of entrepreneurs such as Henry Ford and William Levitt.
After the end of World War I, the National Association of Real Estate Boards started a campaign encouraging people to “own your own home.” On the premise that a home construction boom would revive the nation’s economy, the Department of Labor joined in the campaign, distributing pamphlets and flyers. In 1921, the campaign received an even bigger boost when the young secretary of commerce, Herbert Hoover, personally lent his support, encouraging the homebuilding industry to reduce costs by standardizing construction practices and distributing hundreds of thousands of copies of a booklet titled How to Own Your Own Home.1
Considering that the number of owner-occupied homes grew from 10.9 million in 1920 to 14 million in 1930, many would deem this campaign a success. Some have gone so far as to label the campaign a “conspiracy” aimed at deceiving many Americans into buying homes when they would be better off renting.2
In fact, the own-your-own-home campaign was one of the least important factors in the rise of homeownership in the early 20th century. The government, in cooperation with various special-interest groups, conducts all sorts of campaigns aimed at changing our behavior, from urging people out of their cars and onto transit to reducing obesity. There is little evidence that these campaigns have a major effect on behavior.
On the other hand, the years between 1890 and 1930 saw several profound changes that transformed American lifestyles and the role of homeownership for both middle- and working-class families. Those changes included an expansion of credit; new transportation technologies, such as streetcars and automobiles; new industrial technologies, such as the moving assembly line; a new class of homebuilders who combined subdivision planning with home construction; and the use of protective covenants and zoning to protect home values—often by protecting middle-class neighborhoods from working-class intrusions.
When combined, those changes dramatically increased urban homeownership rates. Rural homeownership rates were already high in 1890: more than 64 percent of rural families but only 17.6 percent of urban families lived in their own homes (see Figure 4.1). By 1930, the rural rate had declined slightly to 54 percent, but the urban rate increased by 2.5 times to 43.4 percent.3 Since urban populations more than tripled in that same time period, while average family size declined from 4.76 to 4.01, the number of owned homes in urban areas grew more than 10 times, from about 710,000 in 1890 to 7.4 million in 1930. Most of that increase was before the realtors’ own-your-ownhome campaign began: in 1920, urban homeownership had already climbed to 37.4 percent, representing 4.7 million homes.4
Expansion of Credit
This increase in homeownership was financed by an expansion of credit tools, and especially by the growth of building and loan associations. As previously noted, as of 1893, B&Ls had helped finance about 300,000 homes. By the 1920s, they became the primary source of finance for homebuyers, offering amortizing loans for up to 12 years with as little as 25 percent down. In a decade that saw the construction of 7.03 million new homes, the B&Ls financed 4.35 million homes, lending $15 billion, or nearly $3,500 per home.5
Growth of the Suburbs
Between 1890 and 1930, the number of urban homes, rented and owned, more than quadrupled. This rise contributed to the rapid growth of the suburbs: During the 1920s, the first full decade in which urbanites outnumbered ruralites, the suburbs grew twice as fast as the cities.6 The political reason for suburban growth was the increasingly scarce vacant land inside the cities, and people living outside the cities were increasingly resistant to being annexed at a time when many cities were run by political machines known for their corruption.
The social reason for suburban growth was that it allowed middle-class families to get away from working-class neighbors and settle into communities of people more like themselves. Historians Oliver Zunz and Margaret Garb have shown that, in the 1880s, urban neighborhoods in cities such as Detroit and Chicago were divided along ethnic lines, while by the 1920s, they were divided by income classes.7 This change hints at a dark side of growing homeownership, which was that it took place mostly or entirely among the middle class, while working-class homeownership rates appear to have stagnated or declined.
Too many, the term “suburbs” evokes images of Levittowns and other post-World War II developments, but people began escaping cities for the suburbs long before that. In the pre-sanitary and public health era—which includes almost all of the 19th century—cities were rightly regarded as unhealthy and unsafe, prime locations for epidemics, not to mention crime and other problems. The ability of those with urban occupations to escape the city for the suburbs depended on their wealth, leisure time, and access to transportation.
New Transportation Technologies
Before the 1830s, the only transportation available to most urbanites was foot or horsepower. Since only wealthy or high-income people could afford to keep horses in cities, most people located within one or two miles of urban job centers. The development of steam-powered trains offered a few people the option of living farther away. Early steam trains had top speeds of about 30 miles per hour but typically ran much slower. In 1839, Ulysses Grant rode a train on part of his journey to West Point and observed top speeds of about 18 mph and average speeds of 12 mph.8 These rates still represented a significant advance over walking speeds, and speeds rapidly increased so that, by 1850, trains could achieve 60 mph and typically cruised at 30 to 40 mph. However, commuter train services were available only in the largest cities, and fares were so expensive that only the wealthiest people could use them for commuting.
An alternative to steam-powered trains was the horsecar—a horse-powered vehicle running on rails—which was first offered in New York City in 1832 and was common in many American cities by 1850. San Francisco saw the first cable car system in 1873, and by 1890 cable cars operated in around 30 American cities. However, horsecars and cable cars were both slow and expensive, so although they attracted some middle-class riders, they did not stimulate much suburban growth.
The electric streetcar, which was perfected in the late 1880s, led to the first major suburban boom. Average streetcar speeds of 10 to 15 mph were slow by today’s standards, but much faster than any previous form of transport other than the far more expensive steam train. Electric streetcars were so inexpensive to operate that almost all horse- and cable-car lines quickly converted to electrical power, and by 1910 well over 800 American cities had at least one streetcar line. In many cities, developers would build a streetcar line between downtown and their subdivision as a way of attracting homebuyers. Although nickel fares were sufficient to operate the streetcars, the cost of building the lines was actually subsidized by lot and home sales. Later, these streetcar lines often merged and often ended up under the control of the local electric power company.
The streetcar transformed both cities and suburbs. Before the streetcar, wealthy urbanites often built the finest homes on major thoroughfares, where they had easy access to transportation and other services. Wealthy suburbanites tended to live 3 to 10 miles from city centers— close enough to reach by horsepower but too far to walk. But the noise and crowds brought by the streetcar caused the wealthy to retreat from arterial streets, which were soon lined with shops and multifamily housing, and to move as far away as 15 miles from the city center.9
Historian Sam Warner estimates that about 5 percent of people in the Boston area of 1900 were wealthy or in the upper-middle class, meaning the owners of large businesses or prosperous lawyers and other professionals. Another 15 percent would be in the central-middle class, including small business owners, teachers, and other professionals. Some 20 to 30 percent were in the lower-middle class, including office workers, shopkeepers, and skilled artisans. The remaining 50 to 60 percent were working class.10
The traditional streetcar fare of 5 cents per ride kept working-class commuters out of the suburbs. Warner