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The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s

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  • Price V. Fishback
  • Alfonso Flores-Lagunes
  • William Horrace
  • Shawn E. Kantor
  • Jaret Treber

Abstract

Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners' Loan Corporation of the 1930s. The HOLC replaced the toxic assets on the balance sheets of financial institutions by buying troubled mortgages and then refinanced the mortgages to allow home owners to avoid losing their homes. We analyze the impact of the HOLC on the nonfarm rental and owned home markets after developing a new data set for over 2800 counties in the United States. In counties with fewer than 50,000 people, where financial markets were not as well developed as in larger cities, the HOLC's financial interventions helped stimulate the demand for owned housing more than it influenced the supply. In rental markets the HOLC appears to have contributed to an increase in the supply of rental housing that was likely associated the improvement of the balance sheets of lending institutions.

Suggested Citation

  • Price V. Fishback & Alfonso Flores-Lagunes & William Horrace & Shawn E. Kantor & Jaret Treber, 2010. "The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s," NBER Working Papers 15824, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:15824
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    Cited by:

    1. Price Fishback, 2017. "How Successful Was the New Deal? The Microeconomic Impact of New Deal Spending and Lending Policies in the 1930s," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1435-1485, December.
    2. Fishback, Price & Fleitas, Sebastian & Rose, Jonathan & Snowden, Ken, 2020. "Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s," The Journal of Economic History, Cambridge University Press, vol. 80(3), pages 853-885, September.
    3. Jonathan D. Rose, 2013. "A primer on farm mortgage debt relief programs during the 1930s," Finance and Economics Discussion Series 2013-33, Board of Governors of the Federal Reserve System (U.S.).
    4. Alexander J. Field, 2013. "The Interwar Housing Cycle in the Light of 2001-2011: A Comparative Historical Approach," NBER Working Papers 18796, National Bureau of Economic Research, Inc.
    5. Jonathan D. Rose, 2014. "The Prolonged Resolution of Troubled Real Estate Lenders during the 1930s," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 245-284, National Bureau of Economic Research, Inc.
    6. Kenneth Snowden & Eugene N. White & Price Fishback, 2014. "Introduction to "Housing and Mortgage Markets in Historical Perspective"," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 1-13, National Bureau of Economic Research, Inc.
    7. Sebastian Fleitas & Matthew Jaremski & Steven Sprick Schuster, 2023. "The U.S. Postal Savings System and the collapse of building and loan associations during the Great Depression," Southern Economic Journal, John Wiley & Sons, vol. 89(4), pages 1196-1215, April.
    8. Jonathan D. Rose, 2012. "The prolonged resolution of troubled real estate lenders during the 1930s," Finance and Economics Discussion Series 2012-31, Board of Governors of the Federal Reserve System (U.S.).
    9. Ichida, Yukinobu & Hirai, Hiroshi & Kondo, Katsunori & Kawachi, Ichiro & Takeda, Tokunori & Endo, Hideki, 2013. "Does social participation improve self-rated health in the older population? A quasi-experimental intervention study," Social Science & Medicine, Elsevier, vol. 94(C), pages 83-90.
    10. Barry Eichengreen, 2016. "The Great Depression in a Modern Mirror," De Economist, Springer, vol. 164(1), pages 1-17, March.
    11. Quincy, Sarah, 2022. "Income shocks and housing spillovers: Evidence from the World War I Veterans’ Bonus," Journal of Urban Economics, Elsevier, vol. 132(C).
    12. Price V. Fishback & John Joseph Wallis, 2012. "What Was New About the New Deal?," NBER Working Papers 18271, National Bureau of Economic Research, Inc.
    13. Jonathan D. Rose, 2011. "The Incredible HOLC? Mortgage Relief during the Great Depression," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(6), pages 1073-1107, September.
    14. Disa M. Hynsjö & Luca Perdoni, 2024. "Mapping Out Institutional Discrimination: The Economic Effects of Federal “Redlining”," CESifo Working Paper Series 11098, CESifo.
    15. Alexander J. Field, 2014. "The Interwar Housing Cycle in the Light of 2001-2012: A Comparative Historical Perspective," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 39-80, National Bureau of Economic Research, Inc.
    16. Kenneth Snowden, 2014. "A Historiography of Early NBER Housing and Mortgage Research," NBER Chapters, in: Housing and Mortgage Markets in Historical Perspective, pages 15-36, National Bureau of Economic Research, Inc.
    17. Krimmel, Jacob, 2018. "Persistence of Prejudice: Estimating the Long Term Effects of Redlining," SocArXiv jdmq9, Center for Open Science.

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    More about this item

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N9 - Economic History - - Regional and Urban History
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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