From: Susan Chase
My interest in land ownership focuses on restrictive deed covenants. In 1995,
I completed a Ph.D. dissertation entitled THE PROCESS OF SUBURBANIZATION AND
THE USE OF RESTRICTIVE DEED COVENANTS AS PRIVATE ZONING,
In regard to the project under consideration, my research might prove useful
in at least two regards. First, when suburban property was marketed in the
first half of the century, the developers insistently used the idea of home and
home ownership as an important selling point. As early as 1902, a real estate
company operating in the
Second, developers who sold suburban building lots frequently encumbered those small parcels of land with restrictions by including covenants in the deeds. Of the seventy subdivisions that I sampled in my research, 83 percent had one or more restrictive covenants. The real estate interests cited the restrictions when they marketed the land, for example, advertising in that restrictions "insure a harmonizing effect" and that they would "keep up the value of your holdings in this tract."
The covenants enabled developers to shape both the physical and the social
landscapes of the suburbs. On the physical side, deed provisions such as
building setback lines designated how close to the streets houses could be
Suburban deed covenants were offered by real estate developers with the assurance that the restrictions would protect property values. They were accepted by buyers, willing to take ownership of their parcels of land without absolutely total power to do with the land what they wished, because they apparently believed that accepting the restrictions insured a neighborhood that would remain attractive both in terms of the houses and gardens next door and the "compatibility" of the folks who lived there.
Third, not as emotionally gripping as racial restrictions, but of some substantial interest is the story of financing home ownership prior to the advent of the New Deal in the mid1930s. Early in the century, building lot prices ranged from less than $100 to $500 or more, available at $10 down and $1 a week. Paying for a lot could take two or three years after which an owner contracted with a builder to have a house erected. Here began the financial maneuvering. Before the Federal Housing Administration came into being in 1934, most banks could lend only 50 to 60 percent of the value of a property on a first mortgage, written for up to seven years with a 6 percent interest rate. A down payment of 30 percent was usual and the balance needed for house construction was covered by a second mortgage on which the interest rate was 10 percent for a loan of one year, 15 percent for two years, and 20 percent for three, the maximum time limit for such a mortgage.
To accumulate the needed funds, families cobbled together flimsy financial structures which sufficed as long as money was plentiful and lenders were willing to renew mortgages at expiration. But when money was tight, as it was at the end of the 1920s, lenders wanted repayment, not renegotiation, and borrowers, already at their fiscal limits, lost their houses to foreclosure. The number of foreclosure sales rose as mortgages holders demanded payment from families unable to come up with the money necessary to save their investments.
All this changed, of course, when FHA-insured mortgages held out to many,
although certainly not all, Americans the hope of owning land and a house
thereon. [Those excluded, of course, were African-American buyers, summarily
excluded by the FHA underwriting guidelines.]
Susan Mulcahey Chase
This abstract was originally
posted to H-Urban (the
H-Net network on urban history) earlier in 1996. Susan Chase, who received
her Ph.D. from the