More on Suburban Subsidies

Earlier this year I wrote about the unseen federal subsidies that made suburbanization in American the phenomenon it was and still is. You can read it here. As I observed then,

The phenomenon of post-World War 2 suburbanization could not have taken place without federal and local subsidies in the form of highway transportation (think, the interstate highway system), other infrastructure expenditures, and subsidies for home mortgages (an earlier related observation here).

The suburban ideal has been part of American consciousness for long enough that it seems "natural." Recent re-urbanization notwithstanding, the the seeming naturalness of suburban living continues to make consideration of its artificiality (in the sense that it is a contingent human creation rather than a historical necessity) difficult to perceive.

For a more in-depth effort to pull back the curtain you can read a 2017 piece at The American Conservative here titled "How We Subsidize Suburbia." Author Devon Zuegel points to three related phenomena and goes on to elaborate on each:

1. Insurance
2. National mortgage markets
3. New standards for debt structuring

Picking bits from Zuegel's post, she writes that the New Deal Federal Housing Administration (FHA) made possible the 30-year mortgage and embedded a "scoring system" for new mortgages that explicitly preferred suburban over urban residential properties. Because it was an agency with national scope, the FHA nationalized the underlying mortgage document.

Standardizing mortgages (that previously varied given the vagaries of state property law) also had the effect of creating a national secondary mortgage for mortgage debt (topped off by guarantees from the federally chartered corporations commonly known as Fannie Mae and Freddie Mac). The deeper the secondary market, the more efficient the entire mortgage system. And a more efficient mortgage system made mortgages yet more available for (suburban) property buyers.

There's more to read in Zuegel's article so I recommend clicking on the link. The "invisible" federal hand in subsidizing the suburbanization of America may or may not have contributed to the common good. What cannot be said of American suburbanization, however, is that it "just happened" or even, in my opinion, that it would have happened apart from very specific federal subsidies.

(For more of my thoughts on invisible or opaque federal subsidies go here (ethanol subsidies) as well as here and here (student loans)).