Redlining and housing discrimination

by Michael McClelland

A rising senior at Davidson College majoring in History, Michael interned with Rebuilding Together of Greater Charlotte over the summer through Davidson Nonprofit Leadership Fellows program.

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For decades, African Americans have experienced housing discrimination by real estate agents, banks, and the government policies regarding where they have the right to live. This post discusses the ways in which the US government along with other aspects of housing (real estate and the banking industry) have segregated American neighborhoods with a focus on Charlotte, North Carolina. Richard Rothstein's 2017 book The Color of Law is an excellent introduction to this topic and provides much of the information referenced below.

Figure 1 - Redlining Map, Charlotte, North Carolina, 1935. Image courtesy of BlackPast.

​First, it is important to explore the background of housing discrimination, which can be traced back to the mid-1930's with the establishment of the Federal Housing Administration (FHA). The Federal Government instituted a practice called redlining to 'grade' neighborhoods based on the riskiness of mortgage lending, which was influenced heavily by race. The FHA’s justification for claiming that African Americans had riskier mortgages was that should an African American family move into a predominantly white neighborhood, the property values in that neighborhood would decline and put mortgages underwater. However, because African Americans were willing to pay more for a home than white Americans, the value of the homes in the neighborhood rose. The FHA suggested that “incompatible race groups should not live in the same neighborhood” further justifying their stance on not insuring African American mortgages especially when they encroach on historically white neighborhoods. "Neighborhoods where black people lived were rated “D” and were usually considered ineligible for FHA backing. They were colored in red. Neither the percentage of black people living there nor their social class mattered. Black people were viewed as a contagion. Redlining went beyond FHA-backed loans and spread to the entire mortgage industry, which was already rife with racism, excluding black people from most legitimate means of obtaining a mortgage" (Ta-Nehisi Coates).

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Figure 2 - Distribution of white residents in Mecklenburg County from the Charlotte/Mecklenburg Quality of Life Explorer

In addition to legislation that was passed in order to keep African Americans out of  white neighborhoods, other forms of discrimination kept African Americans away from city centers. Across the country, projects such as ‘slum clearance’ took place to further segregate cities. The word ‘slum’ during the time of the slum clearances “were widely understood euphemisms for African American neighborhoods”. One tool the government used was the building of the interstate highway system through African American neighborhoods. Policy makers saw the highway system as a way around the illegality of zoning African American residents away from white residents. Those developing the highway claimed that they chose the “blighted neighborhoods” because they may provide “suitable highway routes”. However, other areas surrounding cities could have been used as a location for the highway system. For example in Miami, Florida, abandoned railways could have been used for building the highway system to limit population removal, but it was rejected and the highway was placed in a predominantly Black part of Miami. The highway system was used to zone and move African Americans away from whites and city centers. In Charlotte, a similar situation occurred when the Charlotte Urban Renewal Program broke up the predominantly Black neighborhood called Brooklyn, which was in what is Charlotte’s Second Ward today. The Urban Renewal Program displaced thousands of Black residents of Brooklyn.
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Turning an eye to Charlotte and North Carolina as a whole, the story is no different. In the early 1900's, distinct Black and white neighborhoods formed following the end of the Reconstruction period (1865~1880). During the New Deal in the 1930's just like everywhere else, the government outlined the predominantly white and the predominantly Black neighborhoods. The white neighborhoods were marked a green line indicating low risk mortgages while the Black neighborhoods were marked by a red line indicating high risk mortgages. Even middle class African Americans were listed in the redlined zones, unlike their white counterparts of equivalent wealth. In Figure 1, the green and blue parts of the city were the areas predominantly inhabited by white residents in 1935 that were marked less risky for real estate financing, which to this day remain primarily inhabited by more wealthy residents. Figure 2 shows the distribution of white residents Mecklenburg County, highlighting the lasting impacts of redlining on our neighborhood segregation.  

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Figure 3 - Median Household Income in Mecklenburg County from the Charlotte/Mecklenburg Quality of Life Explorer

Current research shows that even though the initial redlining occurred in the 1930s, families and residents who currently live in those neighborhoods that were redlined, are less affluent. Since home ownership is “the number one way of accumulating wealth”, it makes sense that when discriminatory acts imposed by the government inhibit home ownership, those families will own less wealth. Since the 1930's redlining, about 90% of the neighborhoods that were deemed less risky for bank loans (green and blue lines) remain inhabited by upper and middle class residents. Figure 3 shows the distribution of wealth in Mecklenburg County, which is very similar to the distribution of white residents in Figure 2. 
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Even today loan offices deny loans to Black residents. In 48 cities Black residents are 2.7 times more likely to be declined than whites. Although this is taking place across the country, it is predominantly seen in the South and has been documented here in North Carolina. In certain areas, it has been noted that Blacks are almost three times as likely to be denied a conventional mortgage than whites. In 1977, Congress passed the Community Reinvestment Act, which sought to end discriminatory lending practices based on income and race. However, there have been only been a handful of lawsuits by the Department of Justice in the past two decades for lending discrimination. This 40-year old piece of legislation has done little to enforce the end of discriminatory housing policies. Housing discrimination has plagued the United States since the New Deal era, and it continues to be prevalent today. The housing market discriminated against Black Americans through legislation, redlining, and refusing to provide financing to minorities. A history of discriminatory legislation including the highway system also segregated American neighborhoods destroyed Black communities. 

While legislation has been passed to ban redlining and other forms of housing discrimination, historically Black neighborhoods are still living through the effects of discriminatory housing policies today. The same communities that were redlined and experienced decades of disinvestment are the neighborhoods that are being rapidly gentrified today, putting residents at risk of displacement as the cost of living increases and homes fall into disrepair. Through the Building a Healthy Neighborhood program, Rebuilding Together of Greater Charlotte makes long-term investments in communities with concentrated need to provide critical home repairs and stabilize neighborhoods which are often those impacted by discriminatory housing policies.

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