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.

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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.