Mr. Peabody has the Wayback Machine warmed up for another short and hopefully not-too-fractured history lesson about homeownership. Last week we surveyed 50 years, starting in 1890 (when national housing records were first kept) and ending in1940 when the U.S. found itself simultaneously recovering from the Depression and preparing for World War 2.
Suffice to say, homeownership didn’t occupy the same place in the American psyche in those earlier years when sweeping changes were transforming the Country through massive industrial growth, widespread technological change (autos, telephone, electricity) and wholesale migration from rural farms to urban settings. Despite those changes, the number of homeowner households remained virtually unchanged at 46% for the entire fifty year period! The seeds of our modern housing market wouldn’t come until later.
By 1940, the homeownership had reached an all-time low of 43% and new home construction had all but stopped as scarce manufacturing resources were being diverted to the war effort and millions of people were preparing to be drafted into the fight. Most of the existing housing stock was woefully old, poorly built and inadequate in terms of amenities (almost a third of existing homes lacked indoor toilets).
As the war wound down and Americans celebrated VE and VJ Days, the Country suddenly found itself facing the daunting prospect of 15 million GIs (whose life goals were profoundly altered by war) returning to civilian life in the middle of a huge housing shortage and post-war recession. It stoked fears of riots similar to those that had happened after WW1.
Throughout WW2, women had also been entering the workforce and average family savings were high because of wartime austerity measures. Now that the threat of Fascism was over, young men were eager to leave those memories behind to focus on starting new families and obtaining college educations and good paying jobs. The stage was set for government intervention in the housing industry on a scale never seen before.
The Feds were to embark on what would become a 75 year experiment in socio-economic engineering designed to expand the ranks of homeownership and give it a starring role in the American Dream. Now that the world had been made safe for democracy, a single family home in the suburbs with a white picket fence would become a shining beacon for the value of consumer-driven capitalism.
Over the next two decades, the rate of homeownership (once stagnant for 50 years) soared from 43% to 65% as a thriving middle class was born. Interestingly, once that staggering jump in homeownership peaked in the late 1960s, the rate would again remain unchanged for the next 50 years for reasons we’ll try to discern next week.