The Crystalizing Influence of HOLC Residential Security Maps

Wenfei Xu, Cornell University

The Home Owner’s Loan Corporation (HOLC) created “residential security” maps during the New Deal era to map perceived lending risk in an effort to provide emergency bailout loans during the 1930s mortgage crisis. As the agency relied on local banks and realtors to appraise neighborhoods based on lending risk, these maps can be seen as a proxy for differential access to mortgage borrowing, most notably in new mortgages through the Federal Housing Authority and the Veteran’s Association post-WWII. The durability of housing, the historical value of home ownership as a vehicle for wealth creation, and the differential access to credit that impacts the availability of housing along racial and socioeconomic lines mediates the residential sorting process on both an individual and neighborhood level. The spatialized nature of housing discrimination policies constrains mobility opportunities, creates physical and social isolation, and results in a path dependency of place. The aim of this paper is to understand how institutionalized exclusionary lending policies, as embodied and perpetuated by HOLC designations, have impacted neighborhood trajectories from an analytical perspective. Have these spatially restrictive credit designations influenced home value, ownership, and racial stratification neighborhoods? Focusing on C and D designations, I separate 1930 to 2016 into three periods: a pre-treatment period from 1930 to 1940, during which there may have been informal discriminatory and racial segregation practices along racial lines; a post-treatment period from 1940 to 1970, during which codified lending practices were enacted by institutions such as the HOLC and the FHA/VA; and a “reversal” period from 1970 to 2016, during which federal legislation attempted to reverse and outlaw discriminatory mortgage lending. Using tract-level Census data and geo-rectified HOLC residential security maps, I measure the influence of these zones in shaping the dynamic patterns of racial segregation and home value changes in 60 cities.

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 Presented in Session 13. Emerging Methods: Spatial Analysis and Modeling