Michael Walch

Suburban by Design: The 30-year Fixed Mortgage

Posted in Economics, General Architecture by michaelwalch on 16 January, 2011

The set-street of Edward Scissor Hands.

First, a few links:

“Who Wants a 30-Year Mortgage?” an op-ed article by Bethany McLean for the NYTimes.  Bethany McLean and Joe Nocera are the authors of the book All the Devils Are Here: The Hidden History of the Financial Crisis which is a history of Fannie Mae and Freddie Mac.

“The Frankenstein Mortgage” NPR’s Planet Money’s January 14th podcast, where the team interviews McLean and Nocera and gives a concise history of Fannie and Freddie, from Federal agency to private company and back.

McLean and Nocera’s book is next on my reading list.  This is fascinating stuff.  In a way-oversimplified nutshell, one of the primary ways that the U.S. got out of the Great Depression, and avoided crisis after the World Wars, was through mass-produced housing.  Before the invention of Fannie and Freddie, home loans had much the same terms as, say, a car loan – you would expect to put close to 50% down, and have 10-15 years to pay the loan.  That all changed through Fannie and Freddie and the Federal Housing Authority which now guaranteed individual home loans.  What does this financial history mean to architects and urban designers?

As the guarantor of these “frankenstein” loans, the FHA exercised significant control over the design of the houses themselves.  The FHA heavily favored detached suburban houses in new developments over multiple-unit properties in an urban context.  The benign sounding policy belies some intrinsic biases, including outright racism, as well as the FHA’s political goal to produce construction jobs and clear inner city slums.  Simultaneously, a market was created for suburban housing while the previously unemployed created an industry to produce these houses.  Before government-backed housing loans, houses were generally one-off designs and often employed some level of ingenuity in sourcing building materials.  Particularly after the World Wars, an industrial approach to construction was implemented to meet the demand for the truly mass housing market created through various Federal programs.

The McLean and Nocera op-ed is a good reminder of the consistent government involvement in the housing industry in the U.S., a fact that conflicts with American’s self-sufficiency myth and is therefore convenient to forget.  As architects, we should be very interested in how the financing programs shaped American urbanism, with its strong social ramifications.  The housing built under these programs is now critiqued for being both environmentally and socially unsustainable, but real progress toward more sustainable development – to now ‘fix the suburbs’ as it is often described – will have to address these economic issues.


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