Real estate redlining is a form of discrimination in which lenders, insurers and other financial service providers delineate certain geographical areas in which they disproportionately provide either few services or none at all. Redlining is an insidious problem in the real estate industry, with long lasting and far-reaching implications. It has been used as an illegal racial and/or socioeconomic form of discrimination for generations, and continues to subvert American economic development today.
What is Redlining?
Redlining is the practice of mapping out geographic locations from which banking, mortgage and other lending firms will not provide or issue loans and other services. Redlining is rooted in sociology, geography, urban planning and economics and has long been a tool for identifying high-risk areas for lenders, by creating classifications based on race or ethnicity. Coined in the 1930s, the term “redlining” refers to a practice in which high-risk locations are marked in red on a household-level map. Commonly, those deemed undesirable by lenders were typically neighborhoods that were minority-dominated or populated with immigrants, or those with lower incomes. This practice has been heavily studied over the last few decades with particular focus on the effects on housing availability, mortgage lending and foreclosures.
Effects of Redlining
The effects of redlining in the United States are manifold. The practice has been blamed for a lack of investment in certain neighborhoods, leading to disrepair and further isolation. Areas that have been redlined often face fewer resources for schooling and healthcare, higher crime rates and decreased access to transportation, all of which can have an irreversible and damaging effect on residents. Additionally, redlining has long been linked to a decrease in home values and a spike in foreclosure rates in redlined neighborhoods. By creating a space in which housing is inaccessible for various socio-economic or racial groups, redlining leads to segregation, dilapidated neighborhoods and further economic and racial inequity.
Fighting Redlining: The Fair Housing Act
The Fair Housing Act of 1968 explicitly forbid discrimination based on race, color, national origin and religion, among other identifiers and prohibited redlining in housing. The legislation’s goal was to protect people from arbitrary loan denial and to ensure they are able to purchase a home in any area they wished, regardless of their background. Despite the Act’s clear forbids, studies released in the wake of the Act’s passage showed that lenders were still partaking in discriminatory lending practices.
Conclusion
Redlining has had and continues to have far-reaching effects on society in regards to racial and socioeconomic inequality. The practice has been long studied, with quantitative and qualitative studies pointing to its pervasive, discriminatory effects. The Fair Housing Act of 1968 provided a much-needed start for protecting marginalized communities from the negative effects of redlining. Much more, however, needs to be done in order to ameliorate the continuing inequities redlining has perpetuated, ultimately providing an equitable and accessible real estate landscape for all.
Frequently Asked Questions
Q: What is redlining?
A: Redlining is the practice of mapping out geographic locations from which banking, mortgage and other lending firms will not provide or issue loans and other services.
Q: What are the effects of redlining?
A: The effects of redlining in the United States are manifold. The practice has been blamed for a lack of investment in certain neighborhoods, leading to disrepair and further isolation. Areas that have been redlined often face fewer resources for schooling and healthcare, higher crime rates and decreased access to transportation, all of which can have an irreversible and damaging effect on residents.
Q: How was redlining addressed in the United States?
A: The Fair Housing Act of 1968 explicitly forbid discrimination based on race, color, national origin and religion, among other identifiers and prohibited redlining in housing.