May 28, 2019

Redlining and The Struggles of Wealth Creation

Institutionalized racism is both overt and covert, and one of the ways it has been practiced for many years in the U.S. is through a system called “redlining.” Redlining is the “systematic denial of various services to residents of specific, often racially associated, neighborhoods or communities, either directly or through the selective raising of prices.” One of the most insidious forms of redlining occurs in real estate when the “powers that be” – whether they’re the U.S. government as in FDR’s “New Deal” or private banks and lenders – physically draw red lines on maps to mark off communities of color and then refuse to work with the inhabitants whom they regard as high “risk.” By this logic, risk is determined by race.

Redline Map for Greater Miami, c. 1935.

One of the premises of redlining in real estate is that black families lower the value of property in the surrounding area. Real estate agents and banks then take measures to make home-owning as challenging as possible for the black community. Here are a few of the forms that redlining can take:

  • A real estate agent refuses to show a black family property in a predominantly white community even if they request it. The agent may lie about the availability of properties or take other measures to prevent a sale of this kind. 
  • A white buyer tells her real estate agent that she only wants to look at homes in white neighborhoods.
  • A mortgage lender offers subprime loans to the black community. Subprime, or second-rate loans, are deceiving in that they start out cheap and get more expensive. 

Even though the U.S. federal Fair Housing Act of 1968 made redlining illegal, it is still practiced today. The black community in Overtown has been subject to redlining efforts since Miami was incorporated in 1896. Overtown has also been facing gentrification efforts. For example, soccer player David Beckham and his Miami business partners proposed to build a soccer stadium in Overtown; they have since abandoned Overtown to pursue a bigger location elsewhere is Miami.

Redlining and the racial wealth gap between black and white Americans in the U.S. is explored in Netflix’s show, “Explained.” According to the show, home equity accounts for about ⅔ of the wealth of the American middle class today. Since wealth is primarily acquired through property in this century, excluding black families from home ownership thereby excludes them from the opportunity to acquire wealth and to make connections in a middle class neighborhood. Irresponsible mortgage lending of subprime loans to the black community was part of what led to the financial crisis of 2008, in which black communities lost 53% of their wealth.

How does one address this huge gap in wealth between black Americans and white Americans? During slavery, the wealth of white male property owners was determined by how many slaves they owned. The century of discrimination that followed slavery left an enormous gap in home ownership that continues today. Without proper measures by the government to redress the inequities caused by slavery – inequities which continue to be expressed and perpetuated today – it will continue to be a long and difficult road.

On an individual and community level, people can take action to fight back against redlining, whether it be in real estate, insurance services, healthcare, or access to food. Here are some tips for doing so:

  1. Share this article with your friends and family.
  2. If you discover that your real estate agent supports redlining, inform them that it’s illegal  (which they already know) and look for another agent. Agents can also refuse to work with buyers that reveal themselves as racist.
  3. When you fill out a mortgage application, be honest about your ethnicity and other background information. The federal government reviews this information to look for practices of redlining. If you choose not to provide this information, you minimize the government’s opportunity to identify it happening in your neighborhood. 
  4. Report all instances of redlining to the U.S. Department of Housing and Urban Development by filing a Fair Housing complaint here.

Let’s continue to fight for the power that housing brings.

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