The HOLC Maps: How Race and Poverty Influenced Real Estate Professionals’ Evaluation of Lending Risk in the 1930s

Price Fishback, Jessica LaVoice, Allison Shertzer and Randall Walsh

No 28146, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: During the late 1930s, the Home Owners’ Loan Corporation (HOLC) developed a series of area descriptions with color-coded maps of cities that summarized mortgage lending risk. We provide evidence that these maps were not the primary source used by the FHA to create their “redlining” maps for insuring mortgages. Instead, the HOLC maps provide a unique snapshot of how real estate professionals perceived lending risk in the 1930s. These perceptions were shaped by a wide range of factors including race, income, and housing quality. We use the maps to explore the mechanisms behind the prevalence of black residents in the lowest-rated neighborhoods. Our results suggest that racial bias in the construction of the HOLC maps can explain at most 4 to 20 percent of the observed concentration of black households in the lowest-rated zones. Instead, our results suggest that the majority of black households were located in such zones because decades of disadvantage and discrimination had already pushed them into the core of economically distressed neighborhoods prior to the federal government’s involvement in mortgage markets.

JEL-codes: J15 N9 R28 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-his and nep-ure
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Published as Price V. Fishback & Jessica LaVoice & Allison Shertzer & Randall P. Walsh, 2023. "The HOLC Maps: How Race and Poverty Influenced Real Estate Professionals’ Evaluation of Lending Risk in the 1930s," The Journal of Economic History, vol 83(4), pages 1019-1056.

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