Recap from Part I:

According to Price Fishback and colleagues in Race, risk, and the emergence of federal redlining (2020), in the 1930s economically distressed neighborhoods were redlined because they had the highest default risk, not because they were Black.  Many White neighborhoods were redlined as well – unsurprisingly so, given that all this happened during the Great Depression.  But even if it’s true that that racial bias had little to do with the original practice of redlining, perhaps the classification itself led to discriminatory treatment that ultimately contributed to the Black-White homeownership gap. If so, how would we know?

One approach to this question would be to look at whether once-redlined areas are a good proxy for Black America. How many Blacks currently live in these neighborhoods? Luckily, Andre Perry and David Harshbarger of the Brookings Institute have already crunched the numbers: out of approximately 11 million current residents of once-redlined areas, around 3 million are Black. Over 90% of Blacks live in areas that were never redlined. As Perry and Harshbarger also conclude, once-redlined areas should not be considered a proxy for Black America.

Another approach would be to see what happened to the descendants of redlined residents irrespective of race or ethnicity. That would help us to separate the impact of redlining per se from the impact of historical and ongoing anti-Black discrimination. For example, is there a homeownership gap between the descendants of White residents of redlined neighborhoods and other Whites?  If so, then maybe redlining had something to do with it. If not, perhaps redlining had little to do with the Black-White homeownership gap. Unfortunately, few studies address this question.

My final approach to the question of whether redlining was a root cause of the current Black-White homeownership gap is to look for a connection between redlining and the more immediate, or “proximate”, causes of that gap. First, a review:

  • Proximate cause - Occurs immediately prior to the outcome of interest; directly results in its occurrence and, if eliminated or modified, would have prevented the undesired outcome.

  • Root Cause - One of multiple factors (events, conditions or organizational factors) that created the proximate cause and subsequent undesired outcome. Typically multiple root causes contribute to an undesired outcome.

  • Root Cause Analysis - A method primarily used to identify the underlying cause of an incident or issue, and more effectively mitigate or prevent future similar incidents.

    — Root Cause Analysis/Center for Homeland Defense and Security

 As for the proximate causes of the Black-White gap, this from a 2021 post:

The gap in Black-white homeownership rates recently reached 30.1% in the U,S. Per Jung Hyun Choi of The Urban Institute, three factors explain around 80% of this gap: difference in Black-white income (31%), marital status (27%), and credit scores (22%). Other factors include housing supply, housing affordability, and racial segregation, especially the availability of affordable housing within a reasonable commute distance of racially segregated neighborhoods. After accounting for these factors, about 5% of the difference in Black-white homeownership remains unexplained.

It’s hard for me to see a clear link between 1930s redlining, marital status and credit scores. And given that only 8% of American Blacks even live in once-redlined neighborhoods, that’s too few people to explain a 31% difference in Black-White income (as well as differences in educational outcomes, which are highly correlated with income). It’s quite possible that living in a redlined neighborhood make it harder for Black residents to acquire home equity or get loans in the 1930s and 40s, but that was a long time ago.

References:

America’s formerly redlined neighborhoods have changed, and so must solutions to rectify them. Andre M. Perry and David Harshbarger/Brookings Institute October 14, 2019

Fishback, P. V., LaVoice, J., Shertzer, A., & Walsh, R. (2020). Race, risk, and the emergence of federal redlining (No. w28146). National Bureau of Economic Research. doi: http://dx.doi.org/10.3386/w28146 

Redlining Didn’t Happen Quite the Way We Thought It Did. Jake Blumgart/Governing.com September 21, 2021

The Black-White Homeownership Gap, Credit Scores, and a Modest Proposal/Exploring the Problem Space October 29, 2021