Maybe you did not notice, or maybe it didn’t happen to you when you were looking for your home. Based on your income, home address and sometimes on your color, your bank would pre-approve you for a specific loan amount. With your pre-approval letter, your realtor would not show you houses in particular neighborhoods because your pre-approval tells your realtor what kinds of neighborhoods you are predisposed to live in.
Hello. I am Bobb Rousseau and this is Apostrophe Podcast. On today’s show; the differences between redlining and gentrification and how they shape the socio economic fabric of American cities.
Before I go any further, I want you to do two things for me. Select a poor neighborhood and a suburban neighborhood. Now, stop the podcast, drive through the neighborhoods you selected, and when you come back, I will tell you exactly what you saw.
As you were driving through the median or poor neighborhood, I am sure that you wondered why this family could afford a Tesla and a Cadillac while that family could barely afford a Toyota Celica. As you were driving through the suburban neighborhood, you saw the rich kids, in terms of public services and amenities, having good everything while the middle-class kids have crappy nothing. I bet also that you saw that the residents in the median neighborhood look alike, and the residents in the wealthy community look alike. Am I lying?
Maybe you did not notice, or maybe it didn’t happen to you when you were looking for your home. Based on your income, home address and sometimes on your color, your bank would pre-approve you for a specific loan amount. With your pre-approval letter, your realtor would not show you houses in particular neighborhoods because your pre-approval tells your realtor what kinds of neighborhoods you are predisposed to live in.
Your pre-approved loan amount puts you in specific neighborhoods, and this is why you see people who look like you, living in the same neighborhoods as you are, although sometimes their income may be way higher or lower than yours.
What you witnessed in the two neighborhoods is a longstanding pattern of discriminatory housing practices in America called redlining and gentrification.
Redlining is systematically denying mortgages, loans, and other financial services to residents of certain neighborhoods, usually based on race or ethnicity. This practice was widespread in the 1930s and 1940s when the federal government created maps that designated certain neighborhoods as “risky” or “undesirable” for lending purposes. Banks and other financial institutions then used these maps to discriminate against people living in those neighborhoods, making it difficult or impossible for them to access affordable credit and other financial services.
However, under the banner of commercial development, the same banks offer business loans to rich people to return to these neighborhoods. This is gentrification, which is the process of revitalizing or “upgrading” a neighborhood, often through the introduction of new housing and new amenities that poor residents cannot afford. Because of gentrification, the prices of properties and basic goods increase, and poor people can no longer afford to live there.
In a nutshell, redlining and gentrification allow rich people to chase poor people out of many neighborhoods that, before, the government classified as too low class, too risky, too not desirable, and too dangerous for white people to live in.
In summary, this conversation examines the differences between redlining and gentrification, two real estate financial policies that have profoundly impacted American cities’ socioeconomic fabric. Redlining involves denying people mortgages based on income and race, while gentrification occurs when wealthier people move into formerly poor neighborhoods, driving up housing prices. Both policies have had a long-lasting impact on the economic inequality in U.S. cities, as redlining prevents people from getting the loans they need to buy homes. At the same time, gentrification drives up the cost of living and pushes out those who cannot pay the increased prices. Ultimately, these policies have had a detrimental effect on the economic mobility of many people, leaving them unable to climb the economic ladder and access better opportunities.
Bobb Rousseau, PhD
Host of Apostrophe Podcast
Before I go any further, I want you to do two things for me. Select a poor neighborhood and a suburban neighborhood. Now, stop the podcast, drive through the neighborhoods you selected, and when you come back, I will tell you exactly what you saw.
As you were driving through the median or poor neighborhood, I am sure that you wondered why this family could afford a Tesla and a Cadillac while that family could barely afford a Toyota Celica. As you were driving through the suburban neighborhood, you saw the rich kids, in terms of public services and amenities, having good everything while the middle-class kids have crappy nothing. I bet also that you saw that the residents in the median neighborhood look alike, and the residents in the wealthy community look alike. Am I lying?
Maybe you did not notice, or maybe it didn’t happen to you when you were looking for your home. Based on your income, home address and sometimes on your color, your bank would pre-approve you for a specific loan amount. With your pre-approval letter, your realtor would not show you houses in particular neighborhoods because your pre-approval tells your realtor what kinds of neighborhoods you are predisposed to live in.
Your pre-approved loan amount puts you in specific neighborhoods, and this is why you see people who look like you, living in the same neighborhoods as you are, although sometimes their income may be way higher or lower than yours.
What you witnessed in the two neighborhoods is a longstanding pattern of discriminatory housing practices in America called redlining and gentrification.
Redlining is systematically denying mortgages, loans, and other financial services to residents of certain neighborhoods, usually based on race or ethnicity. This practice was widespread in the 1930s and 1940s when the federal government created maps that designated certain neighborhoods as “risky” or “undesirable” for lending purposes. Banks and other financial institutions then used these maps to discriminate against people living in those neighborhoods, making it difficult or impossible for them to access affordable credit and other financial services.
However, under the banner of commercial development, the same banks offer business loans to rich people to return to these neighborhoods. This is gentrification, which is the process of revitalizing or “upgrading” a neighborhood, often through the introduction of new housing and new amenities that poor residents cannot afford. Because of gentrification, the prices of properties and basic goods increase, and poor people can no longer afford to live there.
In a nutshell, redlining and gentrification allow rich people to chase poor people out of many neighborhoods that, before, the government classified as too low class, too risky, too not desirable, and too dangerous for white people to live in.
In summary, this conversation examines the differences between redlining and gentrification, two real estate financial policies that have profoundly impacted American cities’ socioeconomic fabric. Redlining involves denying people mortgages based on income and race, while gentrification occurs when wealthier people move into formerly poor neighborhoods, driving up housing prices. Both policies have had a long-lasting impact on the economic inequality in U.S. cities, as redlining prevents people from getting the loans they need to buy homes. At the same time, gentrification drives up the cost of living and pushes out those who cannot pay the increased prices. Ultimately, these policies have had a detrimental effect on the economic mobility of many people, leaving them unable to climb the economic ladder and access better opportunities.
Bobb Rousseau, PhD
Host of Apostrophe Podcast