American Urban Form by Warner Sam Bass & Whittemore Andrew

Author:Warner, Sam Bass & Whittemore, Andrew
Language: eng
Format: epub
ISBN: 9780262300926
Publisher: The MIT Press
Published: 2012-02-23T16:00:00+00:00

Figure 6.6

Dutch colonial house, 1920. The Dutch colonial, with its gambrel roof, was a standard of early twentieth-century suburbia in the Northeast.

At the high end of the market, however, a new and influential method of land preparation and sales had begun. A few speculators, supplied with generous bank credit, purchased large tracts of land, laid out streets and lots for single-family houses for the wealthy, and maintained a uniformity of landscaping and building placement by the use of covenants. These subdivisions commonly arranged themselves around a golf club, and a few developed shopping centers as well.

These large-scale “community builders” popularized the designs that subsequently became the standards adopted by the federal government and planning boards everywhere. The list is impressive: a careful ordering of arterial and interior streets, the lesser streets making up the interior circulation; superblocks and cul-de-sacs; planting strips between curb and sidewalk; setback lines and lot coverage restrictions; planned placement of parks and playgrounds; and provision for utility easements. By the advent of World War II these design elements became the everyday methods used in middle-income suburban development.6

Like the phonograph, piano, and automobile, the real estate boom rested on time purchase, in this case on first and second mortgages. Since the 1890s the practice of mortgage lending had shifted to a considerable degree toward institutions and away from individual lenders. Private local investors had always dominated the business because they were in a position to visit the property in question and to make an informed estimate of its value. Savings banks, commercial banks, savings and loan associations, and insurance companies ignored this detailed examination at their peril. Since so much depended on these local evaluations, during the twenties no national market in mortgages yet existed, but one novelty flourished briefly.

Bond houses entered the commercial real estate finance market. Beginning in the nineties bond houses offered 100 percent financing for the construction of commercial buildings at an interest rate 2–4 percent above market levels. After making its loan to the developer, the bond house issued bonds against these properties in small denominations to retail customers. At one point during the twenties one billion dollars in such debentures stood outstanding. When the real estate market collapsed in 1930, the bond houses declared bankruptcy and their bonds fell into default.7

The common deal for apartment houses and commercial properties asked the developers to put up 20 percent of the cost of the project. The banks or insurance companies then lent 50 percent on a first mortgage and 20–30 percent more on a second mortgage. The first mortgages commonly ran for ten years with interest paid semiannually, and the principal fell due at the end of the term. Most developers hoped to sell their properties and to let the purchaser assume the loans. The purchaser in turn expected that the first mortgage would be renewed and that the rents would allow the second mortgage to be quickly extinguished. Second mortgages ran for five to seven years and their interest ranged up from 12 percent.

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