What does redlining refer to in the context of real estate?

Redlining refers to a discriminatory practice in housing and real estate where certain neighborhoods, often inhabited by minorities, are marked on maps with red ink to indicate a higher risk for mortgage lenders. This practice historically involved denying loans and financial services to residents in these areas, largely based on race or ethnicity, rather than the actual creditworthiness of individuals. As a result, individuals living in the redlined zones faced significant barriers when trying to secure loans for home purchases or renovations, perpetuating cycles of poverty and segregation.

This practice became widely recognized and criticized for its harmful impacts on communities, leading to significant legal and regulatory changes aimed at curbing discrimination in housing. Understanding redlining is crucial for real estate professionals, as it shapes discussions about fair housing and access to credit in today’s market.