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

68 Pages Posted: 1 Dec 2020 Last revised: 29 May 2022

See all articles by Price V. Fishback

Price V. Fishback

University of Arizona; National Bureau of Economic Research (NBER)

Jessica LaVoice

Bowdoin College

Allison Shertzer

University of Pittsburgh - Department of Economics

Randall Walsh

University of Pittsburgh - Department of Economics

Date Written: November 2020

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.

Suggested Citation

Fishback, Price V. and LaVoice, Jessica and Shertzer, Allison and Walsh, Randall, The Holc Maps: How Race and Poverty Influenced Real Estate Professionals’ Evaluation of Lending Risk in the 1930s (November 2020). NBER Working Paper No. w28146, Available at SSRN: https://ssrn.com/abstract=3739643

Price V. Fishback (Contact Author)

University of Arizona ( email )

Tucson, AZ 85721-0108
United States
520-621-4421 (Phone)
520-621-8450 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jessica LaVoice

Bowdoin College ( email )

Brunswick, ME 04011
United States

Allison Shertzer

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

Randall Walsh

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

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