I know we really should be talking about the exurbs, the suburbs built from 1990 on. I’m not sure on good studies done there; my experience with the Chicagoland exurbs of Schaumburg (where I worked for some time) and Naperville was that the rule-of-thumb for exurban housing was that you get on the highway at the ramp nearest your job and drive until you don’t want to commute any further.
But I do want to go back to the 1950s for a second and bring up another item, the GI Bill. From When Dreams Came True: The GI Bill and the Making of Modern America:
Between 1945 and 1954, more than 13 million houses were built, just slightly more than the 12.4 million called for by the NHA in 1944. Most of the homes were privately built and privately owned, and a substantial percentage were financed through VA-backed mortgages. In other words, the private market, supported by federally insured mortgages, supplied all the housing needs projected by the NHA, including 2.7 million units the agency thought people would only rent rather than buy. The profound effect the VA mortgage program had on the entire market is clear from the statistics: Of the 324,900 homes built in 1945, only 43,000 were sold on VA mortgages (7.5%), but in 1946 when housing starts almost tripled (to 1,015,2000), 412,000 (40.5%) were VA. In 1947, VA mortgages accounted for 542,000 of the 1,265,100 total (42.8%). The numbers and percentages dropped to 498,000 (26%) of 1,908,1000 in 1950, but by that time, the forces propelling the suburban development in America were inexorable.
The VA mortgages here are the GI Bill mortgages. They were low-interest, coupled with generous unemployment insurance and education grants, and designed to go with the array of single-family homes to be built. So when the housing boom came, which had be suppressed for over a decade due to the Great Depression and World War II, the government was standing there with a bag full of loans for veterans looking to buy. They were providing almost half the mortgages during the initial years, which set the baseline for how future production of the postwar housing market would evolve.
Note that the NHA was the domestic equivalent of the War Production Board (WPB), run by the former general manager of the Tennessee Valley Authority, to plan the building of houses the same way we planned the building of battleships. Luckily they left the building to private hands.
The GI Bill, and some other New Deal offices, became very influential in creating the skeleton of the modern mortgage market; it is very difficult to imagine the exurbs if you had to pay off your mortgage in 5 years.
When the GI Bill was enacted in 1944, the VA was only authorized to guarantee a portion of a house loan, $2,000 in principal with twenty-year terms, but in 1945 the guarantee portion was raised to $4,000 and 25 years. In 1950, Congress raised the guarantee to $7,500, or 60% of the total mortgage, whichever was less, with a maximum maturity of thirty years. That was when the program really became attractive to private lenders.
The mortgage system was strengthened further by the establishment of the Federal National Mortgage Association (FNMA, or Fannie Mae)…
And we know where that ended up. It’s worth noting that the GI Bill was amplified from where FDR targeted it by Republicans, who thought that getting people out of cities and into homeownership in the suburbs would turn them to the right. Worked well the first time, second time not so much. This isn’t to argue that the government created the suburbs, or that the suburbs are bad, etc. etc. It’s just that the projections of government are far-reaching, and show up in subtle ways. Anyone know harder research into the GI Bill and suburban development?