Radburn
History: The Real Estate Market Collapses
This
is the third part of Evelyn McHugh's series on the history of
Radburn.
See
Part 1 (Planning the Perfect
Community) and
Part 2 (Construction Begins)
By the start of 1931, Radburn’s plans and first
phase of homes had won recognition for their innovative design from the
American Institute of Architects.
In April 1931, the Erie Railroad announced it would
be adding two more weekend and two more daily trains to Radburn, for a
total of nine additional trains since the first residents arrived.
Construction on State Route S4B, branching from Route 4 at Arcola in Paramus,
had begun. In the regional planning for Bergen County
and northern New Jersey, this new highway would mean Radburn would be within 11 miles of the
soon-to-open George Washington Bridge. (Route S4B was later renamed Route 208.)
Another ambitious project, dubbed the
Passaic River Parkway, was scheduled to be less than a mile away, allowing drivers direct
access to the City of Newark. The cost of land and the
unwillingness of the City of Passaic to surrender prime real estate would leave this highway, now known as
Routes 20 and 21, uncompleted for almost 70 years.
Radburn marked the second anniversary of existence
with an announcement that the town now had 325 families in homes and
another 79 in apartments, for a total population of 1,000. Residents had
formed a garden club, a choral society and a little theater group, as well
as baseball, cricket and tennis clubs. The second Radburn pool had opened
in time for Memorial Day, 1931. Residents played archery and, with irony,
planted community vegetable gardens where 200-year-old farms had been.
They could now walk two miles without ever having to cross a street.
City Housing was still calling for an ultimate
population of 25,000 to 30,000 residents.
Radburn
continued to be innovative, now by how the new community was to be managed.
Louis Brownlow, one of the first trustees of the
Radburn Association, spoke to the New York Times about Radburn’s
use as a model for other homeowner associations with deed restrictions
intentionally designed to protect property values. (At the time there were
less than 100 such associations in existence in the United States.) The design of Radburn
meant that the Association was guaranteed to
control future development within its boundaries until 1960. After that
time, a vote every twenty years could dissolve the Association if a
majority of the homeowners desired to remove it.
The design of the
Association meant that those with a vested interest in the preservation of
values and community appearance would have a direct influence on any
changes made to the development. Those who purchased a home in Radburn
would have to join the Association. Homeowners would have to appear before
an Association hearing to make changes to their property even before they
could appear before the municipal planning board. Even if planning codes
were lax within the municipality, a homeowner would still have to abide by
the control of the Association for renovations, landscaping, even the
color of a home’s exterior.
(See
Certificate of Incorporation)
No longer would a homeowner be free to make
changes – convert a cape to a two-family, or paint it flaming yellow --
that would affect the character of his neighborhood. This was a
revolutionary idea in an era when most communities had little or no
regulations on property besides use.
There was trouble on the horizon, even as Radburn
continued to sell homes. New plans for houses in the range of $10,000 to
$15,000 were unveiled by Alexander Bing in the fall of 1931. But unlike
prior announcements, this press release included no numbers to be built
and few details.
Architect Clarence Stein, in a speech made in February 1932, had started
to talk about a limitation on the size of planned communities. They needed
only to contain sufficient business and industry to employ those that
lived within the community. They did not need to be city-sized, but only
built with the idea that they needed to have open spaces and parkland as
park of their planning. Furthermore, they would be surrounded by large
areas of open green space for recreation and the growing of food to feed
the community.
The master planner of Radburn was now talking about
returning some of it to farmland.
On the day that Stein’s lecture appeared in the
New York Times, the Page 1 headlines included the demand for the repeal of
Prohibition by New York Governor Franklin Roosevelt as an economic
incentive for businesses and as a source of income for states that were
hurting for revenue. Another article talks about banks that barely skirted
failing to repay federal loans. While it was carefully worded to avoid
panic, it was clear that the world’s economy was in trouble. And that
trouble had started to hurt City Housing Corporation.
Designed to pay a profit of no more than six percent
to shareholders, City Housing was walking a tightrope between the expenses
of construction, mortgages taken out for the purchase of the original
1,000
acres of land, the purchase of the Grange, and the need to have funds
available to meet the day-to-day operations. In the booming market of
1929, cash flow was simple as houses sold. Mortgages were easy to
obtain, and homes in great demand.
By 1932, the newly unemployed were defaulting on the same
mortgages. Banks, many teetering on the verge of failure, were no longer
willing to take risks in lending. Mortgage rates remained high as the
average salary decreased – many homeowners found they were paying
mortgages they no longer could afford, and taking out second and third
loans just to pay bills. Property taxes had become a new source of revenue
for many communities as real estate laws were rewritten and industry was
no longer expanding fast enough to shoulder the burden of new schools and
roads in developing towns.
When Radburn marked its third anniversary in 1932,
the world was a changed place. Now harboring 1,400 residents, only about 20 acres of the interior parklands had been
developed. Some of the land that had been set aside for parkland was now
transformed into public parking near the train station. Recreational
pursuits within the community continued to thrive, but the community
gardens were no longer open to all in the community of
Fair Lawn
, but were restricted to residents of Radburn. So were other
organizations, setting residents apart from the rest of Fair Lawn
for the first time.
More ominous signs began to appear as the Depression
began to affect the middle class professionals that had been Radburn’s
target for homeownership. Real estate listings were now filled with sales
by banks who found themselves left with defaulted mortgages. Even
the City Housing Corporation, trying to stay afloat, was selling off land.
Land on the far edges of the already completed construction were now being
sold as not needed for Radburn.
Thirty-nine acres near
Saddle River Road and Paramus Road
were sold to Garden Estates, a holding company owned by some of the
principals in City Housing, in July 1932, subject to a $39,000 first
mortgage. In October, another twenty acres was sold to Garden Estates.
Other properties that had been mortgaged directly by City Housing and now
under default were given directly to Garden Estates to relieve mortgage
obligations for the land. In turn, Garden Estates would swap land that it
owned back to City Housing, subject to first mortgages. Homes were also
sold back and forth to new owners and to Garden Estates from 1932 until
1934.
New home sales, once announced in the dozens, now
dwindled to one or two a month. Almost all of those homes were sold
subject to existing mortgages, as home buyers found it impossible to get
mortgages in their own name from troubled banks.
The real estate bubble had burst.
Continued
in Part 4 (Bankruptcy)
