Levittown
Brian Trumbore
President/Editor, StocksandNews.com

At the end of World War II, as the GIs came streaming home, there was a crying need in America for affordable housing. No one is more associated with a major solution to the problem than William Levitt.

Levitt was the grandson of a rabbi who emigrated from Russia to Brooklyn, N.Y. Young Bill, his father and brother got into the housing industry and in 1941, the Levitt family won a contract to build 1,600 row houses for shipyard workers in Norfolk, Virginia. With this project Levitt also began to work out his ideas on taking Henry Ford's theories for the auto assembly line and applying them to homebuilding.

Levitt served as a Seabee in World War II, constructing air strips for the Navy. When the war was over, and now 38, he recognized that the government was supplying the incentives for him to follow his dreams. VA mortgages enabled families to move out of the big cities and crowded apartments, where generations often lived together, and out into the boroughs; in Levitt's case the suburbs of New York City. As he later recalled, "The market was there and the government was providing the financing, how could we lose?"

Levitt and his brother, Alfred, had been accumulating land about 30 miles from Manhattan, on the Queens border in an area called Island Trees, part of Nassau County. From 1947 to 1951, the Levitts put up 17,500 homes in two basic models, "ranches" and "Cape Cods," employing the mass-production techniques developed by Ford. William Levitt explained.

"What it amounted to was a reversal of the Detroit assembly line. There, the car moved while the workers stayed at their stations. In the case of our houses, it was the workers who moved, doing the same job at different locations. To the best of my knowledge, no one had ever done that before." [Sobel]

The workers were organized in teams, each responsible for a different task. It's important to emphasize, though, that these were not "factory-built" houses, but rather on-site construction.

In a piece for Time magazine during this era, a reporter wrote:

"Every hundred feet the trucks stopped and dropped off identical bundles of lumber, pipes, bricks, shingles and copper tubing, all as neatly packaged as loaves from a bakery. Near the bundles giant machines with an endless chain of buckets ate into the earth taking just thirteen minutes to dig a narrow four foot trench around a 25 by 32 foot rectangle. Then came more trucks loaded with cement and laid a four inch foundation for the house in the rectangle. After the machines came the men. On nearby slabs already dry they worked in crews of two and three laying bricks, raising studs, nailing boards, painting, sheathing, shingling. Each crew did its special job and hurried on to the next site. A new one was finished every fifteen minutes."

The initial models rented for $65 a month with an option to buy for $6,990. Soon the price was raised to $7,990 and after 1949 they could only be purchased, not rented. As Robert Sobel describes, "For this amount the new Levitt owners got a home on what usually was a sixty-by-one-hundred-foot lot, which consisted of two bedrooms, a living room, kitchen -complete with GE refrigerator and Bendix washing machine - and bathroom, with eight hundred square feet of living space. The house came with an attic that might be expanded into two additional rooms and another bathroom. There were no basements, but instead each house was erected on a concrete slab." [With this last bit the town of Hempstead complained, since such construction was banned, but Levitt got the waivers.]

Well, you can imagine that while the home owners loved their new freedom, there were a ton of critics. Perhaps most famously were the comments from John Keats who penned a book "The Crack in the Picture Window." Keats wrote of crooked developers and developments, "'nurtured by greed, corroding everything they touched,' which had been 'vomited up' by heartless speculators who destroy the landscape with their rows of 'identical boxes spreading like gangrene.'" [Sobel]

Keats didn't name Levitt, specifically, but he didn't have to. Keats explained:

"Then he (his unnamed developer) whistled up the bulldozers to knock down all the trees, bat the lumps off the terrain, and level the ensuing desolation. Then up went the houses, one after another, all alike, and none of those built immediately after the war had any more floor space than a moderately priced two- bedroom apartment?.The result was a little box on a cold concrete slab?A nine-by-twelve rug spread under the largest room wall to wall, and there was a sheet of plate glass in the living-room wall. That, the builder said, was the picture window. The picture it framed was of the box across the treeless street."

In describing what came to be called Levittown, Keats was comparing the development to two- and three-story family homes in towns far from America's big cities. But to criticize Levittown simply wasn't fair. The parents of those moving in didn't live in the homes of Hannibal, Missouri, but rather in tenements, often in rundown neighborhoods and sharing it with their son's or daughter's family. For these prospects, Levitt's developments and others that quickly followed fulfilled life-long dreams of open space and a detached home of their own.

But all was not peaches and cream, that's for sure. Levitt placed severe restrictions on his work. For starters, the initial tenants were all white and mostly Christian. Blacks were excluded, until the 1960s even though a court ruled earlier the clause was unconstitutional. There were also to be no fences, and there was no laundry on the lines on weekends. In addition, the deed stipulated that the homeowner mow his lawn on a regular basis.

Levitt's success bred imitation, however, and in 1947, 60,000 units went up in Los Angeles alone, while one developer, Joseph Eichler, teamed with architect Robert Anshen to offer 51 variations of their standard three-bedroom, one-bath model that they built in Sunnyvale, near San Jose. These were priced at $9,500 and sold out in weeks. [Eichler was also one of the first to break through the color barrier.] Regional builders, such as Eugene Glick of Indianapolis, flourished.

From 1946 to 1955, two-thirds of the new housing constructed in the U.S. was in metropolitan areas; of that, 80 percent was in "suburbia." In 1960, the census revealed that for the first time in American history, a majority of Americans lived in suburbs. All of this added up to wealth, particularly for the builders and suppliers of building materials.

And many decades later, while most of the projects of the inner city became dumps, communities like Levittown flourished. Some of the original owners sold their homes at nice profits and used that for down payments on a bigger home in a more affluent suburb. By 1990, the $7,000 box was going for $135,000- 150,000 and they were hardly recognizable as over time they underwent huge facelifts.

But the debate continues to this day between those who voice opposition to developments like Levittown and those who support them. Author Robert Sobel compared two letters to the New York Times in early 1999. One wrote:

"Sprawl has become instrumental in the destruction of any sense of community within both large and small cities across the country. New developments?have done more to fractionalize communities along racial, economic and political lines than any other time in our country's history."

Another took issue with those desiring a pristine environment.

"Areas that otherwise would be given over to job creation and highly profitable logging, strip mining and oil drilling are being expropriated by wild animals, which are inherently valueless since they contribute nothing to our economy. Once these beasts establish themselves, shielded by hellbent wildlife-protection groups and misguided politicians from Al Gore to Christie Todd Whitman (ed. and I could add today's New Jersey Governor McGreevey), they can never be dislodged.

"But these animals are only the unwitting servants of the quaint- seeming 'country folk' whose diabolical plan is to eradicate or make unlivable our suburbs and cities by covering our streets, sidewalks and highways with grass, shrubbery and trees. They want to inundate shopping malls and sports arenas with lakes, ponds and streams; replace our condo developments with 'picturesque' villages and hamlets and our suburban tract homes with drafty old-fashioned farmhouses."

Ah, it's a great country.

As for Levitt, he used to famously reply, "No man who owns his own house and lot can be a communist."

Unfortunately, Levitt's later years were not filled with success. While he sold his company in 1968 to ITT for $92 million in ITT stock, Levitt then proceeded to lose his fortune in various ventures, including $34 million to Ayatollah Khomeini of Iran when Khomenei reneged on a deal. Then in 1981, Levitt was charged with taking money from a charitable foundation he established and was forced to repay $5 million. He died in 1994 at the age of 87, a ruined and broken man.

Sources:

Evans, Harold. "The American Century"
Jennings, Peter and Todd Brewster. "The Century"
Sobel, Robert. "The Pursuit of Wealth"
Sobel, Robert. "The Great Boom"
Weber, Joseph. Business Week

Brian Trumbore

BUYandHOLD does not recommend any securities. The securities mentioned above are being used for informational purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy.