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How redlining kept Black Americans from homeownership and still does



  • As part of the New Deal, the federal government began insuring mortgages in the 1930s, a sorely needed shot in the arm for the housing market during the Great Depression.
  • But the lending practices that came to be known as “redlining” effectively denied credit to residents of predominantly minority neighborhoods.
  • Rising rates of home ownership were a big aspect of rising middle class prosperity after World War II, but redlining kept Black Americans from the same opportunity until the late 1960s. Instances of discriminatory lending continued into this decade.
  • A report by Redfin reveals how the practice of redlining is still contributing to America’s racial wealth gap today.
  • Visit Business Insider’s homepage for more stories.

The American Dream and home ownership have been closely linked since 1944.

In that year’s State of the Union address, President Franklin Roosevelt described a “second Bill of Rights” that included “the right of every family to a decent home.” And for about a decade up to that point, Roosevelt’s New Deal had revolutionized mortgage lending, which would power wealth accumulation for the middle class for decades afterward.

But the racial wealth gap has also been a persistent feature of American life, as reported by Business Insider — the most recent estimate by the Federal Reserve estimates that white families have a median net worth nearly 10 times that of Black families. Black Americans’ access — or lack thereof — to home ownership is a major factor in this gap. The national homeownership rate for Black families is 44%, versus 73.7% for white families.

For decades, it was harder for Black Americans to get mortgages because of “redlining,” a policy that was baked into Roosevelt’s own housing agenda. The Dept. of Housing and Urban Development (HUD) defines redlining as “the practice of denying credit to residents of predominantly minority neighborhoods.” And it’s still a factor in the longstanding racial wealth gap, a recent Redfin report found. 

Black home ownership reached its highest point ever in the half-decade before the 2008 financial crisis, after President George W. Bush signed a law to encourage first-time buying. When the subprime crisis devastated the world economy, it also wiped out all the gains Blacks had made in the housing market

Here’s how the roots of today’s housing and wealth disparities stretch all the way back to the 1930s.

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