A History of Housing Discrimination
A 1937 Residential Security map for the city
of Philadelphia used by the Home Owners Loan
Corporation to make new loans to homeowners
at risk for default on their mortgage. The
color-coded maps assigned risk grades to
areas throughout the city, based in part on
neighborhood demographic composition.
Source: The Encyclopedia of Greater
In the early 20th century, a confluence of factors prompted a large and extended migration of African
Americans from southern states to northern cities, a movement referred to as the first Great Migration. From
1915 to 1940, hundreds of thousands of poor, rural African Americans left the southeastern United States for
northern cities, including Baltimore, Chicago, Detroit, New York, and Philadelphia.
The influx of African Americans into northern cities magnified existing racial disparities and residential
segregation patterns. Prior to the first Great Migration, African Americans who lived in the northern states
tended to work as servants and housekeepers for wealthy White families and often resided near their place of
employment. White families lived along main streets, while African American residences were often clustered
along side streets and back alleys.
During the early 20th century, African American neighborhoods grew larger and more homogeneous. Often, the
housing stock available to African Americans was in parts of the city that were no longer desirable to White
people because of their proximity to industry or physically deteriorating housing.
A variety of tactics were used to prevent African American migrants from settling in predominantly White
neighborhoods. Early methods of deterrence were both physical and economic. Violence against African
Americans was common in low-income neighborhoods, whereas home prices and imposing various fees and dues
created an economic barrier in upper-income neighborhoods. The racially restrictive covenant (racial
covenant) was another tool that early 20th century developers, home builders, and White homeowners used to
prevent African Americans from accessing parts of the residential real estate market.
Real estate advertisement for a
restricted development in the
East Falls neighborhood of
Source: Evening Public Ledger,
September 29, 1915.
Racial covenants were obligations inserted into property deeds that typically forbade persons not of
Caucasian descent from occupying or owning the premises. The use of racial covenants accelerated rapidly
through the 1910s and 1920s. By 1940, 80 percent of property in some cities (e.g., Chicago and Los
Angeles) carried restrictive covenants. Within the city of Philadelphia, covenants were put into place to
restrict the movement of African Americans into new developments and predominantly White neighborhoods (Santucci,
During this time, courts could order African American families to vacate homes in White neighborhoods. This
practice was legal until 1948, when the Supreme Court ruled that racial covenants could no longer be
enforced in state courts. Despite the ruling, the Federal Housing Administration (FHA) continued to refuse
mortgage insurance to racially inclusive projects. FHA officials stated they had “no responsibility
for a social policy …” (Rothstein, 2017). On February
15, 1950, the U.S. Solicitor General intervened to prevent FHA from using racial covenants as a precondition
for mortgage insurance. The FHA continued to finance racially exclusive subdivision developments until 1962
when President John F. Kennedy issued an executive order prohibiting the use of federal funds to support
racial discrimination in housing.
While much work has been done to document the existence of racial covenants throughout the country, little is
known about their effects. This is beginning to change. Recent work by Sood, Speagle, and Ehrman-Solberg (2021) presents evidence that racial covenants
placed on properties during the 1940s had significant and persistent effects on home prices and African
American spatial concentrations and homeownership rates in the Minneapolis area. Their results add to a
growing body of economic research that finds long-lasting effects of redlining (Aaronson, Hartley, and Mazumder, 2021).
NOTE: The views expressed here do not necessarily reflect the
views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.