Worcester Business Journal

wbjournal.com | December 12, 2022 | Worcester Business Journal 13 REDLINING: An Economic Legacy Neighborhood poverty level While there have been some fluctuations, the poverty level of the Worcester neigh- borhood largely aligns with their ranking by the Home Owners' Loan Corp. assessment in 1936. % of population 1936 zone below poverty & ranking level in 2020 1 15.0% 2 11.1% 3 5.2% 4 15.9% 5 28.3% 6 39.9% 7 24.4% 8 8.0% 9 23.7% 10 36.0% 11 27.1% 12 12.1% 13 15.4% 14 22.4% 15 25.6% Note: The 2020 median income is based off the Census tracts most aligning with the 1936 map, as calculated by the Worcester Regional Research Bureau. Source: University of Richmond, American Community Survey Neighborhood household income While some neighborhoods have improved, those ranked highest in 1936 still have the highest incomes in Worcester while those ranked the lowest 86 years ago are near the bottom in incomes. 1936 zone 2020 household & ranking median income 1 $85,379 2 $87,524 3 $77,392 4 $64,075 5 $29,024 6 $28,222 7 $38,347 8 $75,265 9 $44,734 10 $27,670 11 $46,849 12 $59,837 13 $56,335 14 $48,168 15 $39,191 Note: The 2020 median income is based off the Census tracts most aligning with the 1936 map, as calculated by the Worcester Regional Research Bureau. Source: University of Richmond, American Community Survey owned the home at the end, giving the borrowers equity in their homes as they paid off the mortgage. at wasn't the case before as loans were mostly based on interest payments. is meant if they sold their homes even while still paying off the loan, they took some money with them for their next move. With the new loan program, though, it meant that HOLC needed to delineate between borrowers who could pay off the loan with regular payments and others it feared would default. To do this, it hired local real estate agents to create maps and appraise homes and homeowners. is resulted in HOLC drawing color-coded maps showing the neighborhoods safest for loans as green and the riskiest as red, thus the term "redlining." e zones were created on racial lines, following the 1922 ethics rule implemented by the Nation- al Association of Realtors to not allow agents to sell homes to Black people in white neighborhoods. A year aer HOLC was created, Roosevelt created the Federal Hous- ing Administration to help people buy homes by insuring bank mortgages up to 80% of purchase prices with 20-year terms. e FHA did its own appraisals of property to make sure the loans weren't risky and it even included a "whites-on- ly" requirement for the because the FHA believed integrated neighborhoods, or even white neighborhoods near Black ones, were too risky. is set a precedent and created a cycle of generational wealth that we are still dealing with today. Black people and other minority groups, including Jewish people, were excluded from getting reasonable loans to buy homes, which would have allowed them to accrue wealth through increased equity. is also meant homeowners in neighbor- hoods near a red neighborhood on the map were encouraged to sell their home, as those properties had already begun to lose value since banks were less likely to give out loans for those homes. "It was real estate agents who did that originally, flipping the houses, telling homeowners, 'Blacks are moving in and you should sell at a premium to me,'" said Daina Harvey, professor of sociology and anthropology at the College of Holy Cross. "And then I am going to mark it up 200-300% for a Black family and then in 10 years it is not going to be worth any money." FHA loans allowed white buyers the chance to begin to buy property and in turn create a cycle of wealth. For mi- norities, and especially the Black middle class, that opportunity was ruined. ey could not secure loans and in a lot of cases couldn't buy homes because, according to Rothstein, property owners and builders put language in home deeds and pacts among neighbors prohibiting future resales of homes to Black people. Add all of this alongside the maps and the FHA discouraging banks from giving out loans to neighborhoods in cities and favored loans for freshly built suburbs, and you have white people fleeing the cities. is made the neighborhoods they le even less valuable and the ones they moved to more valuable, creating a roadmap where a Black person buys into an area and finds the purchase they made is underwater. "You bought an $80,000 house for $120,000, and now it's worth $40,000; and so you're hemorrhaging money," Harvey said. "is happens at the same time as we see deindustrialization and things like that take place, so your parents had really good jobs at Ford or GM or something like that, and now they don't have any jobs. ey can't send you to college because they can't borrow any money based on the value of their home, which is underwater now." With that, the next generational bar- rier grows. ere's now not only a equity wealth gap, but families in deep debt with no ability to send their children to college to create some educational value, as the financial system won't allow them to finance higher education, which becomes another version generation- al wealth because it allows people to leverage their way out of poverty for higher-paying jobs that value the degree they receive from a higher institution of learning. "Today's residential segregation in the North, South, Midwest, and West is not the unintended consequence of individu- al choices and of otherwise well-meaning law or regulation but of unhidden public policy that explicitly segregated every metropolitan area in the United States. e policy was so systematic and forceful that its effects endure today," Rothstein writes. PHOTO | CHRISTINE PETERSON Continued on page 14 Triple-deckers are one of the principal types of housing in the Main South neighborhood, where housing is 78% rentals.

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