Race, Market Constraints, and the Housing Crisis: A Problem of Embeddedness


  • Jesus Hernandez




Explanations for the US subprime loan crisis fail to acknowledge the high concentration of unsustainable mortgage products in predominantly nonwhite neighborhoods. Using Sacramento, California, as a case study, this article places the housing crisis within the historical context of housing discrimination, demonstrating how market preconditions were manipulated through the use of racial categories—a process that fuses race with economic action. This sorting of individuals based on racialized criteria secured market privilege and position for selected groups while encouraging group closure. Such historically rooted and racialized credit lending policies left segregated neighborhoods highly vulnerable to subprime lending and foreclosure. The existence of a dual credit market calls attention to the presence of such race-based rules for market conduct and access. By extending Granovetter’s claim that economic action remains embedded in social relations to include race relations, this article argues that the housing crisis in Sacramento is a problem of embeddedness.