For some reason or another people seem to associate cities with socialism and suburbs with the capitalist American dream. The notion that the strong middle class created American suburbia has been engraved in our minds for all of recent American history. Contrary to popular belief however, it wasn’t always like this. In fact, as far as population trends grow, suburbia is a relatively new concept. And it wasn’t always “The American Dream”. Many people grew up with the idea that prosperity meant the white house with the picket fence, the family, and the big beautiful American car to hit the open road with. That was the American Dream. However this dream of land and home ownership wasn’t the result of market forces occurring naturally, it was the result of government intervention and social engineering.
Lessons from Merry Old England
Even after our succession from England and American independence, there were things that remained highly valued which were still wants from the old empire. And not just tea, but land. The idea that one could own land for themselves to work and prosper on made America a very attractive place, and for most of our country’s history your options were you can take a job in a city or find a place to homestead in a small town somewhere or set up working the land. Even today’s commercials for things like “Scott’s Turf Builder” play into the fact that as a homeowner you can be “King of the Castle” and have a lush beautiful lawn, just like the palaces of the old country (Of course, the old country gets much more rain than most parts of the United States and as such, has some very naturally lush grass, but I digress). In addition to persecution of religion, many people came to America to free themselves from landlords who forced them to work land for little personal benefit.
These ideals stuck with Americans for a long time, and even if you were able to escape the old world landlords, land acquisition became one of the earliest “American Dream”s and as such, something that could be exploited.
Government Intervention, and the American Dream being sold to the American People
Coming out of the war and Depression, Americans were eager to start families and enjoy new lives! The federal government hopped right on board and created programs where banks were forced to make long term mortgages to people as long as they met the qualifications the government provided, both in the neighborhood and the people who were looking to buy. The idea of the long term 20 or 30 year mortgage is not a creation of the market or even banks looking to hook people into forking over their paychecks. It’s not that long ago that mortgages were very short term and required a large down payment. Think along the lines of 50% down and a three year mortgage.
Not only was the federal government now involved with Federal Housing Administration backed loans and Veterans Administration loans for the servicemen coming home, but they were deciding where these loans could be used. Essentially, a number system was invented to determine the loan risk, redlining areas where they didn’t want to grant loans. Basic criteria said that if the number of black Americans in the neighborhood was greater than 0, that you either could not get a loan in that area or if perhaps that neighborhood was only within walking distance of black neighborhoods could you get a loan but at a higher interest rate. If you read this in the context of the modern world it sounds absurd, but at the time, there was even a wall built in Detroit to separate blacks from whites in order to allow for new housing developments and FHA / VA mortgages.