HOLC “redlining” maps: The persistent structure of segregation and economic inequality

Abstract

Eighty years ago, a federal agency, the Home Owners’ Loan Corporation (HOLC), created “Residential Security” maps of major American cities. These maps document how loan officers, appraisers and real estate professionals evaluated mortgage lending risk during the era immediately before the surge of suburbanization in the 1950’s. Neighborhoods considered high risk or “Hazardous” were often “redlined” by lending institutions, denying them access to capital investment which could improve the housing and economic opportunity of residents.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. The study reveals: The economic and racial segregation created by “redlining” persists in many cities Redlining buttressed the segregated structure of American cities. Most of the neighborhoods (74%) that the HOLC graded as high-risk or “Hazardous” eight decades ago are low-to-moderate income (LMI) today. Additionally, most of the HOLC graded “Hazardous” areas (nearly 64%) are minority neighborhoods now. Persistent economic inequality There is significantly greater economic inequality in cities where more of the HOLC graded high-risk or “Hazardous” areas are currently minority neighborhoods. To a lesser extent this is also true of cities where more of the HOLC low-risk or “Desirable” areas have remained white. 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. Persistent residential segregation Cities where more of the HOLC high-risk graded “Hazardous” neighborhoods are mostly minority are associated with “hypersegregation”. Both black and Hispanic residents of hypersegregated cities are unevenly distributed and have lower levels of interaction with non-Hispanic whites. Minority residents also tend to be more clustered in neighborhoods of cities where there were more HOLC higher-risk or “Hazardous” neighborhoods. Gentrification is related to some lessening of segregation, but also with increased economic inequality 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 probably occurred in the HOLC “Hazardous” graded areas because of decades of depressed home values. Regional differences in changes of HOLC “Hazardous”, and LMI and majority-minority areas Cities 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. The Midwest closely followed the South in the persistence of low-to-moderate income (LMI) neighborhoods and HOLC “Hazardous” areas.

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