The Rise of Filtering Down: The American Housing Market Transformed, 1915–1929

Between 1915 and 1929 across North America most commercial builders ceased to erect dwellings for low- and moderate-income households. As a result, these households increasingly relied on housing units that had filtered down. This development had momentous consequences for the housing market and eventually for housing policy as well as for the character of American cities. The reasons for this change were complex. They included a rapid and then permanent increase in building costs coupled with an irregular decline in owner-building, the means by which many families had once housed themselves. Especially after 1918 there was a shift in consumer preferences away from housing and toward other consumer goods, notably automobiles. This was partly counterbalanced by a new appreciation by the middle class of the virtues of home ownership and improvement, but this preference was channeled into the development of large, planned, and well-serviced subdivisions. This type of residential development required larger amounts of capital and fostered the growth of a new financial instrument, the mortgage bond. Bonds redirected the savings of small investors that had previously financed small-scale land speculation, house building, and landlordism. In 15 years the urban housing market had been transformed, with large consequences for the lives of Americans.