During the 20th century, discriminatory policies and practices systematically excluded African Americans from the home mortgage market and restricted them to segregated communities with limited resources and depressed property values.
Beginning in the 1930s, the federal Home Owners Loan Corporation and the Federal Housing Administration used color-coded maps to rank the investment potential of residential areas for banks, insurance companies, loan associations, and other investors. “Excellent prospects” for investment—predominantly white neighborhoods—were green; other desirable areas were blue; “declining” areas were yellow; and predominantly black communities were red. Properties in these “redlined” neighborhoods were deemed unsafe investments and were typically ineligible for federally-backed mortgages.
Racially biased sales practices blocked black people from buying property outside black neighborhoods, and redlining made it all but impossible to obtain mortgages to buy property in black neighborhoods. Generations of black families were barred from home ownership, a major source of wealth building in America. Those able to buy homes faced exorbitant interest rates, unstable property values, and high risk of default and foreclosure.
Fair housing provisions in the Civil Rights Act of 1968 outlawed racial discrimination in home sales, rentals, and financing, but 1970s studies showed discrimination was still widespread. Between 1984 and 2009, the racial wealth gap in the United States nearly tripled; today just 41 percent of black Americans own homes, compared to 64% of Americans overall and 73% of white Americans.