This project performs microeconomic studies of housing markets, housing finance institutions, and changes in the income distribution during the Great Depression using panels of city and neighborhood level data to analyze how these markets were influenced by various factors, including federal, state, and local government policies. Current worries about a possible bursting of a housing bubble pale in comparison to the Great Depression. After a housing boom in the late 1920s, housing markets and construction ground to a halt in some markets and housing values plummeted. Only a handful of modern economists and economic historians and several NBER economists in the 1950s have published studies on the microeconomics of housing during the 1930s. Housing is particularly important because it accounts for a large percentage of household assets and mortgage loans are typically the major form of debt owed by households. The New Deal administrators saw housing as a major concern and established several programs to resolve housing problems, including the Home Owners' Loan Corporation's (HOLC), which refinanced 20 percent of all mortgages in 1933-1934 and the Federal Housing Administration, which began providing insurance of mortgages and loans for repair and reconstruction.
This project analyzes housing markets during the Great Depression using a series of panel data sets that we will construct from original sources and government documents. It analyzes annual building permit activity for over 200 cities in the 1920s and 1930s. For all U.S. counties, it examines changes in the distribution of home ownership, housing values, and rents for 7 to 11 value ranges between the census years 1930 and 1940 for all counties in the U.S. After matching information from detailed property inventories from the mid-1930s for over major 200 cities and towns with the 1930 and 1940 information, the project examines the decline in home ownership rates, average housing values and rents from the late 1920s into the mid-1930s and the recovery in these values in 1939 for up to 200 cities in the United States. Based on formerly confidential HOLC housing studies, the project examines the bust and recovery in housing values for different qualities of housing for thousands of neighborhoods across 200 cities with emphasis on the impact of neighborhood amenities and disamenities, income levels, and racial and ethnic differences across the neighborhoods.
The investigators trace how variations in the 1929-1933 decline across cities influenced the incomes of specific groups of households in 1929, 1932, and 1933 in different parts of the income distribution using retrospective information from housing finance surveys in at least 22 cities. The investigators also examine for a larger number of cities how shares of households in different income ranges changed between 1933 and 1940. Using HOLC surveys of all the mortgage lenders in roughly 200 cities, they analyze the dramatic cross-sectional differences in the types of institutions offering mortgages in different parts of the county and the changes in the institutions roles and the types of mortgages contracts that they agreed to during the 1930s. Throughout this project examines the interactions between Federal government programs and state and local taxing and spending programs on these housing markets and on the income distributions.
Broader Impact: The project broadens our understanding of the factors that influence housing markets, particularly in Depressions. The datasets created and the .pdf file copies of the records that are posted provide a large public good to other researchers interested in these and other topics related to the 1930s and in discerning long run trends in during the 20th century.
