Press Releases

Homes in Formerly Redlined Areas Trailing in Value

The typical home in an area given a "hazardous" rating in the 1930s is worth 85 percent of the median value of surrounding homes today

- The effects of redlining are still visible in today's housing market. The median value of a home in a formerly redlined area is $276,199, while the median value of a home in a surrounding non-redlined area is $324,489.

- Homes in areas that were "redlined" were deemed hazardous for mortgage lending by the Home Owners' Loan Corp., and this designation often coincided with the racial makeup of the area's residents.

- In Atlanta and Tampa, homes in formerly redlined areas are still worth less than half the rest of the homes in the area.

Apr 25, 2018

SEATTLE, April 25, 2018 /PRNewswire/ -- The effects of redlining are still visible in today's housing market, 50 years after the practice was outlawed.

Homes in areas that were "redlined" – or deemed "hazardous" for mortgage lending by the federal Home Owners' Loan Corp. – remain undervalued when compared with other nearby homes, according to a new Zillow® analysis of Mapping Inequality.

The median value of a home in redlined areas is $276,199, nearly $50,000 less than the $324,489 median value of homes in the surrounding areas. The gap demonstrates how the practice – outlawed in 1968 – has had a lasting impact on neighborhoods and the ability of the people who live there.

The practice of redlining emerged as the U.S. recovered from the Great Depression. Areas around the country were labeled to assess credit risks for mortgage lenders. The worst designation was "hazardous," which frequently coincided with the racial makeup of the area's residents. These areas were literally colored in red on maps, hence the term "redlining." People living in these places – overwhelmingly people of color – were essentially locked out of the mortgage lending market, and therefore unable to buy a home.

Homeownership is often regarded as a significant factor in building wealth. By denying people in whole neighborhoods equal access to homeownership, the practice of redlining put residents of those areas at a distinct economic disadvantage that can still be seen today.

Through most of the housing recovery from the Great Recession a decade ago, homes in redlined areas made incremental gains on the rest of the housing stock, gaining 69.1 percent in value compared with 53.5 percent for homes in non-redlined areas since March 2012. Yet the gap still persists – homes in redlined areas are now worth 85 percent of the value of the surrounding homes.

"The lasting impact of redlining is a striking example of how the kind of discrimination – financial and racial – codified nearly a century ago continues to affect homeowners and whole communities today," said Zillow Chief Economist Dr. Svenja Gudell. "Redlining and other forms of systemic discrimination, from Jim Crow laws to racial covenants, contributed to a serious divide in homeownership rates between whites and other groups that has had devastating consequences for both the financial wealth and social health of non-white Americans. With the renewed popularity of inner cities in particular in recent years, some formerly redlined areas are experiencing a renaissance of sorts, but even in these areas "success" is relative. Gentrification and eminent domain, for example, have both re-shaped cities and often displaced long-time residents, many of them people of color. Progress toward closing these gaps and righting history's wrongs has been slow, and clearly there's a lot of work left to be done."

In Atlanta and Tampa, homes in redlined areas are still worth less than half the value of the rest of the homes in the area. Homes in areas once marked as "hazardous" are worth $193,866 in Atlanta, compared with $428,813 for the rest of the region. In Tampa, those values are $219,991 and $482,141, respectively.

There are some places where homes in formerly redlined areas are now more valuable than the rest of the homes in that area. In Boston, for example, the typical home value in a historically redlined area is $847,992, about $95,000 higher than nearby homes.

Region Name

 Median Value in Non-Redlined Areas, December 2017

 Median Value in Redlined Areas, December 2017

United States

$ 324,489

$ 276,199

Atlanta, GA

$ 428,813

$ 193,866

Baltimore, MD

$ 175,040

$ 97,933

Boston, MA

$ 752,778

$ 847,992

Charlotte, NC

$ 460,229

$ 334,733

Chicago, IL

$ 543,015

$ 322,562

Cleveland, OH

$ 112,137

$ 95,535

Columbus, OH

$ 129,941

$ 119,793

Dallas, TX

$ 536,894

$ 271,216

Denver, CO

$ 509,545

$ 542,709

Detroit, MI

$ 115,669

$ 62,824

Greater Kansas City, MO

$ 150,936

$ 104,305

Indianapolis, IN

$ 173,487

$ 101,674

Los Angeles, CA

$ 1,290,038

$ 738,070

Manhattan, NY

$ 1,860,758

$ 1,778,488

Miami, FL

$ 499,410

$ 256,468

Minneapolis, MN

$ 193,924

$ 208,075

Philadelphia, PA

$ 332,448

$ 285,539

Pittsburgh, PA

$ 161,642

$ 109,600

Portland, OR

$ 534,493

$ 560,103

Sacramento, CA

$ 407,174

$ 342,014

San Diego, CA

$ 923,973

$ 555,993

San Francisco, CA

$ 1,707,559

$ 1,293,197

San Jose, CA

$ 1,054,661

$ 752,765

Seattle, WA

$ 852,686

$ 826,283

St. Louis, MO

$ 153,729

$ 148,877

Tampa, FL

$ 482,141

$ 219,991

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

 

SOURCE Zillow

For further information: Lauren Braun, Zillow, press@zillow.com


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