By A recent report reveals that the harmful effects of redlining persist in modern-day America, systematically preventing millions of families of color from achieving homeownership.
This study, conducted by the prominent real-estate brokerage Zillow, delves into the consequences of limited access to credit, which forces many individuals and households to rent for longer periods instead of pursuing affordable mortgages that could enable them to build equity in a home.
Zillow’s analysis focuses on specific regions in the United States deemed “credit insecure” – areas where residents encounter significant challenges in qualifying for credit. Astonishingly, these areas are directly correlated with communities populated by a higher percentage of Black residents. Furthermore, they are also characterized by higher rental costs compared to mortgage payments.
Nicole Bachaud, a senior economist at Zillow, emphasizes that this lack of credit accessibility perpetuates a vicious cycle wherein individuals and families of color, particularly Black families, are unable to achieve economic stability and generate wealth. She urges policymakers to take decisive action in order to enhance credit access for millions of families.
Remarkably, despite mortgage rates reaching a 23-year high, monthly mortgage payments remain more affordable for households residing in these areas than renting. The report further reveals that for the broader market, with interest rates surging over 7.5% in early November, the average principal and interest payment exceeds $2,500, as stated in the latest ICE Mortgage Monitor report. On the contrary, rents across the nation are experiencing a downward trend, with year-over-year rent growth decreasing by 1.2%, according to Apartment List’s November report. The median rent nationwide currently stands at $1,354.
Redlining’s Lingering Effects on Heart Health
From the archives (July 2023)
A report revealed that redlining, a discriminatory practice outlawed over half a century ago, continues to have detrimental effects on heart health in certain regions. Redlining involved systematically denying communities of color access to financial services like mortgages and insurance based on their race or ethnicity.
The Harmful Impact in New Orleans
New Orleans serves as an example of this ongoing issue. In credit-insecure areas, where 57% of the population is Black, the median renter would spend nearly 78% of their income on rent, according to Zillow. In contrast, a median household that owns their home would allocate only around 29% of their income toward a mortgage.
This stark contrast implies that residents in these areas, unable to secure necessary financing to purchase a home, are forced to pay exorbitant amounts for rent each month. Sadly, the burden weighs heavier than what they would expect to pay for a mortgage.
A Persistent Legacy with Broader Implications
More from the archives (March 2023)
In another case related to discriminatory practices, a bank accused of concentrating branches exclusively in white neighborhoods has agreed to settle discrimination allegations for $9 million. This resolution comes after an investigation led by the Justice Department.
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