Presidents have long argued for maximizing American homeownership. From FDR’s belief that a nation of homeowners cannot be conquered to G.W. Bush’s belief that homeownership can transform people, and every president in between, American Presidents consistently encourage homeownership. The thought process being the more rooted in the community a family is, the more invested in society as a whole. Therefore, the U.S. encourages homeownership through significant public policy initiatives.

It is not just the Government that perpetuates this goal, but individual Americans as well. Though not necessarily highlighting the same positive effects. For individual Americans, homeownership is a tangible investment. It is historically profitable and is perceived as a convenience – if you have to pay to live somewhere, why not pay into your own investment? If the Government also offers tax benefits and other incentives, why rent?

Over the last two decades, municipalities have invested significant capital in rehabilitating cities to attract commerce. As businesses flocked to cities offering incentives, the cycle of job creation and housing followed. Suburbs, the once king of American culture at the end of the 20th century, lost homebuyers who preferred to be located in a city even if it meant renting. In the midst of this transition, the U.S. entered the Great Recession which put a significant amount of residential construction companies out of business. This ensured the next decade on would see a supply and demand issue arise.    

On the heels of a second financial crisis in just over a decade, U.S. homebuying is taking a different turn than it did after the Great Recession. Have potential and reality finally met the moment? The collision between technological capacity to bring people together and the remote environments sparked a massive moment of pause and reflection on the current water cooler system. With the COVID Pandemic pushing businesses to keep nonessential employees working from home, businesses are seeing potential savings in office rent costs. As employees spend more time at home, they realize their ties to their locations were not as strong as they thought, and many have decided to move. Big city renters are now buying suburban housing so much so 2020 and 2021 saw housing sales and appreciation skyrocket. Are they finally accessing the American Dream? Does the American Dream evolve into owning and working from your home? The next decade will likely determine the future of the American Dream.


Affordable housing, a major issue of current US policy, ties back to the mid 1800s.  As US housing policies evolved over time, we can segment them into four historical periods; Progressive Era (1865 – 1929), Great Depression (1929 – 1941), Postwar Era (1945 - 1973), Neoliberal era (1974 - ?). 

We’ll begin our series with the Progressive Era…

The Progressive Era

With rapid industrialization and urbanization slums were created. Poor city dwellers crowded into unsanitary, overcrowded, and unsafe housing creating a host of problems; health issues (drunkenness, Cholera, Tuberculosis, Diphtheria), sloth, and unemployment.

Bitter sweet - the conditions sprung some of the United States’ first building codes and solutions; In 1815, the use of wood for construction was limited in dense areas and NYC required fire escapes in 1862.  These codes, among requirements for windows in every room that faced fresh source of air, were included in the Tenement Act.

Early supporters of these reforms were philanthropists and civic minded developers as most returns were limited to only 5%.  Additionally, the sequence of reforms and developments served as an example of the Progressive belief that cleaner cities made better citizens. 

Another enacted reform current policy makers still struggle with today are zoning guidelines.  Rienhard Baumeister made the case for separating cities into distinct areas with the first modern zoning implemented in Frankfurt in 1891.  However, it wasn’t until 1916 that NYC passed the first comprehensive zoning in the US.  Zoning then spread slowly before 1920 across the country as Americans gave it mixed views as urban corrupt and incompetent politicians brought it about.

Between 1920-1930 zoning spread quicker and single-family homes in particular benefited with Americans viewing it as a means to protect property rights.  Finally, Euclid v Ambler 1926, Supreme Court decision established the constitutionality of zoning. 

Then came the Great Depression…


The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from the stock market crash of 1929 to 1939.  After the stock market crashed, millions of investors were wiped out, dropping consumer spending and investment, causing deep declines in industrial output and employment as failing companies laid off workers.  By 1933, when the Great depression reached its lowest point, some 15 million Americans were unemployed and nearly half of the country’s banks had failed; approximately a 25% unemployment rate.  

At the time, and presently, housing links to many sectors that drive economic stability including finance, construction, and manufacturing appliances.

As a catalyst to jumpstart the drowning economy, the Federal government created a slew of new programs;

  • Federal Home Loan Bank System (FHLB)
  • Home Owners’ Loan Corporation (HOLC)
  • Federal Housing Administration (FHA)
  • Federal Savings and Loan Insurance Corporation
  • Federal National Mortgage Association (FNMA)

Federal Home Loan Bank System (FHLB) 

In 1932, Congress established the FHLB as a government sponsored enterprise to support mortgage lending and related community investment activity.  Its mission is to provide reliable liquidity to its member institutions to support housing finance and support housing finance and community investment.  While it serves a public purpose, all FHLBs are privately capitalized and do not receive federal funding.  

Home Owners’ Loan Corporation (HOLC)

Under Franklin D. Roosevelt, the HOLC was established as a government sponsored corporation to refinance home mortgages currently in default to prevent foreclosure, as well as expand home buying opportunities.

The HOLC issued bonds and then used the bonds to purchase mortgage loans from lenders.  The borrowers gained because they were offered a loan with a longer time frame at a lower interest rate while reducing the amount of principal owed.  Unfortunately, 1/5 of the loans it refinanced eventually foreclosed and the program was terminated by order of the Home Loan Bank Board Secretary in 1954.

Federal Housing Administration (FHA)

In 1934, as the housing industry was on its back, the FHA was created.  Terms to were difficult to meet for homebuyers seeking mortgages; limited to 50 percent of the property’s market value and the repayment period spread over just three to five years ending with a balloon payment.  This created a nation of renters with only four of 10 Americans owning homes.

To accommodate lower income homebuyers the FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories.  It insures mortgages on single family homes, multifamily homes, residential care facilities, and hospitals issuing more than 46 million mortgages since its inception in 1934. 

The FHA provides the lenders with protection against losses if a property owner defaults on their mortgage.  The lender bears less risk because the FHA will pay a claim to the lender for the unpaid principal balance of a defaulted loan.

Today, the FHA insures over 8 million single family mortgages, almost 12,000 mortgages on multifamily properties, over 3,700 residential care facilities mortgages; and almost 100 mortgages on hospital facilities. 

Federal Savings and Loan Insurance Corporation

First established in 1934 as part of the National Housing Act, FSLIC served as a safety net for the savings and loan industry.  The government sought to restore confidence in the security of savings and loans accounts by backing them up so that if any given institution went under, the depositors’ funds would still be safe. All federal savings and loans associations were required to apply for insurance through the program. 

During the savings and loans crisis in the 80s, the FSLIC became insolvent, and recapitalized with taxpayer money many times.  It was later abolished by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

Federal National Mortgage Association (FNMA)

FNMA or otherwise known as Fannie Mae, is a government sponsored enterprise (GSE) founded in 1938 as part of the new deal.  As the foreclosure rates rose every year from 1926 until 1934, Congress recognized it was becoming increasingly difficult to obtain and retain a mortgage/loan.  The aim of Fannie Mae was to create a stream of housing funding available to everyone in every market.  The short 3-5 year terms were replaced with long-term fixed rate mortgages and allowed the borrowers to refinance at any time.  The long term fixed rate mortgage has now been the cornerstone of mortgage financing since the 50s.  

With that, FNMA continues to innovate and improve their products to provide efficient and effective products and services to support mortgage lending activities.  However, unethical lending practices help lead to the mortgage housing and financial crisis. The housing bubble burst, hundreds of thousands went into default, creating a subprime meltdown.  

The meltdown created ripple effects throughout the economy and FNMA, as well as Freddie Mac, were taken over by the government via a conservatorship of the Federal Housing Finance Committee. 

The programs, collectively, innovated new ways our government and private sectors finance and provide housing to all demographics in every market. As some were only needed in that dire time, many still remain integral components of the US housing industry.


Annual Report of the Federal Home Loan Bank Board (1933, 1934, 1951)

National Bureau of Economic Research 



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