The United States has a long history of facilitating housing policies that cause racial segregation and discrimination against people of color. When contextualizing contemporary examples of wealth and housing inequality, the term ‘redlining’ is often used. Redlining, a segregationist practice in which a mortgage lender denies loans to certain areas of a community, was created by the HOLC in the early 1950s. These areas bore a red code, categorizing them as hazardous, often because of the racial or ethnic makeup of the loan applicant’s neighborhood. Neighborhoods that were predominantly made up of African Americans, Catholics, Jews, and immigrants from Asia and Southern Europe were deemed undesirable by Loan Corporations and marked as ‘red’, regardless if these neighborhoods were actually hazardous or not. In contrast, neighborhoods that were marked as green or “desirable” were found to be predominantly white. Even though this practice was outlawed over 50 years ago with the creation of the Fair Housing Act of 1968, the effects of redlining can still be seen in neighborhoods today.

 

A 2018 study published by the National Community Reinvestment Coalition (NCRC), revealed that the socioeconomic inequalities and racial segregation created by mid-20th century redlining persist in many cities to this day. For example, in the city of Atlanta, Georgia, 100% of the areas that were green in a 1938 map by the  HOLC were in majority-white census tracts in the 2010 Census. The researchers also found that 100% of those communities were identified as having a median income greater than, or equal to 80% of the greater area’s median income. Comparatively, over 81% of the communities classified as red or “hazardous” in 1938 are currently identified as having high minority populations, and over 71% of residents have a median income below 80% of the median income. 

 

I sat down with Bruce Mitchell, a researcher with the National Community Reinvestment Coalition and co-author of the 2018 study for comment. “Our research was some of the first to look at historically redlined neighborhoods and how they served to concentrate disadvantage in urban areas” he noted. “Housing is a relatively permanent aspect of the built environment. Once built, it persists over decades. The quality of its construction sets the value of properties for a neighborhood. If they are well built, they are likely to be more desirable, and therefore have a higher value,” Mitchell said. “Redlined neighborhoods did not have access to capital to build quality housing, or to improve the existing housing. So redlining is one of many policies and practices that served to segregate U.S. cities, both racially and economically.”

 

Where certain economically underdeveloped neighborhoods have shown a major increase in median home values and education quality between the 2000 and 2010 United States censuses, researchers cite the process of gentrification. Gentrification is defined as a rapid process in which a low-income urban area experiences an influx of middle-class or wealthy people who renovate and rebuild homes and businesses- which often results in an increase in property values. While gentrification can lower crime rates and attract new businesses, it is at the expense of current residents, who are often forced out of their homes and neighborhoods because they can no longer afford to pay the rising rent and property taxes.

 

“This is what is meant by systemic or structural racism, that the long history of discrimination put in place impediments that last,” Mitchell said.

 

In the United States, homeownership is one of the major ways people create generational wealth. As home values increase and you make payments towards a home loan, you'll gain wealth through equity. Because of the discrimination in real estate, we can see observable differences in the racial wealth gap:  white families have an average of 10 times the net worth of a black family, even when accounting for other factors such as a lesser quality of education and lower average income. 

 

“This [racial] gap can be addressed through several interlinked policies,” Mitchell said, “Increasing the supply of affordable housing, improving mortgage offerings for Black and Hispanic borrowers so that they include lower fees and down-payment assistance, and encouraging better education and employment opportunities for all Americans”.