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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Housing Collapse – An Aerial View

Posted in Economics, General Architecture by michaelwalch on 22 September, 2010

Firstly, to be my friend or read my blog you must listen to NPR’s Planet Money.  Last week, the Planet Money team was tracing the origins of Toxie, the ‘toxic asset’ (mortgage-backed security) that they bought a while back in order to experience first-hand the major story of the economic downturn.  Toxie is essentially a bundle of home mortgages, so while perhaps no other investor has thought to do this, the NPR team has been looking for the actual houses associated with their complex financial instrument – which brought them to Florida, where they discovered not only the houses they were looking for, but entire neighborhoods from a previous housing bubble in Florida.  Read the blog post and listen to the podcast, then compare the maps below:

LAND BOOM AND BUST:

Lehigh Acres, FL

This is the area mentioned in the podcast.  You can find out lots more about it at the website of Spikowski Planning Associates, who have done extensive planning for reusing the abandoned lots.  “[Lehigh Acres] was subdivided into about 135,000 lots, over 121,500 of which remain vacant.” – from Spikowski, W. M. and Stroubd, H. B. “Planning in the Wake of Florida Land Scams” available as a PDF on their website.

Salton City, CA

This was posted in the comments on the blog page, and looks to be a similar story to the Florida example.

These neighborhoods were built as land investments (from around the 1970s) so streets were built (and named) but not houses.  The land was cleared but was never built upon, and in most areas has grown back.  This is in sharp contrast to neighborhoods of foreclosed homes, where houses were built but then abandoned (or, as the podcast reports, no one ever moved in in the first place).  The question of what to do with this land is huge in every dimension – the sheer amount of vacant space within (albeit suburban/rural) cities, their value not only to the local owners and/or municipalities but to the world economy through the various financial instruments that caused their associated booms in the first place, and their environmental impact (one point emphasized in the podcast was the array of animals who had moved in to the abandoned houses).

HOUSING BOOM-AND-BUST:

I’m working on a comparable map insert for the more recent foreclosure crisis.  This is largely a more subtle, on-the-street issue where you see unmaintained yards and homes – it’s more abstract in an aerial view.  One place to start is the HotPads Foreclosure search map.

Cape Coral, Florida:

Check out the live map at HotPads.com

Las Vegas, Nevada:

Check out the live map at HotPads.com