Contemporary differences in residential housing values along historic redlining boundaries

Abstract

AbstractRedlining refers to discriminatory lending practices based on the demographic composition of neighborhoods. The term is often attributed to boundaries drawn on maps by the Home Owners’ Loan Corporation (HOLC) in the 1930s to represent the perceived credit risk of neighborhoods. Combined with other discriminatory actions, redlining restricted access to mortgage financing for racial minorities, and areas subject to historic redlining practices still exhibit worse outcomes on various socio‐economic dimensions. This study examines contemporary differences in residential housing values along historic redlined boundaries. Boundary fixed effects models are constructed using contemporary property sale data for Seattle, WA and Richmond, VA from 2000 to 2018. Results indicate that properties inside a redlined boundary continue to sell at significantly discounted prices compared to houses across the redlined border. Further investigation, using historic data from the 1930s and 1940s, finds that there was also a large and significant historic difference in housing values across the redlined boundaries at that time, including before the advent of HOLC maps. This suggests that contemporary differences in housing values are likely not a direct effect of HOLC maps but rather depict the lingering effect of broader redlining and discriminatory practices that existed before the advent of these maps.