The housing industry collapsed, taking the economy down with it. Homeowners missed payments, and foreclosure rates doubled. This worked fine while the economy was booming, but investors refused to renew the loans after the 1929 stock market crash. It was standard to pay back some and negotiate a new loan for whatever they still owed. Most people didn’t have enough cash at the end of the term. Nowadays, payments are spread out over decades, but back then they came due all at once after a few years. In the early 1900s, mortgages were just like any other kind of debt. Meanwhile, we view mortgages very differently - they are seen as an investment, a symbol of adulthood, and a sign of financial stability. Credit cards, student loans, and auto loans are the anchors that keep many Americans in debt for most of their life. A New Deal to restore the housing industryĭebt has a negative connotation these days. But their effects are striking - they determined the location and shape of development across America for generations. As a result, most people are unaware of these subsidies. The housing market hides these details from the typical home buyer. For decades, federal finance regulations incentivized single-family homes through three key mechanisms: As a result, suburbs dominate housing in the United States. Nope - suburban homeowners are the single biggest recipient of housing subsidies. What image springs to mind when you picture “federally subsidized housing”? Most people imagine a low-income public housing tower, a homeless shelter, or a shoddy apartment building.
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