We set out to determine if there is a measurable difference in contemporary home values among Single Family properties that were once “redlined” when compared to Single Family properties that were subject to one of the other three grades.
This research project was self-funded by Pactriglo, Inc.
No other persons, parties, or organizations contributed financially to this project.
Historic resonance is an actual thing.
If you have ever been driving on a freeway in Los Angeles where traffic slows to a crawl at a spot without a visible reason for the slowdown, you have likely experienced historic resonance. The slowdown of vehicles you experience stems from an earlier lane closure. Once reopened, each vehicle driving through the area of the lane closure catches a little piece of the behavior of the vehicles in front of it. This form of historic resonance is not indefinite as the slowdown from the prior lane closure eventually disappears.
Let’s be perfectly clear. Redlining was wrong.
However, it’s important to understand what redlining was and what it was not.
In the wake of The Great Depression, the United States Government created the Homeowners Loan Corporation (HOLC) to reassure financial markets as to the resiliency of Single-Family mortgages by backing the mortgages that local banks wrote.
The newly formed HOLC set out to grade properties in urban areas into one of four color-coded categories:
A (green), B (blue), C (yellow), D (red)
Those homes located in red areas were considered unsuitable for HOLC protections -- hence the term "red-lining".
And here’s where the abhorrent decisions started. In justifying why an area was “redlined”, HOLC appraisers often made reference to the race, color, creed, ethnicity, religion, and national origin of residents in that area in words and phrases that need not be repeated here.
It is important, however, to note that HOLC did not reject homeowner loans based upon the characteristics of applicants, HOLC only rejected loans if the property was located in a Grade D (red) area. Properties were being rejected because of discriminatory policies in assessing a property's location.
Several known unknowns regarding HOLC policies remain to this day, particularly the extent to which bank decision makers relied upon the gradings in their maps. In a time before ZIP Codes and mapping software, one also has to wonder how widely distributed the maps were and how often they were actually referenced in the loan review process.
In other words, we know the redlining maps existed and we know that many of the justifications for redlining an area were based upon discrimination. Further investigation into records of rejections of loan applicants would be needed to better understand the application of redlining maps in the context of banks' lending operations.
Yet there are outright misconceptions about redlining that permeate meaningful discussions of the topic.
For example, redlining and restrictive covenants are far too often convoluted. Redlining did not prohibit anyone from living in an area based upon discrimination nor did it confine people to live in an area based upon discrimination. It was the practice of restrictive covenants that allowed property owners to restrict renters and prospective buyers based upon discrimination.
Additionally, redlining did not necessarily prevent buyers from getting a mortgage for a property in a redlined area. And it is certainly plausible that lenders who knew a property was in a redlined area took advantage of buyers because of a scarcity of mortgage options those buyers might have had. It's a piece of history that really needs an oral history project to capture the experiences of people disaffected by redlining.
Finally, redlining was not always based upon discrimination. In Los Angeles, Griffith Park was redlined because no single-family homes existed or could exist there.
Surprisingly, our analysis shows that contemporary values, based upon the last sale price of the property as recorded by the Assessor, of previously Red area properties were slightly higher than those of properties that were in areas with Yellow grades.
In other words, a Single-Family property that was once in a Red area has a higher Price per Square Foot on average than properties that were in Yellow areas. Yellow area properties were not denied mortgages based upon their grade.
It’s important to note that the values are contemporary. Meaning, we cannot draw a conclusion that properties in Red areas were always selling for more than properties in Yellow areas. In fact, it would take a much deeper analysis of the sales history of properties since 1937 to fully track value history of redlined properties compared to properties in other graded areas.
What is clear, however, is that based upon an analysis of sales values, properties that were in previously Red areas are no less valuable than properties in the higher graded Yellow areas. This finding refutes the notion that properties in previously redlined areas suffer lower values today than properties in higher graded areas.
A look at where some of the previously Red areas were shows a number of areas once redlined are now very sought-after neighborhoods:
Red and Yellow areas were very similar in terms of their land size. That is, the size of the parcel of property. Whereas Blue and Green area properties were remarkably larger:
Red area properties had the smallest structure size on average. Yellow area structures were early 50% larger than Red area structures and that may account for the difference in contemporary average sale price:
Some caveats to consider. This analysis is based upon sales values of properties. It does not, and cannot, account for social impacts of redlining. Only detailed interviews of people impacted by redlining could do that. And it is appropriate to seek out oral histories of people who experience rejection because of redlining as well as those decision makers who used, or did not use, the HOLC grades in their loan applications.
Our research involved two sets of data:
1) A modern GIS polygon file based upon HOLC maps
2) Contemporary real estate data from the County of Los Angeles’ Assessor
The HOLC map polygon did not require any additional processing or cleaning. The County Assessor data required significant preparation.
First, the Assessor’s data had to be linked by Assessor Parcel Number to a polygon file of the Assessor’s Parcel Map system. Once linked, the property polygons were reduced to points with Latitude and Longitude coordinates using a process that approximated the center of each parcel’s polygon. Next, the current Zoning Map of the City of Los Angeles was used to assign the municipal-level zoning to each point via a spatial join. The Assessor data, still in point form, was then reduced to only those properties with Single Family zoning. Another spatial join was used to assign HOLC map grades to properties inside mapped and graded areas. All properties outside of previously graded areas were then removed.
The result was 152,328 Single-Family zoned properties in the City of Los Angeles that were once subjected to HOLC map grades of Green, Blue, Yellow, or Red. This methodology allowed us to sort, examine, and compare the data based upon its grading in tabular format.
Software: Esri’s ArcGIS Pro, Microsoft Excel
Hardware: HP Workstation
Literature Review
1) LAPL BLOG Los Angeles Land Covenants, Redlining; Creation and Effects, Steven Kilgore, Administrative Clerk, Special Collections & Digitization, Monday, June 22, 2020 https://lapl.org/collections-resources/blogs/lapl/los-angeles-land-covenants-redlining-creation-and-effects
2) The Legacy of Redlining in Los Angeles: Disinvestment, Injustice, and Inefficiency Finding a Path Forward in 2019 and Beyond March 16, 2019 By: Jamie Tijerina Budget Advocate for Region 8https://clkrep.lacity.org/onlinedocs/2019/19-0600_misc_5-6-19.pdf
3) Our Neighborhood Then and Now: Redlining, Gentrification and Housing in Los Angeles
4) Lasting Effects: Redlining in Los Angeles County
https://sites.tufts.edu/gis/files/2020/07/schumaker_grace_GIS101_Fall2019.pdf
5) Segregation in the City of Angels: A 1939 Map of Housing Inequality in L.A.
6) Redlining in Los Angeles County
https://www.laalmanac.com/history/hi727.php
7) Redlining in Los Angeles, CA The effects of historic redlining in today's LA cities
Mirian Melendez May 7, 2021
https://storymaps.arcgis.com/storie