A 4-part dissection of how more than 50 years after redlining was outlawed, America’s communities continue the practice in clever and blatant ways
The Past Informs the Present
If it holds true that the key to generational wealth in America is, and has largely always been, homeownership, then the opposite holds true for intergenerational poverty. When a person is locked out of the single most commonplace and realistic way to create and sustain wealth in our country, they spend a lifetime wallowing in poverty—or at least in the inability to have access to one of the most tried-and-true methods of rising up into a higher economic class.
For people who are living paycheck to paycheck—as more than half of all Americans are even to this day—the means to save money, invest, or even pay down debt is largely absent, and so each generation must begin from scratch. With few exceptions, people remain in poverty when they are born into it, for a wide variety of reasons. Chief among them is the cultural memory that gets passed down from generation to generation (as described in an earlier blog post) that they are never going to truly be allowed to join the ranks of America’s homeowners. Financial literacy is difficult to teach when a person is uncertain where money will come from, or if they will even make enough to cover life’s bare necessities.
Having witnessed this mindset first hand, I can attest to the fact that my friends and neighbors in the poor communities where I grew up had mostly thrown up their hands and just accepted poverty as a fact of our existence. Yes, there were those of us who fought to get out of poverty and sometimes succeeded, but the power of poverty is overwhelming, and the mental toll of being denied fair access to jobs, services, and even safe and sanitary living conditions cannot be overstated. The weight of poverty is tangible. It is very real. And even the most informed and prepared poor and minority Americans are well aware the chances of overcoming the various historical hurdles into the middle class are slim to none.
In addition to the cultural mindset of poor and minority Americans and our assumptions about the lack of opportunities available to us, there are the very real historical mechanisms that have been used to ensure that people of color have more impediments to their success than their White counterparts. Everything from unequal wages to predatory loan schemes—not to mention being denied access to quality education and persistent racist hiring practices—has built a clear and traceable history of discriminatory laws and policing, as well as socially acceptable policies that have resulted in the inequalities we still grapple with in modern America.
The near-complete absence of Black and other minority homeowners from the founding of our country until the early 20th Century is precisely what people are referring to when they argue that systemic racism is baked into the very fabric of American society. This is one of the most effective ways to keep entire groups historically disenfranchised and unable to participate in society and reap the many benefits that accompany homeownership.
Sure, there have always been a lucky few who have managed to claw their way into the comforts of American life despite the many obstacles in their path, but their stories are rare exceptions to the overall rule of thumb that we might never get ahead. Those lucky few are often (rightfully) celebrated, but the underlying statement when they are spoken about is that precisely because they succeeded in the face of discrimination when so many others did not, they are memorable.
Redlining: How the Game Was Changed
So, what are the ways, historically, that poor and minority families have been kept from homeownership?
Prior to the government-sanctioned practice of redlining, there were several methods used to keep minorities from buying homes and participating in the middle class American Dream. Sometimes it was a literal mob of people threatening the lives of an unwanted group, or groups, in their community. Sometimes it was communities coming together and creating laws to disallow certain minority groups access to housing and services, effectively banning anyone from settling into the community in a meaningful way.
One of the most commonplace ways of legally banning “undesirable” groups of people was to write housing covenants, a practice that began prior to redlining but flourished with its creation. This is when communities were able to expressly state that—for example—only White Christians were able to purchase homes in a particular area. The people who built or owned the homes were unable to sell to the unwanted groups, whether they were the wrong color or religion or sexual orientation, without facing legal recrimination from the community itself. But, over time, this technique fell out of favor when redlining was implemented with the creation of the Federal Housing Act of 1934. After all, there was no longer as much of a need to create impediments at the local level when the U.S. Government itself had simply handed the tools to the entire country to discriminate in home lending and effectively slam the door on minority homeownership.
Redlining has, historically, been one of the most successful roadblocks to homeownership ever created. Despite its being outlawed as a practice in 1968, the damage had been done and the effects are still being felt nearly 50 years later. What made it so successful was that prior to its implementation in the 1930s, each community had to come up with its own set of rules and regulations to push back against would-be minority homeowners. With the backing and blessing of the federal government, a powerful tool had been created to simply deny minorities the ability to obtain a mortgage.
Why was this such a powerful tool? Because a mortgage is the only way most Americans ever get to purchase a home. Unless a person has somehow managed to save enough money to buy a home with cash, virtually anyone attempting to buy a home must rely on a mortgage loan from a bank. When banks can deny entire groups of people loans because the government tells them they can, what incentive is there for a bank to take the risk? There was, of course, nowhere else for these people to turn once they had been denied a mortgage. That door was now closed for good.
Redlining was a sinister and long-lasting tactic for a number of reasons, but chief among them was the creation of literal maps of cities and towns across the country that color-coded neighborhoods based on their value and future potential growth. The green areas were deemed to be the safest areas for banks to invest (and therefore grant mortgage loans). These were the wealthiest, safest, Whitest parts of town. The areas where home values were certain to always rise, precisely because of the government said they would. The opposite was the case with the red zones (which is where the term redlining stems from), since these were the neighborhoods with poor and minority families that the government determined to be bad investments. The repercussions of these maps are still felt to this day.
In fact, one need only look at the redline map of any city to see that the government’s grading system and corresponding “assessment” of the quality of particular neighborhoods was blatantly designed to segregate cities and keep the safe, White neighborhoods free from infiltration by poorer and minority citizens. Each map has a grading scale to correspond with the color-coded outlined areas, with green zones being given an “A” for being the “best” neighborhoods and, therefore, the least amount of risk. Red zones were given a “D” and considered to be “hazardous” risks for banks. Blue areas, granted a “B” grade, were described as “still desirable,” while yellow areas were depicted as “definitely declining.” Each map created to assess the various regions of the United States used this grading system.
Beyond this sweeping assessment of towns and cities across America by government assessors, there are the particular neighborhood descriptions that were often attached to the maps to further explain the root cause of the area’s value or risk. For example, as outlined in the redline map of Los Angeles, Northwest Compton was redlined because of “threat of negro infiltration from the north,” while Compton itself was graded yellow because it was “inhabited by Mexicans and other racially subversive elements.”
These blatantly racist depictions of neighborhoods, towns, and suburbs had their desired effect. Banks refused to lend in high-risk areas, and homeownership slumped dramatically for generations to come. Such was the outcome of this particular practice, as it was purposefully designed.
Blight and the Self-Fulfilling Prophecy
The greatest tragedy of the redlining era was that this form of racial and financial segregation became a self-fulfilling prophecy. In other words, because the government said the redlined areas were undesirable, they literally became less and less desirable due to the lack of investment. The government deemed areas to be dangerous and high-risk, and so that is precisely what they developed into over time.
Since banks would not lend in these areas, homeownership plummeted. Many of the homes lost what value they had once held, so the properties fell into disrepair. Cities and towns lost tax revenues from the devalued properties in these regions and therefore did not invest in infrastructure and services. Businesses shied away. School funding was dramatically reduced, or lost altogether. The very tools that allow people to break free from poverty—decent jobs and good education—were disappeared from these “blighted” communities, and so the cycle of poverty was put into place and carried on for generations.
The term “blight,” often used during the era of redlining, was a none-too-subtle way of describing poor and minority neighborhoods that were crumbling. Over time, this once harmless term, which originally was used to describe a sick or diseased plant, became code for a minority neighborhood. It came to mean dangerous. It came to mean poor. It came to mean the neglected places in our country that were beyond saving, and so there was no incentive to save them.
So common had the term become—and the understood true meaning of the word—that in the 1983 film, National Lampoon’s Vacation, the character Clark Griswold (played by Chevy Chase) drives through a poor and decrepit part of Chicago and says, “look at all this blight,” which was a nod to the newer, now-established meaning of the word. It is meant to be a joke shared by those in the know. But, in reality, it was a tragic fact.
The blighting of America was well underway by the time redlining was outlawed, and the seemingly irreversible causes of blight were now well established. The neighborhoods that had been neglected and abandoned would begin their fight to stay alive, but newer, more sinister methods of “shadow redlining” would make the battle as difficult as it had ever been.
Are you ready to make your move into the world of homeownership? Visit AHP75.com to learn about our homebuyer programs designed specifically to help low-income and minority Americans join the ranks of homeowners and get onto the path of financial stability and wealth generation.
Aaron Morales is the Social Justice Writer for AHP 75, based out of Chicago, IL.