Redlining in real estate refers to a practice of withholding mortgage financing from neighborhoods based on the perception that those areas have a higher risk for default, because of their racial demographics. This infamous practice, which originated in the 1930s during the New Deal, was designed to assess financial risk in urban areas by creating color-coded maps that shaded neighborhoods based on their racial makeup and property values. Neighborhoods that had a greater percentage of nonwhite residents were shaded in red and denied loans, which exacerbated residential racial segregation and urban decay. Although legalized housing discrimination is now illegal, its legacy continues to have a negative impact on neighborhoods and families across America.

The most well-known example of redlining occurred when the Federal Home Owners Loan Corporation (HOLC) created these colored maps in the 1930s. The government agency was established as part of the New Deal to provide mortgage loans for distressed homeowners and used these maps to guide its lending decisions. The HOLC determined that the racial and socioeconomic characteristics of a neighborhood had a direct correlation to its investment and mortgage lending potential. Read more https://www.whiteacreproperties.com/sell-my-house-fast-in-winchester-massachusetts/

Neighborhoods with high levels of nonwhite residents were considered to be at risk and redlined, while areas with a larger majority of white residents were shaded green or blue and deemed desirable for mortgage financing and investment. The racial assumptions behind the HOLC’s decision to redline neighborhoods continued for decades and still have reverberations today.

Many of the cities and neighborhoods that were once redlined are experiencing gentrification now, but those same racial dynamics are causing them to become more expensive. This is because the majority of buyers who purchase homes in these neighborhoods are white. These trends will continue to skew the market and prevent other neighborhoods from getting the capital they need to build sustainable communities.

To increase homeownership and affordability in the US, it is important to understand the root causes of the problem and work towards addressing these underlying biases. This can be done through Fair Housing education and training for real estate professionals, increased enforcement of Fair Housing laws, and investments in communities that were previously redlined.

If you are looking to buy a home, be sure to work with a Clever Partner Agent who adheres to the highest ethical standards and can recommend fair and equitable mortgage lenders. Contact a Clever Agent today to learn more about what is redlining in real estate and how it can affect your ability to get the best mortgage for your unique situation. The best agents are always up-to-date on the latest Fair Housing trends, so you can rest assured that your agent will be able to help you find a home with the right lender for your needs. We look forward to working with you!