MetroChanges - Metropolitan Changes 2008 Page 1...

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Metropolitan Changes 2008 Page 1 METROPOLITAN CHANGES INFLUENCING HOUSING Web site reference: The Fannie Mae Foundation conducted a survey of 160 experts – urban historians, social scientists, planning faculty, and working planners and architects. This panel was asked to rank a list of factors that have altered the American metropolis and had a direct impact on our nation’s housing. The result was a list of the ten top influences: 1. The 1956 Interstate Highway Act and the Dominance of the Automobile. Proclaimed the largest public works program since the pyramids, the 41,000 mile interstate highway system transformed American cities in ways its planners had not anticipated. The original intent was to save the central cities from traffic congestion and to provide high-speed travel from city to city. Unfortunately, the new highways quickly became snarled themselves and devastated many urban neighborhoods. The beltways that were designed to allow long-distance travelers to bypass the crowded central cities turned into access arteries to suburbia. Cheap rural land along the beltways became the preferred cities for suburban housing, shopping malls, industrial parks, and office parks. Both people and businesses were drawn out of the cities. Compounding the situation was the fact that the federal government paid 90 percent of the cost of interstate highways with revenue from gasoline taxes. By contrast, local communities that wanted to invest in mass transit were faced with a much lower federal subsidy. The result was that most cities neglected mass transit and focused their investment only on roads. More than any other measure, the 1956 highway act created the decentralized, automobile-dependent metropolis we know today. 2. Federal Housing Administration Mortgage Financing and Subdivision Regulation. The post-1945 development of suburbia was built on the foundation of the FHA’s insuring against default low-down-payment, long-term, fixed-rate mortgages issued through federally chartered thrift institutions. The idea was an innovation of President Roosevelt’s New Deal era. The impetus for this government intervention came after the older mortgage system of down payments as high as 50 percent and terms as short as five years led to massive defaults. Home ownership jumped from 44 percent in 1940 to a record 66 percent today. The FHA imposed standards both on the homes and the subdivision design that quickly became the norms for the home building industry. More importantly, the mortgages insured by the FHA in the two decades following WWII were limited to race-restricted housing on the suburban fringe. The FHA refused to insure mortgages on older homes in typical urban neighborhoods. White home buyers wishing to stay in urban neighborhoods had to seek the old-style mortgage with higher rates and short terms. The same purchaser could choose a home in suburbia and get an FHA-insured mortgage with lower rate, longer term, lower down payment, and lower monthly payment. By contrast, all African-American households were excluded from the FHA-subsidized suburbia with
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MetroChanges - Metropolitan Changes 2008 Page 1...

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