# Race, Crime, and Lending Risk in Chicago: The Relevance of Crime and Disorder for HOLC’s Neighborhood Assessments

## TL;DR

This study explores how race and perceptions of crime influenced lending risk assessments in Chicago during the HOLC era.

## Contribution

The study reveals that racial bias, rather than actual crime data, shaped lending risk perceptions in Chicago neighborhoods.

## Key findings

- Perceptions of crime and disorder were largely driven by a neighborhood’s Black racial composition.
- Observed crime and racial composition predicted lending risk assessments, but perceptions of disorder did not.
- Racial discrimination was already embedded in HOLC appraisers’ neighborhood valuation practices.

## Abstract

While scholars have documented the importance of race for decisions on lending risk and value in the U.S. housing market, less is known about how crime shaped lending risk assessments or how a neighborhood’s racial composition influenced appraisers’ perceptions of crime and disorder. Drawing on the Home Owners’ Loan Corporation (HOLC) residential security maps, this study examines appraisers’ narratives around neighborhood crime and disorder, how observed neighborhood conditions shaped these narratives, and how both observed crime and perceptions of disorder influenced decisions on lending risk. Using the case of Chicago, this study integrates multiple historical datasets, including the HOLC residential security maps and their corresponding neighborhood area descriptions, the 1940 Census, and data on criminal activity reflected through Clifford Shaw et al.’s residence of male offenders map and Frederic Thrasher’s gangland activity map. Findings suggest that perceptions of crime and disorder are largely driven by a neighborhood’s Black racial composition, independent of observed measures of crime. While both observed crime and a neighborhood’s Black racial composition predicted lending risk assessments, appraisers’ perceptions of disorder did not. The results indicate that although HOLC appraisers’ perceptions of crime and disorder were racially motivated, their biased perceptions did not exert a unique, independent influence on their decisions to redline Black neighborhoods. Rather, racial discrimination was already explicitly embedded into their neighborhood valuation practices. This study provides new insights into the historical roots of neighborhood stigmatization and institutional disinvestment.

The online version contains supplementary material available at 10.1007/s12552-025-09442-4.