot, and they think that’s the case. And of course, like, that’s, unfortunately, our history is filled with so many of those examples, that it just really does, like count on people like not understanding the value in their own community, and other folks preying upon that.

Brancaccio: So in this neighborhood, some people sold cheap. And then a real estate speculator bought cheap, and then was able to find a buyer for the property. But at inflated values, in many cases, they would put a little paint up or not put a little paint up and say this isn’t worth $5,000, like the last person who sold it, it’s worth $25,000. So someone would come in with the promise of home ownership in America.

Carter: And people would look at that promise and go, “Wow, that’s for me, too. And I could finally actually participate in that.” And but it was all a bit of a scam. And unfortunately, we still see that to this day. But that one from that article was something that — yeah, I don’t think I was prepared to read that.

Brancaccio: So maybe the person bought, maybe they could just afford this mortgage. It was subsidized by the government. In fact, it was guaranteed and they get the house. And it turns out, no, the electricity wasn’t upgraded. No, the plumbing needed a lot of work. They might not have had the money to do the upkeep.

Carter: And they usually didn’t. But could you imagine just how people were feeling? You know, they bought into this thing, thinking that it was just the next best thing for their families, and then realizing that they had been had. I can’t even imagine what it felt like to folks who were just like, “No, I’m part of this American Dream thing.” And then all of a sudden, I don’t have it. And I feel stupid. And I think that, unfortunately, is the way a lot of folks, you know, who are not a part of that — the folks who were running those scams and who were personally and professionally benefiting from it — they weren’t the little guys.

A chance at generational wealth — gone

Brancaccio: So if they couldn’t keep up the payments, they often had to abandon the property. They were foreclosed upon. And then, in this special case, because there were special federal programs at work, the lender was able to recoup the money from the feds, but then the property would just lay fallow.

Carter: Yeah, the lender was able to recoup the property, the broker that they worked with, there was everybody [that] got a little bit of it, except for the person who was trying to build some generational wealth for their family. And those levels, I think, of corruption and the scale at which it went through were the kinds of things I think we need to recognize still happen, and that it’s never really designed to support people who actually benefit from having generational wealth in their families. And we’ve seen it, you know, from immigrants of all colors getting worse. We’re definitely still seeing it for Black and Brown folks who are still looking at this right now. I mean, the 2008 crisis, disproportionately impacted Black and Brown folks in the same kind of way. There were the banks [that] were too big to fail. But we lost so much, so many assets, so much generational wealth in the Black community, and in general communities of color, and actually all colors. But it’s just troubling that we’re not learning from the mistakes that we saw happening that were actually supported by the federal government.

Brancaccio: When the New York Times reporter comes here, residents don’t even know why the neighborhood was in “decline.” They didn’t understand they were part of this system that was being used to exploit some people.

Carter: And the system, I think, was malicious. There was a lot of malicious intent involved, that was literally preying on people not knowing that. It’s like using ignorance in a way that was benefiting folks who didn’t, they were benefiting the folks who were most able to do the most harm to other folks.

A personal connection to the neighborhood

A pair of photographs of Hyman Fleischer, grandfather of “Marketplace Morning Report” host David Brancaccio, at his bar in Sunset Park. Jarrett Dang/Marketplace

Brancaccio: Some people had little bits and pieces of this, it was hard to piece together. My grandfather’s only role — one paragraph in this extended investigative piece by The Times — was that he had noticed a lot of business cards being left by property speculators around his bar and in the neighborhood looking for business and he was always curious, “Why are all these property speculators trying to do business in this neighborhood?” He didn’t see the connection.

Carter: Wow. And that’s, unfortunately, once you start seeing those cards, it’s almost too late. You know, I mean, we’ve certainly seen that. I own a cafe up in the South Bronx. And you know, it’s one of the only locally-owned places up there. You know, that’s a public third space. And guess what, when we first opened, we were already seeing those — not even business cards, these were just the folks who were running these, were buying up the properties and fixing and flipping them. And then we just asked like, a lot of questions of folks. And we realized, that’s why we need to be very mindful.

The train may have left the station, but there’s still room, I think, for those of us in communities like that, to decide that we want to buy and hold and/or keep the wealth that’s generated in our own community, and so that we’re the ones benefiting from whatever changes we’re seeing in our neighborhood. And I don’t think that that’s the kind of story that often gets told, or even pushed out there, whether it’s our electeds, or certain leading nonprofits in the communities who may have some inkling of this, but are not really sharing it. Because I feel like especially as the neighbors “change,” what we’re seeing is folks deciding that poverty in those neighborhoods, that’s part of the cultural attribute. And so we’re going to play to that, versus, you know, wait a second, we’ve got people here who own property or who could, if given opportunities to do so. And how do we sort of support and then retain that asset within our own communities, and I feel like we’re still not seeing that happen.

The same way that your grandfather kind of got, like little Inklings, and just in the form of like little pieces of paper, littered over his bar. You know, we’ve been seeing, little inklings of that, as well, whether it’s a large amount of subsidized affordable housing being built, which we know the subsidies, those aren’t supporting people in the community. They are supporting the developers, you know, who decide to do just that, which also continues to concentrate the poverty in the community, and the rest of the system that says that it’s okay to profit off of different real estate trends that support not the people that are ultimately going to live in those communities, but everybody else who basically gets paid off as a result of it, and not even paid off, because it’s totally legal. Gross.

Brancaccio: And it’s just a practical point here, but it’s an important one, and you make the point in your book. If people fully understood the actual value of the property they have, they wouldn’t sell cheap, and that would increase the chances that you retain people in the neighborhood.

Carter: Absolutely. And it is the whole point of what we’re talking about, like recognizing that if given an opportunity to understand what’s going on, people everywhere will actually respond to that. But if you keep telling people and showing them that somehow or another, their communities don’t matter, that there’s no real value there, then essentially what we’re doing is pulling the wool over their eyes, and not giving them the benefit of the doubt that they could actually create wealth within their own community that benefits them. And it’s always going to be this thing where we’re playing out this idea that poverty of both economics as well as of the mind are things that happen in some places, and you know what, somebody else is going to do better as a result of it. So let somebody else do that.

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