Individual consumers and the state subsidized the post-war housing boom, true. It would be a truer statement if pre-fabricated housing technology were added as a determining factor. In fact, it is just this sort of omission that obscures the problem and thereby the solution as well. Americans could afford a Levittown house for $7,000-$10,000 with mortgage, taxes etc. covered by a monthly payment of $29,00, which was less than the $40 monthly for a rental in the city. They could not afford the $300,000+ price of a starter home in recent years.
Current-day prefabrication housing technology is lightyears ahead, aesthetically and sustainably, of the 1950s version. Per-unit costs in a sizable development would be in the $50,000-$75,000 range--New Orleans, anyone? Yes, there can be starter homes for every qualified American family, meaning one that doesn't cheat the system by hiding their assets for a freebie. But of course this requires a clear-witted sense of history, research, smart work and implementation. Something we hope for in the Obama era.
Few recognize American suburbanization for the great feat of social engineering that it was. Between the years 1933-1978 this massive public and private sector undertaking involved 35 million American families, 140 million individuals if one estimates a family size of four. The seemingly innocuous process of suburbanization created the modern American middle class. The introduction of homeownership to millions of families was its signal achievement. Home equity, the largest part of the wealth assets of average Americans then and now, was no longer the province of a relative few. The Federal Housing Administration and Veterans Administration provided low-cost home loans and $119 billion in mortgage insurance to families that would not have ordinarily qualified for home ownership. Federal mortgage guarantees, in turn, encouraged the creation of large-scale suburban tract home developments across the nation, like Levittown, New York (17,400 units), Park Forest, Illinois (5,000 units), and Oak Forest, California (5,000 units). In total, the federal government assisted 11 million families to own homes, insured 1.8 million suburban tract homes and provided 22 million families with home improvement loans. From 1945 through June of 1971, veterans of World War II received 4,729,000 of these low-cost mortgages. The federal government's expansion of the nation's home equity capital base also helped to spur the explosive growth in the number of small businesses during this period.
Federal transportation policy complemented the housing policy. The Interstate Highway Act of 1956 authorized $26 billion for the construction of a nationwide arterial highway system. This critical piece of infrastructure increased the economic viability of suburban communities by connecting them to the nation's marketplaces. State and local governments also supported nascent suburban communities with infrastructure investments for electrification, sewer systems, secondary roads and commuter rail links. In these years, blue-collar industries out-migrated from the nation's central cities to the suburbs to take advantage of the economic efficiencies that larger horizontal spaces provided. Federal taxation policies hastened this exodus with large tax savings for relocating firms. At a time when average worker education and skill sets closely matched blue-collar industry requirements, millions of workers from suburban communities found well-paying jobs. These locations had become synonymous with good jobs, good schools, home ownership, massive infrastructure investment and small business formation.
For the middle class, the reservoir of wealth available to transfer or leverage on behalf of future generations consists primarily of homeownership. Since 1990, baby boomers have begun to draw down on an estimated $9 trillion in wealth transfer payments from their parents.
To be sure, mid-twentieth-century suburbanization was not an isolated real property therapy in American history. Under seventeenth-century land grant provisions, settlers to the Carolinas of the American South exercised "head rights" entitling them to 100 acres of land for each member of the family. Six members meant 600 acres of land. In the Chesapeake Bay region, land grants provided families with 200 acres. Middle State and New England colony families received 50 acre plots. The process of land distribution continued through the westward expansion, Homestead Act et al., until reaching the shores of the Pacific in 1900.
Subsidized land/home ownership seeded America's wealth for 400 years, and it should be the centerpiece of US domestic policy for the next 400.
Sioan Stephen Bethel
Dec 1 2008 - 3:24pm