FDR's New Deal
The 1920s-1970s: Stabilization and Expansion of Homeownership
The New Deal and the FHA (1930s-1940s)
In response to the Great Depression and the collapse of the housing market, President Franklin D. Roosevelt’s New Deal programs revolutionized homeownership.
The Federal Housing Administration (FHA), established in 1934, introduced the 30-year, fixed-rate mortgage, allowing middle-class Americans to buy homes with lower down payments and affordable monthly payments.
The Home Owners’ Loan Corporation (HOLC) helped refinance homes to prevent foreclosures.
The GI Bill (1944) provided returning World War II veterans with low-interest, no down payment loans, dramatically expanding suburban homeownership.
The Role of the Federal Reserve and Banking System Stabilization
The creation of the Federal Reserve in 1913 laid the groundwork for more stable banking practices and standardized lending.
The Glass-Steagall Act of 1933 separated commercial and investment banking, reducing risky speculation that had contributed to the 1929 stock market crash.
The Federal Deposit Insurance Corporation (FDIC) insured deposits, restoring public confidence in banks.
Post-War Suburban Boom (1950s-1960s)
Mass production techniques pioneered by developers like William Levitt (Levittown) made suburban housing affordable for millions.
Interstate highway construction and increased car ownership allowed families to move to the suburbs.
Racially discriminatory practices like redlining and restrictive covenants excluded minorities from these opportunities, contributing to racial wealth disparities that persist today.
The 1970s: Inflation and Housing Policy Shifts
Rising inflation and interest rates in the 1970s made borrowing more expensive.
The Community Reinvestment Act (1977) aimed to combat redlining and increase minority access to mortgages.
The Big Picture
The New Deal programs, banking system stabilization, and post-war policies transformed homeownership into the "American Dream," leading to a surge in suburban living and the homeownership rate reaching nearly 65% by 1970.
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