Contemporary housing policies in the United States have evolved from major economic events in the 20th century. The Great Depression marked the start of these catalysts as the worst economic emergency in the United States hit the housing market first. In the 1930s social welfare programs were limited and wages were lower, partially due to weak labor unions. Once the stock market crashed in 1929, President Hoover and his successor, President Roosevelt, had to reconcile with the housing crisis and create new government institutions to resolve these issues–the first of their kind.
The 1930s
The biggest housing issues for low-income Americans were the substandard conditions of the housing stock and lack of access to home ownership for low-income families. Homeownership was less of a priority and being a tenant was more socially acceptable, as financing a house was out of reach for most low-income Americans. Congress passed the Emergency Relief and Construction Act of 1932, which created the Reconstruction Finance Corporation (RFC), allowing banks to lend to private corporations that provide housing for low-income households. In the same year, President Hoover implemented the Home Loan Bank System, which consisted of twelve Federal Home Loan Banks and a Federal Home Loan Board. The Home Owners Loan Corporation essentially bailed out defaulting home buyers by trading government bonds for bad mortgages. However, Hoover’s new system was outpaced by growing unemployment and home ownership continued to decrease to two-fifths of all households in 1933.
The National Housing Act passed in 1934 under FDR formed the Federal Housing Administration (FHA) with the mission to improve housing conditions by providing credit for home repairs and home purchases. Insurance policies of the FHA allowed for mortgage loans to be paid monthly, forming a secondary market for home mortgages. The FHA was reported to have helped 12 million people improve their living conditions, but this number ignores the discriminatory lending practices called redlining, a system the FHA and the Home Owners’ Loan Corporation used to grade the profitability of neighborhoods. The four categories were green (“best”), blue (“still desirable”), yellow (“definitely declining”), and red (hazardous). These grades were largely based on the neighborhood’s racial, ethnic, socioeconomic, and religious composition. White, middle-class neighborhoods received FHA loans whereas Black and Hispanic neighborhoods were deemed hazardous and declining in value and did not receive FHA insured mortgages or loans. Redlining continues to impact the intergenerational wealth of Black and Hispanic Americans due to these discriminatory zoning and lending practices.
Congress had first pushed to introduce public housing in 1933 on a trial basis. This was encouraged from outside of the administration by activists and scholars. The United States Housing Act of 1937 solidified public housing and created the United States Housing Authority to administer the program. This bill allocated federal subsidies to local housing authorities to improve the conditions of low-income housing. The same top-down system is used today. The USHA created the regulations for construction costs, limits on tenant incomes, and architecture for local authorities to follow. Public housing became standardized to fit these stipulations, and low-income housing became distinguishable across the country by the monotonous brick-laid buildings.
In 1938, the Federal National Mortgage Association (Fannie Mae) was created by Congress as a subsidiary of the RFC. It was implemented to stimulate construction for housing. Fannie Mae backed loans in the secondary mortgage market but did not directly lend to homeowners. Its sibling program, the Federal Home Loan Mortgage Corporation (Freddie Mac), was chartered in 1970 to continue money flow into the mortgage market. The purpose of Freddie Mac is to also stimulate homeownership and rentals for middle-income Americans.
The 1940s
After World War II, the United States faced another housing crisis as millions of veterans returned home from overseas. There was a lack of available housing for the influx of people and President Roosevelt was forced to address the housing shortage. The Servicemen’s Readjustment Act passed (also known as the G.I. Bill) in 1944 and created programs to support returning veterans of World War II. This included mortgages and loans at low interest rates but were denied to Black veterans. The G.I. Bill was extremely beneficial for those included in its assistance but also perpetuated the unjust housing policies that harmed Black Americans and other minority groups.
The 1950s
The Housing Act of 1954 provided funding to construction, demolition, rehabilitation, and conservation of decaying neighborhoods. This new effort arose from the booming economy that followed the war-torn previous decade. Urban renewal became the new focus of federal housing initiatives, especially in inner cities. Sections 203 and 207 of the Housing Act of 1956 gave priority to the elderly and paid those displaced by urban renewal. The Federal Highway Act was passed in 1956 which chartered the construction of an interstate highway that bulldozed “blighted neighborhoods” and impacted low-income communities the most. Highways encouraged white flight from urban centers into suburban areas. This is the start of visualizing the “American Dream” in terms of white picket fences and suburbia.
The 1960s
In 1968, President Johnson signed the Civil Rights Act which included the Fair Housing Act (FHA). The FHA protected citizens from discrimination when buying or renting a home and increased protections for those seeking federally funded housing. This bill also outlawed practices like blockbusting which was a common practice where real estate agents would convince White home owners to sell their homes before Black Americans moved into their neighborhoods and decreased property values. The FHA eventually formed the U.S. Department of Housing and Urban Development (HUD) at the cabinet level. The mission of HUD was to assist homeownership, community development, and affordable housing through federal programs. HUD continues to be the major agency of housing in the U.S.
The 1980s
President Reagan cut more than 50 percent of HUD’s budget, dropping from $83.6 billion in 1976 to $40 billion in 1982. He then implemented the Low-Income Housing Tax Credit (LIHTC) in 1986. With this program, banks and private companies can purchase federal income tax credits and use profits to build affordable housing. This continues to be the primary source of funding for affordable housing today. Section 8 Housing Choice Voucher Programs were added to the Housing Act of 1937 in 1974 and continue to aid extremely low-income households. Vouchers allow tenants to pay 30 percent of income towards rent while the rest is covered by federal subsidies. Despite the success of vouchers for recipients, the waitlist for Section 8 vouchers is often multiple years long and many landlords refuse to rent to people with vouchers.
The 1990s to 2008
In 1992, Congress implemented the HOPE VI program to focus on urban revitalization. This provided block grants for low-rise and mixed-income housing to combat previous histories of public housing and segregated socioeconomic neighborhoods. Unfortunately, many cities that receive these funds use it to destroy slums and implement private housing. In 2007, the housing market crashed and forced 3 million foreclosures over the following three years. The U.S. continues to rebuild the housing market over a decade after the crash. The history of housing in the U.S. proves the ever changing social and political context of affordability and access, and where contemporary issues develop.