Redlining
The government-backed policy that built America's racial wealth gap, block by block.
The short version
- From 1935–1940, the federal government graded neighborhoods A–D and outlined Black and immigrant areas in red on maps shared with banks.
- Banks and federal mortgage programs refused to lend in red-zoned areas for decades — starving them of the investment that builds wealth.
- White families used federally subsidized mortgages to build home equity after WWII. Most Black families were explicitly excluded.
- The racial homeownership gap today — about 30 points — maps almost exactly onto those original red lines.
What it is
Redlining was a systematic practice by which the U.S. federal government and private financial institutions denied mortgages, insurance, and investment to residents of neighborhoods deemed 'hazardous' — a designation that mapped almost perfectly onto neighborhoods with Black and immigrant populations.
From 1935 to 1940, the federal Home Owners' Loan Corporation (HOLC) sent assessors to 239 cities and graded neighborhoods A through D. Grade A ('Best') neighborhoods received green shading; Grade D ('Hazardous') neighborhoods were outlined in red on maps that banks and federal mortgage programs then used to determine lending. The maps survive and are publicly accessible today — and their outlines still predict neighborhood demographics and wealth levels with startling accuracy.
The Federal Housing Administration formalized the practice by writing neighborhood racial composition into its mortgage underwriting guidelines. Lending in integrated or Black-majority neighborhoods was explicitly discouraged or prohibited. Until the Fair Housing Act of 1968, this wasn't a rogue practice by a few discriminatory bankers — it was official federal policy, underwritten by federal insurance, making homeownership in postwar America accessible primarily to white families.
Why it matters
The postwar American housing boom was the largest wealth-building event in the nation's history. The GI Bill, FHA loans, and federally subsidized suburban development allowed millions of working-class white families to become homeowners for the first time, building equity that has compounded across generations. Black veterans and families were systematically excluded. The neighborhoods they were confined to were starved of the investment that builds value — and the ones that were 'opened' to them were often done so through exploitative contract selling rather than traditional mortgages.
The racial homeownership gap today — roughly 30 percentage points between white and Black households — tracks almost exactly with redlined geographies. Homeownership is the primary vehicle through which American families accumulate and transmit wealth. The average gap in home equity between white and Black families exceeds $150,000. This is not historical coincidence; it is the compounding result of a policy that ran for decades.
Redlined neighborhoods still show measurably higher rates of poverty, lower school quality (funding is tied to local property taxes), higher rates of pollution and environmental hazards, and lower life expectancy. The physical boundaries drawn on maps 90 years ago remain visible in city data today. Researchers at the University of Richmond have mapped every HOLC assessment, and the correlation between Grade D neighborhoods and present-day disadvantage is among the most robust findings in urban social science.
The official policy ended in 1968, but its aftermath continued through 'reverse redlining' — where subprime mortgage lenders in the 1990s and 2000s specifically targeted Black neighborhoods with high-cost, predatory loans. The 2008 financial crisis stripped billions in accumulated home equity from these communities, which had only recently begun to recover. The same neighborhoods. The same blocks.