The Evolution of Redlining in the United States Housing Market

Abstract

This article explores the lasting effects of redlining in the United States on wealth creation and economic opportunity. Due to rising mortgage rates and low supply, housing costs are growing. Redlining is the practice of discrimination in the homebuying and lending market that resulted in significant housing inequality. While illegal since the 1970s, redlining has not disappeared but rather evolved. Institutional economics provides a framework to understand the history, consequences, and solutions to modern redlining that can generate greater housing equality in the United States. This article uses the latest Federal Reserve Bank’s Survey of Consumer Finances (2023) data to analyze the size and effects of housing inequality resulting from redlining practices and what groups are most affected. From these empirical findings, public policy solutions are presented to create a more financially stable and equitable housing market.

Keywords:

• discrimination
• housing
• inequality
• mortgages
• redlining
• stratification
• wealth

JEL Classification Codes:

• D63
• G51
• P63
• R31

Disclosure Statement

No potential conflict of interest was reported by the author.

Additional information

Notes on contributors

Robert Haywood Scott

Robert Haywood Scott, III is a professor and Greenbaum/Ferguson/NJAR Endowed Chair in Real Estate Policy in the Department of Economics, Finance & Real Estate at Monmouth University.