A post-World War II “redlining” practice against Black Americans seeking homeownership has affected wealth gaps in the United States today, a new study out of UC Santa Barbara found.
The study coauthored by Wenfei Xu, an assistant professor of geography at UCSB, found that nationally only 2% of the Federal Housing Administration loans and 5% of Veteran Administration loans went to Black borrowers between 1935-1947, according to the published research.
The result was a widened racial wealth gap for years to come throughout the country.
“Because housing lasts a long time, these policies had long-lasting consequences on racial wealth inequality that continues today,” said Xu in a news release from UCSB.
But historically in Santa Barbara, racial “redlining” has been a practice consistent with these national findings in the years following the second world war.
In a 2022 project conducted by Healing Justice Santa Barbara on the history of Black people in the city, many communities in the 1940s were excluded from neighborhoods and newly constructed subdivisions post-World War II.
Bill Simms, who came to Santa Barbara as a kid with his family in 1944, recounted witnessing cross burnings on the corner of Voluntario and Gutierrez streets as “a sign to local African American and Black residents to stay on the east side of State Street,” according to the project.
Nationally, Black people had less access to homeownership after 1948 as the Federal Housing Administration’s policies made banks less likely to lend loans to those living in racially mixed communities.
The red color-coded areas where most Black communities resided and that were based on city maps created by the Home Owners Loan Corporation during the Great Depression became known as “redlining,” the project states.
An “unofficial color line” through the 1940s in Santa Barbara limited Black residents from living on the Westside as well.
The research by Xu from UCSB and a team of other academic scholars throughout the country confirms most of this bias against Black people seeking to borrow loans to buy homes.
“These historical inequities have real implications for our present time through the intergenerational transfers of wealth through housing,” said Xu in the university news release. “Any new housing policy should not only consider who it helps now, but what it sets in motion 50 years later.”
