Starting with the Fair Housing Act of 1968 and continuing with the 1977 Community Reinvestment Act, the federal government has attempted to root out its past redlining guidelines. But the impact of decades of discriminatory lending is still contributing to the racial wealth gap today, as Redfin reported.
Over the last 40 years, per Redfin, homeowners in redlined neighborhoods have earned 52% less in home equity. In addition, Black individuals who own homes are 4.7 times more likely to own in a former "D" graded neighborhood than a formerly "A" graded neighborhood. White individuals are only 1.5 times more likely to own a home in a formerly redlined area.
Since 1980, the report states, homeownership among Black families in "A" neighborhoods has dropped from 50.4% to just 44.0% by 2017, while the percentage of white families in "A" neighborhoods increased, to 71%.
"Black families who were unable to secure housing loans in the neighborhoods where they lived have missed out on one of the major ways to build wealth in this country. And even families who were able to buy homes in their neighborhood after redlining ended haven't earned nearly as much home equity as people who bought homes in neighborhoods that were considered more valuable," Redfin Chief Economist Daryl Fairweather said in the report.
"That has had a lingering effect on their children and grandchildren, who don't have the same economic opportunities as their white counterparts. Not only are Black parents less likely to have the resources to pay for higher education and help with other expenses, but studies show that children of homeowners are about 7.5% more likely to become homeowners than children of renters," she continued.