How 19th century finance and housing associations shaped 20th century housing regimes in Germany and the United States

Why has Germany become a country of tenants with a housing policy directed at private and public rental construction? On the other hand, why has the United States turned into a homeownership country? In an interesting article, Sebastian Kohl (University of Uppsala) tackles these questions, looking at the continuing impact of institutional legacies in determining the different trajectories of housing policies and patterns in the US and Germany and scrutinizing their origins and developments.

“Comparative welfare and production regime literature has so far neglected the considerable cross-country differences in the sphere of housing. The United States became a country of homeowners living in cities of single-family houses in the twentieth century. Its housing policy was focused on supporting private mortgage indebtedness with only residual public housing. Germany, on the contrary, remained a tenant-dominated country with cities of multi-unit buildings. Its housing policy has been focused on construction subsidies to non-profit housing associations and incentives for savings earmarked for financing housing. The article claims that these differences are the outcome of different housing institutions that had already emerged in the nineteenth century. Germany developed non-profit housing associations and financed housing through mortgage banks, both privileging the construction of rental apartments. In the United States, savings and loan associations favored mortgages for owner-occupied, single-family house construction. When governments intervened during housing crises in the 1920/1930s, they aimed their subsidies at these existing institutions. Thus, US housing policy became finance-biased in favor of savings and loan associations, while Germany supported the housing cooperatives.”

The article makes an important contributions by bringing the realm of housing into the field of comparative political economy by using explanatory approaches from historic institutionalism and connecting them to the crucial topic of varieties of financial systems.

Kohl, Sebastian. 2015. “The Power of Institutional Legacies: How Nineteenth Century Housing Associations Shaped Twentieth Century Housing Regime Differences between Germany and the United States.” European Journal of Sociology / Archives Européennes de Sociologie 56 (2): 271 – 306.