CCR Resource Portal - Redlining in the U.S.

Redlining in the United States

Redlining¹ refers to a racially discriminatory practice of disinvestment and exclusionary lending that systematically obstructed African Americans and other communities of color from accessing homeownership and economic mobility.² Originating in the 1930s, redlining was institutionalized by federal agencies such as the Home Owners' Loan Corporation (HOLC) and the Federal Home Loan Bank Board, which developed color-coded maps to evaluate the investment risk of residential neighborhoods. Predominantly white neighborhoods were marked in green as "best" for investment, while blue indicated "still desirable" areas, yellow denoted neighborhoods "definitely declining," and red signified areas deemed "hazardous"—the majority of which were heavily populated by Black residents. The red designations effectively discouraged banks and investors from offering mortgages and financial services to those areas, reinforcing racial segregation and contributing significantly to long-term Black poverty.

Impacts of Redlining

Racially Segregated Communities
Redlining reinforced racial residential segregation by directing investment away from communities of color, thereby creating racially homogenous neighborhoods with entrenched disparities.³ Today, nearly 64% of the neighborhoods classified as "red" by the HOLC remain predominantly non-white.⁴

Socioeconomic Disparities
Homeownership is a principal driver of intergenerational wealth in the United States. However, by restricting access to mortgages and investment opportunities, redlining severely limited wealth accumulation among African Americans. As of recent data, Black household wealth is estimated to be only about 5% of white household wealth.⁵ The lack of homeownership among communities of color also led to lower property values, reduced rental income, limited access to credit, and inflated borrowing costs—further discouraging private and public investment and contributing to the deterioration of urban neighborhoods.⁶

Health Outcomes
Redlining has had lasting health consequences.⁷ Studies have demonstrated that residents in historically redlined communities experience worse mental health outcomes, lower life expectancy, and higher rates of morbidity. On average, life expectancy is 3.6 years shorter in formerly redlined areas compared to their historically favored counterparts.

Crime and Social Disorganization
Redlined neighborhoods have also been associated with elevated crime rates.⁸ These areas exhibit characteristics of social disorganization—marked by high levels of poverty, ethnic heterogeneity, and frequent population turnover—all of which are linked to increased delinquency and reduced communal stability.

Redlining in Baltimore

Baltimore played a foundational role in the development of racially discriminatory housing policy. In 1910, Hawkins, a Yale-educated Black attorney, purchased a home on McCulloh Street—then considered a prestigious, majority-white neighborhood. This event prompted the enactment of Ordinance No. 610 in 1911, which instituted racial zoning laws prohibiting Black residents from moving into majority-white blocks. This ordinance became the first racial zoning law in the United States and served as a legal precursor to the redlining practices that would emerge nationally in the 1930s. Even before the formal adoption of redlining, the Baltimore City Housing Authority operated racially segregated and unequal public housing programs. Redlining entrenched a cycle of economic and racial disparity that continues to shape the socio-economic landscape of Baltimore to this day.

Figure SEQ Figure \* ARABIC 1 Map of Baltimore Redlining (Black Butterfly and White L) 9

Modern Redlining

Reverse redlining refers to the discriminatory practice of targeting predominantly non-white neighborhoods for exploitative financial products, such as high-interest loans or subprime mortgages offered on unfavorable terms.¹⁰ Unlike traditional redlining, which involves the denial of services, reverse redlining capitalizes on the same communities by subjecting them to predatory lending practices. In 2015, Hudson City Savings Bank was ordered to pay $25 million in restitution to communities that had been subjected to such practices. These neighborhoods—predominantly Black and Hispanic—had been systematically denied access to fair home mortgage lending services between 2009 and 2013.¹¹

Devaluing of Black Assets

Devaluation refers to the percentage reduction in median home values in neighborhoods where Black residents comprise at least 50% of the population, compared to neighborhoods with no Black residents, after controlling for structural home characteristics and neighborhood amenities.¹² According to a report by the Brookings Institution, in the average U.S. metropolitan area where the population is majority Black, homes are valued at approximately half the price of comparable homes in predominantly white neighborhoods. This systemic devaluation of property not only reflects entrenched racial bias in housing markets but also undermines intergenerational wealth accumulation and limits upward mobility for Black children residing in these communities.

References

Coined by sociologist John McKnight in the 1960s, it derives from how the federal government literally drew a line on a map around neighborhoods to decide investment based on specific demographics, the people of color communities
Gaspaire, B. (2012, December 28). Redlining (1937- ). https://www.blackpast.org/african-american-history/redlining-1937/
Glodstein, S. & Legallet, N. (2021, June 4). Redlining in Chicago. https://storymaps.arcgis.com/stories/1ef3f1a1a8a645e7a59ea34f401ae601
Mitchell, B. (2018, March 20). HOLC “Redlining” Maps: The Persistent Structure Of Segregation And Economic Inequality. National Community Reinvestment Coalition. https://ncrc.org/holc/
See Footnote 3
Aaronson et al. (2021, November 1). p 33. The Effects of the 1930s HOLC “Redlining” Maps in American Economic Journal: Economic Policy 13, no.4, 355-393, doi:10.1257/pol.20190414
Richardson et al. (n.d). Redlining And Neighborhood Health. National Community Reinvestment Coalition. https://ncrc.org/holc-health/
Powell, R. (2021, September). p 228. Redlining, Neighborhood Decline, and Violence: How Discriminatory Government Policies Created Violent American Inner Cities in CUNY Academic Works
Coined by Dr. Lawrence Brown, the Black Butterfly describes the contrast between the “White L”, from the Inner Harbor and stretching straight North to the wealthy neighborhoods of Homeland and Guilford, while the low-income Black neighborhoods make up large of East and West Baltimore.
Hayes, A. (2021, October 21). Redlining. Investopedia.com. https://www.investopedia.com/terms/r/redlining.asp#:~:text=Reverse%20redlining%20is%20the%20practice,predatory%20lending%20of%20subprime%20mortgages.
Consumer Financial Protection Bureau And United States V. Hudson City Savings Bank, F.S.B. (D.N.J.). (2015). https://www.justice.gov/crt/case/consumer-financial-protection-bureau-and-united-states-v-hudson-city-savings-bank-fsb-d-nj
Perry et al. (2018, November 27). The devaluation of assets in Black neighborhoods, the case of residential property. Brookings. https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/
Background image credit: The New York Times; https://static01.nyt.com/images/2021/08/22/upshot/25up-redliningbk/25up-redliningbk-facebookJumbo.jpg?year=2017&h=549&w=1050&s=44eef2d8fa423f983501b5eeb868d8f053372c2f7a93901f4855111174829fb6&k=ZQJBKqZ0VN