Redlining, Race, and the Color of Money

Redlining, Race, and the Color of Money

Redlining maps document the deep history of institutional racism in the United States. They also reveal how the federal government managed risk for capital—a role that has perpetuated inequality long after the end of explicit discrimination in the housing market.

The HOLC map of Boston (Robert K. Nelson, LaDale Winling, Richard Marciano, Nathan Connolly, et al., “Mapping Inequality,” American Panorama, ed. Robert K. Nelson and Edward L. Ayers)

Starting in the 1930s, a federal agency known as the Home Owners’ Loan Corporation (HOLC) sent dozens of surveyors to neighborhoods across the country. Often relying on the knowledge of local realtors, banks, and city agencies, the surveyors tallied up statistics about race, ethnicity, mortgage rates, and housing conditions. From these notes, the HOLC stamped thousands of neighborhoods with rankings on a graded scale, from A to D, with D-grade neighborhoods marked on maps in red.

It was this cartographic color palette that gave rise to the term “redlining.” In recent years, these maps and the broader phenomenon of redlining have become some of the most widely used and shocking demonstrations of institutional racism in American life. The maps seem to tell a straightforward story: the federal government engineered racial segregation by specifically identifying Black neighborhoods and eliminating them from federal housing programs, setting these neighborhoods up for permanent disinvestment and marginalization.

Redlining, however, wasn’t only about race. In fact, in many American cities, the majority of redlined neighborhoods didn’t have any Black residents living in them at all. If redlining maps were not just maps of race, then what were they maps of? They were maps that cataloged and reproduced the spatial order of a much broader system of inequality and injustice, one in which race mingled with other markers of social disinvestment. Redlining maps endorsed ideas about risk and value that suited the needs of private finance, laundering all sorts of coded ideas about social order behind the neutral geographic assessment of good and bad neighborhoods. Getting the history of these infamous maps right is crucial if we want to understand how patterns of urban inequality continue to undermine social integration and economic justice in the present day.

In the Hough’s Neck and Germantown neighborhoods of Quincy, Massachusetts, jutting out into the Atlantic Ocean with impressive seaside views, HOLC surveyors found no foreign-born families and no Black residents. Sixty percent of homes here were owner-occupied. The surveyors graded the area D on their description card, and on the map, they inked it red. They made a similar conclusion at Winthrop Beach, north of Boston, where they observed a “resort location” and a “good beach” but nonetheless assigned the area a D.

In one tract of the Nonantum section of the Boston suburb of Newton, the surveyors found 60 percent Italian families and 0 percent Black; they noted “good schools, churches, etc.” This neighborhood, too, got a D rating and a splash of red. In Boston’s Charlestown district, where the surveyors found 40 percent Canadian families and 0 percent Black families, as well as a neighborhood that boasted “proximity to Boston commercial area,” the HOLC made the same conclusion: D grade, red map.

To understand why neighborhoods like Hough’s Neck, Winthrop Beach, Nonantum, and Charlestown were redlined, even though they had no Black residents at all, it’s important to realize that the raison d’être of the HOLC programs wasn’t enforcing racial apartheid. It was managing financial stability and risk. The HOLC didn’t refer to its documents as “redlining” maps, but rather as “security” maps. And its evaluations of financial risk and security rested heavily on stereotypes about what kinds of people and places were risky or secure—stereotypes that continued to shape cities long after the HOLC was disbanded in 1954.

Ownership of land and buildings lies at the base of the modern financial system. In the United States today, residential housing makes up more than $36 trillion of the nation’s total assets, and nearly two-thirds of middle-class wealth is invested in primary residences. Real estate is expensive because it’s extremely difficult to make more of it. It’s also the ultimate fixed good: housing tends to last for decades or even a century or more, and it’s essentially impossible to move it from one place to another.

Since the 1930s, the federal government has had a major hand in shaping the market for housing. The idea that the federal government should intervene in real estate financing was in fact a relatively progressive one for its time. For decades, banks and realtors had fought to keep regulation and public control out of the private mortgage system. It was only after the Great Depression and the political revolution of the New Deal that these industries reluctantly acquiesced to greater oversight from economic planners in Washington.

But banks and realtors did more than just passively accept federal intervention. They shaped it in their own image. Rather than converting housing and land into publicly managed assets (as was done, for example, under the social democratic government in Vienna between the world wars), the U.S. federal government agreed to manage risk for the financial industry, using its credit and bond-issuing powers to stabilize the market for private mortgages. In doing so, the federal government became a speculator itself, trying to evaluate where capital was likely to continue flowing in the future—and, conversely, to insulate itself against the risks of exposure to bad loans.

This was the motivation for creating the redlining maps: the government needed to standardize its rates for mortgage insurance. Just like a fire insurer would want to know whether a house was made of wood or brick, a mortgage insurer—in this case the federal government—wanted to know whether a neighborhood was attractive or unattractive to capital. In their description for the redlined Hough’s Neck neighborhood, the HOLC surveyors noted that “cheaply built houses and cottages” predominated here, and that many of its white residents were on “relief”—that is, welfare. This gave the neighborhood “a poor reputation.” Prices and rents were declining. Examining the private “availability of mortgage funds,” the assessors found that it was impossible to secure a loan in Hough’s Neck.

Similar evaluations about falling prices, tumbledown housing, and precarious tenancy led to D ratings elsewhere. Noxious factories and limited access to transportation could also mark a neighborhood as a bad investment. A neighborhood in Norfolk, Virginia, earned a D grade because its “general appearance” was “rural and undesirable.” The poorest neighborhood of Cuyahoga Falls, a city on the outskirts of Akron, Ohio, exhibited “low standards of living and in general gives every evidence of a rapid downward trend,” guaranteeing it a D grade even with zero foreign families and zero Black families.

These evaluations were unquestionably saturated by racist ideology. The fraction of “Negro” residents was one of the default fields to be completed on every HOLC assessors’ forms. Since the failure of Reconstruction in the 1870s, Black citizens had been excluded from both employment and credit in the mainstream of the U.S. economy. The vast majority of private lenders simply would not issue a loan to a prospective Black borrower, no matter how secure their income or social reputation. The 1924 National Association of Real Estate Boards’ Code of Ethics instructed realtors never to sell a home to “members of any race or nationality . . . whose presence will clearly be detrimental to property values.”

The presence of Black residents was therefore one of the attributes that could make a neighborhood financially risky. But it was not the only one. Oftentimes, poor residents of all races already clustered in places near environmental hazards or substandard construction. A neighborhood on the outskirts of Los Angeles received a D grade for the presence of Japanese gardeners, Mexican farm laborers, and oil wells. The economic vulnerability of out-groups was what made their neighborhoods valueless, and skin color alone could not provide a reliable protection from this vulnerability. In a D neighborhood of Oshkosh, Wisconsin, the HOLC surveyors found a large fraction of Russian immigrants who worked for a lumber company that had recently shuttered. “No work for them today,” the surveyors jotted down. They condemned the neighborhood to junk status.

What the financial industry wanted most of all was to profit on loans and to avoid holding defaulted assets. Through programs like the HOLC, the federal government did everything it could to help lenders manage this risk and to protect itself from holding the final bill for bad loans. That meant making assumptions about risky neighborhoods that were based on assumptions about risky people—Black people, welfare recipients, poor tenants, and so on—and encoding these assumptions into the self-perpetuating logic of the financial system.

Thus, the red areas of HOLC maps were not simply the cartographic representations of where Black residents were located. They were the areas that the government and the financial industry, working in concert, had marked as un-investable. In the City of Boston alone, eight of the twelve redlined neighborhoods had no Black residents at all. Conversely, however, every neighborhood in Boston with any measurable Black population was issued a D. The presence of Black residents was sufficient, but not necessary, to consign a neighborhood to the margins of housing markets.

The social composition of a neighborhood is just as intertwined with its perceived financial value today as it was in the 1930s, even though the HOLC has been gone for several generations. I recently received a mailer from the multinational bank that services my own mortgage. The smiling models on the brochure included many photogenic Black couples. On the inside, the bank invited me to log in to a portal where I can keep an eye on “neighborhood trends”—by which they meant the exact same assessments about rising or falling values that the HOLC surveyors were making nearly a century ago.

This is the modern-day incarnation of the logic of redlining maps—no longer outwardly bigoted, it nevertheless fuses together personal credit, the government-stabilized financial system, and the fundamental assumption that certain kinds of neighborhoods are “good” and therefore valuable, while others are “bad” and therefore cheap. Choose any luxury real estate broker in any city in the United States and read their neighborhood descriptions for homebuyers. In many cases, the language might as well be lifted directly from the HOLC.

These valuations of good and bad quite literally map onto racial disadvantage. One recent study found that, since 1980, homes in white neighborhoods had appreciated, on average, $200,000 more than homes in otherwise comparable communities with many people of color. As the historian Keeanga-Yamahtta Taylor has written, after the finance and real estate industries stopped excluding them outright, Black communities eventually faced another sinister form of exploitation—what she calls “predatory inclusion.” Black borrowers were steered into high-interest loans in neighborhoods already isolated by segregation, thereby simultaneously enriching lenders while erecting a new barrier to integrating the suburbs. By creating enormous geographic differentials in neighborhoods’ values, chaining middle-class prosperity to these financial assets, and then indexing the social makeup of neighborhoods to the values themselves, private housing markets have served as one of the greatest force multipliers for inequality in the United States for over a century.

The problem with the popular understanding of redlining is that it makes it seem as though we would not still find ourselves bound inside the red prison bars of segregationists if only the government had not dropped into urban housing markets in the 1930s and identified Black neighborhoods with these bigoted maps. But in 1930 as in 2020, the private market didn’t need the federal government’s direction to mark certain communities for disinvestment. Instead, federal economic planners, fearful of pulling up the private lending and real estate system root and branch, merely stepped in to stabilize and rigidify the unjust practices that were already in place.

What the government did do, however, was provide opportunities that lifted some communities out of their status in the un-investable margins of housing markets while leaving others to languish. After the Second World War, the especially strong labor market for white people, coupled with the financial stability of federally guaranteed loans and decades of investment in schools and infrastructure, created opportunities to gradually erase the mapmakers’ red ink in certain neighborhoods where residents could blend into the midcentury suburban dream. Nonantum is a characteristic example. The HOLC surveyors noted that, while multifamily units were impossible to finance there in the 1930s—a major factor in its D rating—single-family homes could still secure mortgages. As the neighborhood transitioned to the new white suburban norm of single-family homeownership, Nonantum, like hundreds of “white ethnic” neighborhoods across the country, levitated into the middle classes through the power of rising home prices. The same did not happen in Greater Boston’s majority Black neighborhoods, where the condemnations of surveyors in the 1930s deepened into the racial ghettoization of the 1960s and ’70s, which persists to this day in yawning wealth inequalities.

Redlining maps are not proof that the federal government engineered racial inequality, but are rather one piece of evidence showing how government catastrophically failed to un-engineer the deeply unequal patterns of private wealth accumulation in residential property that had been in place long before the HOLC started intervening in housing markets. Those unjust patterns reflected racial differentiation, but also many other social markers of value and hazard.

Tackling the relationship between economic inequality and geographic inequality remains a colossal task that requires much more than simply ceasing the outright racist practices of the past. Local politicians, the ones who most closely control policies like school districting and zoning codes that reproduce the value systems inherited from the redlining maps, have consistently opposed direct federal intervention into decisions about housing policy. And, as Elizabeth Warren noted in an op-ed last summer, housing has only become an even more lucrative source of profit for Wall Street since the 2008 crisis.

In fact, the 2008 crisis demonstrated yet again the persistence of redlining logic: the government chose to stabilize lenders rather than taking more dramatic steps to support homeowners and renters, a choice that had disastrous consequences for Black wealth over the past decade. If we want the federal government to move beyond redlining, rather than simply acting as a risk-management support for capital, as it has been doing since the days of the HOLC, it should instead take a more active role in directing a housing policy with the goal of geographic equalization.

It could do so in part by drawing money through wealth taxation out of the very neighborhoods whose exorbitant present-day values are also products of redlining: the affluent, primarily white communities where the HOLC and its successors steered investment. Redlining maps were meant to preserve existing residential patterns of affluence and poverty. Correcting their legacy will take not only racial justice but geographic justice as well.

Garrett Dash Nelson is the Curator of Maps & Director of Geographic Scholarship at the Leventhal Map & Education Center at the Boston Public Library.

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