Part of the evidence of this enduring structure can be seen in the Home Owners’ Loan Corporation (HOLC) maps created 80 years ago, and the neighborhood economic and racial/ethnic composition today. While overt redlining is illegal today, having been prohibited under the Fair Housing Act of 1968, its enduring effect is still evident in the structure of U.S. Redlining––the practice of denying borrowers access to credit based on the location of properties in minority or economically disadvantaged neighborhoods––was widely practiced across the U.S., even in places not commonly associated with “Jim Crow” segregation laws (Rothstein 2017). As a consequence, it has a neighborhood-level spatial structure, presenting a geography which can be examined in maps of cities across the country. Home mortgage lending credit access is subject to all of these factors, with the property collateralizing the loan. Another determinant of credit access is the risk associated with lending, which can be mitigated by the value of the collateral. Credit access, however, varies greatly depending on individual creditworthiness, and also on place-based factors like economic conditions of prosperity and growth which shape local credit markets. INTRODUCTIONĪccess to credit––home mortgage and small business loans––is an underpinning of economic inclusion and wealth-building in the U.S. The Midwest closely followed the South in the persistence of low-to-moderate income (LMI) neighborhoods and HOLC “Hazardous” areas. Regional differences in changes of HOLC “Hazardous”,Ĭities in the South showed the least change in the HOLC-evaluated “Hazardous” neighborhoods that today have lower incomes and higher populations of majority-minority residents. Gentrification probably occurred in the HOLC “Hazardous” graded areas because of decades of depressed home values. Gentrification is associated with greater economic change in the HOLC highest-risk, “Hazardous” neighborhoods and higher levels of interaction between black and white residents, but also greater economic inequality in cities. Gentrification is related to some lessening of segregation,īut also with increased economic inequality Minority residents also tend to be more clustered in neighborhoods of cities where there were more HOLC higher-risk or “Hazardous” neighborhoods. Both black and Hispanic residents of hypersegregated cities are unevenly distributed and have lower levels of interaction with non-Hispanic whites. This could indicate that cities with less change in the racial and ethnic structure of their neighborhoods over the past 80 years have greater economic inequality today.Ĭities where more of the HOLC high-risk graded “Hazardous” neighborhoods are mostly minority are associated with “hypersegregation”. To a lesser extent this is also true of cities where more of the HOLC low-risk or “Desirable” areas have remained white. There is significantly greater economic inequality in cities where more of the HOLC graded high-risk or “Hazardous” areas are currently minority neighborhoods. Additionally, most of the HOLC graded “Hazardous” areas (nearly 64%) are minority neighborhoods now. Most of the neighborhoods (74%) that the HOLC graded as high-risk or “Hazardous” eight decades ago are low-to-moderate income (LMI) today. Redlining buttressed the segregated structure of American cities. The economic and racial segregation created by “redlining” persists in many cities This study examines how neighborhoods were evaluated for lending risk by the HOLC, and compares their recent social and economic conditions with city-level measures of segregation and economic inequality. (Source: Mapping Inequality Project, University of Richmond) Reversing the red lines: Disinvestment in America’s citiesĮxample of the original 1938 HOLC “Residential Security” map of Atlanta with color-coded gradation of neighborhoods by risk level.How 1930s discrimination shaped inequality in today’s cities.
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