From one of the Internet's tiny treasures, Delancy Place:
The Government Did Not Want Houses In Urban Areas
Today's encore selection -- from Debtor Nation by Louis Hyman.
To help bolster mortgage lending during the Great Depression, the Federal Housing Administration (FHA) was created, and the FHA in turn created the twenty-year mortgage. But no one had made a mortgage loan for anywhere close to as long as twenty years before, and lenders were worried that the houses would not hold their value over twenty years. So the FHA created standards and guidelines to help insure that they did. But in so doing, it clearly showed a bias against urban areas, inaugurating an almost eighty-year period in which the trends in housing was toward suburbs -- and away from urban areas. This trend has only recently reversed:
"The purpose of the FHA was to create demand for building materials and for labor. To get money moving again in the economy, the FHA guidelines helped buyers and lenders alike differentiate between a good house and a bad house. Too many home buyers had been burned by shoddy construction in the 1920s. Enacting national standards allowed investors to loan money at a distance, and allowed mortgages to be resold. Housing quality was the foundation upon which the entire FHA system resided.
"In determining 'good' housing, however, FHA guidelines went well beyond the proper ratio of nails to wood in addressing what had long been contentious politically and racially. ... The FHA Underwriting Manual instructed lenders on which properties could be insured. ... Through its many pages of charts, tables, and descriptions, the manual instructed banks on where to lend and on whom to lend money to. While the manual promised objectivity, the social assumptions of the FHA planners shaped the planning criteria as much as macroeconomic considerations.
 |
"These standards were not only for how they were physically constructed, but also where they were located, which few extant homes could meet. ... The ideal house lot possessed 'sunshine, ventilation, scenic outlook, privacy, and safety.'
....MUCH MORE
