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Real Estate Brokerage to Unfettered Development

A History of Sprawl

In 1908, the nascent National Association of Real Estate Exchanges met in Chicago for their first annual meeting. Members of the association were seeking to organize themselves around principles with designs as lofty as saving America from the perceived ill effects of wholly unregulated development. In one major sense, such ?unfettered? development would later be termed ?sprawl,? and despite early efforts to help prevent it, it is the defining characteristic of urban and suburban development for the better part of the twentieth century in America—but it is not unique to the last century. At the time, however, optimism reined supreme, particularly in Chicago, which had the advantage of designing a major metropolitan center onto a relatively clean slate, following the Great Chicago Fire of 1871. One of the oldest organized boards of real estate brokers, the Chicago Real Estate Board, addressed overarching questions pertaining to the common civic good and the future of their city. For this reason, the Chicago board became the model upon which similar boards in major cities around the nation were based. These local boards were the fraternities of real estate men (though woman successfully entered the field and gained membership in boards in increasing numbers, particularly at the onset of World War II, and would later hold the majority among residential realtors) that began to think in ?high-class? professional terms and organized in Chicago for the first of many meetings designed to elevate their status as hard-working middle-class Americans with a truly legitimate profession with a truly ethical mission (Hornstein 2005).

A History of Sprawl: Endemic to the Growing City

In the latter half of the nineteenth century and the early decades of the twentieth century, American cities were maturing and beginning the kind of outward push already seen in their European counterparts in previous decades. Precedent for sprawl exists in antiquity (Babylon, Rome, China, etc.), but the earliest model among modern European cities is London. The wealthiest class in London had access to methods of transportation that made possible the long commutes from early suburban areas into the city. Grand estates were built in exurbia, an area of manicured landscape on the very fringe of nature. As transportation, roads, and availability of municipal resources improved, relatively affluent people also built residences outside of the city and, as these demographics moved out, less affluent people moved in, causing city centers to be increasingly populated by lower-income individuals—the same class of people later displaced by gentrification.

Although sprawl is not a recent—or even uniquely American—phenomenon and has been common to every city from the beginning of ?urban history,? it has exploded as an area of focus in recent years, with researchers citing the automobile, governmental single-use zoning laws, accessible mortgages, and housing subsidies as necessary indicators for the present-day version of the phenomenon (Bruegmann 2005). Its negative connotation, though, is the generally understood ?ill effect? of unregulated development that early real estate brokers and developers with an interest in land ethics and city planning were trying to avoid.

Character, Integrity, and the Failure to Professionalize

Unsurprisingly, real estate boards were especially likely to form during the periods of greatest economic growth, from the early twentieth century’s newly emerging middle-class consciousness and the postwar booms of the 1920s and the 1940s. Boards responded to the economic booms both for the profitability potential and for the desire to have a hand in the character—for better or for worse—of the emerging metropolitan landscape. Early boards were keen on establishing a name for themselves in the political arena as well as for their civic participation. Out of this atmosphere grew the drive for personal integrity among brokers and later the willingness to adopt ethics drawn from Richard T. Ely?s recently developed land use economics. A former economist at the University of Wisconsin, Ely was an outspoken and charismatic leader in the field he founded prior to World War I.

Accountability in the American cityscape was notable among enthusiastic and intelligent early brokers in the business such as William W. Hannan. A prominent early voice in the National Real Estate Journal, Hannan exemplified the desire for professional legitimacy and ceaselessly advocated for standard practices and a national organization that would have stamped out fraudulent would-be brokers who were giving the industry a bad name. Moreover, he was passionate about quality city planning and engaged in all walks of civic life. His enduring legacy is the model licensing law ratified at the convention in 1918 and finally adopted in almost every state by 1950. In its early years, the law was sparsely enacted, so additional measures were already being taken to distinguish the honest real estate broker from the dishonest one. After heavy promotion, the word ?realtor? came into accepted use by the National Board and even appeared in the dictionary in 1917. And even before it became a registered collective mark in 1948, it was upheld as symbolic property in a number of cases, effectively preventing nonlicensed brokers from using it, though even this proved not entirely successful. The next major effort toward professionalization included preparing textbooks that would be the foundation of a uniform real estate curriculum.

For all these efforts, however, the transformation of the early club of brokers into a distinctively modern professional association continued to fall short, and membership as licensed realtors in the boards remained disproportionately low. The emerging ?double consciousness of the middle class? found a home among self-interested real estate practitioners who may have advocated for an ethical imperative but were wholly unethical in practice (Hornstein 2005). On the one hand, realtors created their own code of ethics at their convention in 1924. At the same time, however, over-speculation on the housing market and the ?destabilizing impact [of real estate] on the banking system? heavily influenced the economic collapse that occurred in October of 1929 (Hornstein 2005).

The New Deal Housing Boom and the Homeownership Ideal

Realtors were not solely to blame for the Great Depression, but their reputation had slid with the collapse of the housing market. In response, however, real estate brokers worked directly with President Hoover to craft the New Deal?s critical National Housing Act of 1934. The act made possible the vision of ?the free-standing, owner-occupied, single-family home in the suburbs? (Hornstein 2005). The vision quickly became a reality for some and the aspiration of many as intense Own-Your-Own-Home national campaigns took off, culminating in a massive display exposition in Philadelphia of the kind that has persisted to the present day.

From an economics standpoint, the National Housing Act successfully made over the American cityscape with powerful proposals that combined long-term home mortgages and loan discounts with carefully developed neighborhood units and the controversial ?slum clearance? recommendation for purposes of property value and rezoning. Nevertheless, the federal government was now inextricably linked to issues of home financing. As a result, further reconfiguring of the housing market continued into the 1940s when leaders in Washington took the opportunity of the World War II wartime emergency to further the mission of the U.S. Housing Authority--though, in this instance, with the worthy goal of providing permanent communities for low-income families.

The work of the realtors in this era heavily privileged private space and property in vast expanses of suburban areas that would become the future areas of new commercialization and industrial development—in other words, sprawl (Hornstein 2005). By the time of the greatest housing booms following the war, a majority of homeowners lived in characteristically suburban areas, and following additional postwar trends, density even in the suburbs decreased, as lot sizes increased and family sizes fell. As a consequence, as populations increase, sprawling residential zones extend further and further out--in some cases, as far as the limits of physical geography (coastal regions like Manhattan Island or the London metropolitan area) or the limits of resources (water mains in desert-built cities such as Phoenix or Las Vegas).

Sprawl and the Middle Class Consciousness

The early movement from the central business district outward, where affluent residents settled farther and farther out in suburban lands, in part has slowed as cities reclaim districts of abandoned warehouses, former industry, and so-called ?historic districts? in the process known as gentrification. Consequently, urban centers and suburbs are now increasing in density rather than losing vast populace to outlying areas. (Bruegmann 2005).

The movement into the suburbs and beyond became the norm of the emerging middle class consciousness largely through efforts of the real estate brokers working in conjunction with the federal government to promote economic growth. Becoming a homeowner was a prototypical ambition across classes, but was particularly the ideal of the middle class, in part because of the self-defined position of the professional realtor within and on behalf of that class. The greatest rates of sprawl were during the boom years after World War I, during the New Deal, and again after World War II and into the 1950s (Hornstein 2005).

Anti-Sprawl and the Push for Sustainable Development

As populations have skyrocketed in recent decades, the actual rate of sprawl has slowed while urban populations have become denser. Meanwhile, the category of the middle class has become in some ways a virtually all-encompassing consciousness and has remained directly tied to the ideal of consumerism within strong housing markets. This ideal has prompted anti-sprawl advocates to criticize unfettered development and the over-consumption of resources. Though not unique to the late twentieth century, anti-sprawl campaigns during this period were particularly strong and multifaceted. Easily accessible data such as the cost of sprawl, the visible destruction of open spaces and agricultural land, and the over-dependence on the automobile were used by such marquee anti-sprawl activists as the Sierra Club and the National Trust for Historic Preservation to prove that sprawl is a major public concern. In fact, the idea of sustainable land use previously broached by Richard Ely has been one of the key concepts uniting groups in their campaign, because it taps into the larger and even more compelling issue of global warming (Bruegmann 2005).

Yet, in different forms, the cycle of sprawl persists, with a highly mobile and increasingly affluent populace continuously moving around with the economic waves and trends of history. Over the years, and particularly in America in the twentieth century, the real estate broker has had a close relationship to periods of economic boom and bust. It is uncertain what the city would have looked like had the early proponents of ethical land use economics and city planning achieved their visions. Still, real problems emerging out of the time-honored condition of sprawl raise important questions for the nature of sustainable development. Such questions would suggest added pressure on the professionals representing the real estate market, those brokers for whom defining themselves meant aggressive efforts towards legitimization in the early- and mid-twentieth century. With increasing populations and diminishing resources, issues of ethical, conscientious development may take center stage and force a rewrite of existing curriculums.

-- Posted February 10, 2008

References

Bruegmann, Robert. 2005. Sprawl: a Compact History. Chicago, IL: The University of Chicago Press.

Hornstein, Jeffrey M. 2005. A Nation of Realtors®: A Cultural History of the Twentieth-Century American Middle Class. Durham, NC: Duke University Press.