The History of the Modern Housing Model
Last updated
Last updated
The modern homeownership model has its roots in the late 19th and early 20th century. Before then, homeownership was a privilege of the wealthy, and most people rented their homes. However, the Industrial Revolution and the growth of the middle class in Europe and the United States led to a demand for affordable housing. ()
According to the US Census Bureau, the homeownership rate in the US was only 47% at its highest rate as early as the 1890s. The rate remained steady at around 46% until the mid-1940s. From the late 1940s through the 1950s, the homeownership rate increased rapidly to reach 64%. It has remained relatively stable around 65% in recent years, except for the brief correction in the early 2000s. ()
The sharp increase in homeownership rates in the mid-20th century was due to the creation of the Federal Housing Administration (FHA) under the National Housing Act of 1934 during President FDR’s administration. This occurred at a time when the housing industry was struggling due to the Great Depression, with many construction workers unemployed and mortgage terms difficult for homebuyers to meet.
The FHA did the following:
reduced down payment requirements
assessed leaders based on their ability to make payments
ensured that the quality of homes was evaluated before purchase
made it easier for lenders to offer mortgages to a broader range of borrowers, including those with lower incomes and less money for a down payment
This challenged the traditional mortgage lending process that private banks had been using for years.
Efforts to increase homeownership rates since the 1970s have included targeted programs such as goals, down payment assistance (DPA), and cross-subsidies. While these programs have been effective in uplifting sub-communities and specific minorities, they have not significantly increased the overall homeownership rate on a macro level over the past half-century.
Today, homeownership remains a cornerstone of the American Dream. It is seen as a symbol of success and stability. However, the high cost of housing in many areas has made it difficult for some Americans to achieve this goal, leading to the ongoing discussions about how to make homeownership more accessible. ()
1 - "A Short History of Homeownership in America" by Shana M. Watters, Federal Reserve Bank of Atlanta, Economic Review, 2006:
2 - "The History of Homeownership in America" by Brent T. White, Georgia State University College of Law, 2013:
3 - "Homeownership in the United States: Historical Perspective and Future Directions" by Richard K. Green, University of Southern California, Journal of Housing Research, 2006:
4 - "A Brief History of Homeownership in the United States" by National Association of Realtors, 2021:
