Housing Crisis - Not The First Time

The age of industrialization hardly ushered in a society of home owners. In 1900 nearly 40% of Americans were living in urban areas, double the percentage from 40 years earlier. But 75% of those dewellers were renters. No doubt many didn't see homeownership as a realistic possibility.
In 1921 construction of housing units soared from 449,000 units to 937,000 in 1925. The following year the air started coming out of the real estate boom. By 1929 construction had dropped to 509,000 units. In October the stock market plunged; the Great Depression was on.
The Depression left many home owners unable to renew their mortgages at reasonable rates. Between 1930 and 1940 about 1,000 homes were foreclosed daily and homeownership plummeted more than 25%. By 1940 the homeownership rate was at 43.6% below the 47.9% it had been 20 years earlier.
On May 7, 1933 President Roosevelt in a radio broadcast outlined the "New Deal" program. He said "Congress is about to pass legislation that will greatly ease the mortgage distress among the farmers and the home owners of the nation by providing for the easing of the burden of debt now bearing so heavily upon millions of our people."
The Home Owners Loan Corp. that Congress authorized in 1933 helped save thousands of destressed home owners from losing their houses. It called for the federal government to issue bonds that home owners could exchange for home mortgages. In 1934 Congress established the Federal Housing Act (FHA).
More readily available and affordable mortgages helped spur home building and buying.
The country's entry into World War II again currtailed homebuilding, but the G.I. Bill in 1944 made low interest home, farm and business loans readily available with 100% loan to value ratios.
SO IF 100% LOANS HAVE BE AVAILABLE SINCE 1944 - WHY IS EVERYONE BLAMING OUR CURRENT HOUSING CRISIS ON THESE TYPE LOANS?
Before citizens could take advantage of this program builders had to address the serious housing shortage that existed. By 1947 millions of husbands and wives and children were living bunched up with their in-laws.
The housing boom that followed the war is one of the defining moments in America's housinf history. Homeownership increased more than 11% fro 1940 to 1950 and jumped another 7% by 1960, passing the 60% mark.
Over the next 40 years the percentage of Americans owning their home continued to rise. Homeownership peaked at 68.9% in2005, a year that marked the end of a prolonged housing boom.
CONGRESS NEEDS TO STEP FORWARD, AS THEY DID IN THE PREVIOUS ECONOMIC CRISIS, TO REFORM THE FHA AND TO ESTABLISH A HOMEBUYERS TAX CREDIT THAT WOULD RESTORE CONFIDENCE TO CONSUMERS.