The appraiser who went to Brooklyn in the 1930s to assess Bedford-Stuyvesant for the government summarized the neighborhood’s prospects on a single page. Many brownstones in “obsolescence and poor upkeep.” Clerks, laborers and merchants lived there, about 30 percent of them foreign-born, Jews and Irish mostly.
Also, this: “Colored infiltration a definitely adverse influence on neighborhood desirability.”
The government-sponsored Home Owners’ Loan Corporation drew a line around Bedford-Stuyvesant on a map, colored the area red and gave it a “D,” the worst grade possible, denoting a hazardous place to underwrite mortgages.
Lines like these, drawn in cities across the country to separate “hazardous” and “declining” from “desirable” and “best,” codified patterns of racial segregation and disparities in access to credit. Now economists at the Federal Reserve Bank of Chicago, analyzing data from recently digitized copies of those maps, show that the consequences lasted for decades.
As recently as 2010, they find, differences in the level of racial segregation, homeownership rates, home values and credit scores were still apparent where these boundaries were drawn.
“Did the creation of these maps actually influence the development of urban neighborhoods over the course of the 20th century to now?” said Bhash Mazumder, one of the Fed researchers, along with Daniel Aaronson and Daniel Hartley. “That was our primary question.”
The economists now believe that appraisers like the one in Bedford-Stuyvesant weren’t merely identifying disparities that already existed in the 1930s, and that were likely to worsen anyway. The lines they helped draw, based in large part on the belief that the presence of blacks and other minorities would undermine property values, altered what would happen in these communities for years to come. Maps alone didn’t create segregated and unequal cities today. But the role they played was pivotal.
The maps became self-fulfilling prophesies, as “hazardous” neighborhoods — “redlined” ones — were starved of investment and deteriorated further in ways that most likely also fed white flight and rising racial segregation. These neighborhood classifications were later used by the Veterans Administration and the Federal Housing Administration to decide who was worthy of home loans at a time when homeownership was rapidly expanding in postwar America.
“Housing policy can have a really long-lasting impact, since structures last a long time,” Mr. Hartley said.
The new research reaffirms the role of government policy in shaping racial disparities in America in access to housing, credit and wealth accumulation. And as the country grapples with the blurred lines between past racism and present-day outcomes, this new data illustrates how such history lives on.
“We now have evidence that is very systematic and nationwide that has detailed that these borders did matter,” said Leah Boustan, an economic historian at Princeton familiar with the research, which she called “pathbreaking.”
Historians have long pointed to the significance of the Home Owners’ Loan Corporation maps. But a large collection of the 239 cities that were originally appraised was only recently digitized by a collaboration of schools and housed at the University of Richmond, making the underlying geographic data widely available.
The Chicago Fed economists used that data to identify boundaries between neighborhoods with different ratings. As of 1930, there were already clear differences along some of the borders in racial demographics and homeownership rates. Blacks were already more likely to be living in “D” neighborhoods than “C” neighborhoods, for example. But differences in the black share of the population and homeownership rates widened after the 1930s, reaching a peak in the 1970s, when federal laws requiring equal access to housing and credit took effect.