Gilded Age Real Estate Boards

Real Estate Boards

Real Estate Exchanges[1] were common throughout the United States and they pretty much did what their name implies. Real estate boards were, and are, industry trade associations, composed of individuals and firms engaged in real estate transactions, property ownership and sub-division development-redevelopment. Their membership also extended to all sectors (for instance banking, construction and insurance) relevant to real estate development, they eventually assumed responsibility for issue advocacy and legislation desired by their membership. Since in most states, the state governments retained considerable authority over city matters, state-wide real estate associations were also established at the state level. Allegedly, the first state-wide Real Estate Board was set up in New York in 1896. I am uncertain as to which city’s real estate exchange developed first—probably New York City.

 

The earliest evidence of a residential and commercial body having influence on city agencies and codes, was probably the National Board of Fire Underwriters founded in 1866. Its purpose was to fix uniform rates nationwide and act as a lobby for and against state-level legislation. The national board also worked hard to push localities into more stringent building codes and to develop well-trained and equipped fire departments. The symmetry of logic between strong fire codes and city governments is fairly self-evident. In 1871 Chicago burned down. The fire destroyed an estimated 15,000 buildings (3 ½ square miles), and drove sixty-eight insurance companies into bankruptcy. The Boston fire of 1872 destroyed 750 buildings and sixty-five acres of its CBD[2]. As early as 1857 (San Francisco) individual cities had formed their own boards of fire insurance. In the course of their efforts to prevent fires, insurance firms naturally, through city regulation, imposed constraints on home builders (mostly a pretty heterogeneous lot of small builders), banks and the like. By 1892 electrical codes were fairly commonplace as well. Each of these codes, however, accepted and necessary reached into the pockets of real estate-related businesses. The more stringent the codes, the more expensive. That’s why New York City was probably the first to form a Real Estate Exchange. Amendments to New York City’s building law in 1885 and 1892 added four new members to the City’s Board of Examiners: one being the Real Estate Owners and Builders Association and the other the New York Real Estate Exchange.[3]

 

The Greater Boston Real Estate Board (Real Estate and Auction Board) claims to be the nation’s oldest–formed as it was in 1889—metropolitan real estate exchange. The GBREB’s first chairman, Frederic H. Vaux, played a critical role in introducing the electric trolley to Boston. Originally GBREB signed up 100 members (versus 7,000 today) “including the best known real estate men in the city”. Their activities and membership grew quickly and in 1903 “at the bequest of the chamber of commerce, the exchange took part in high level conferences regarding reforms under consideration by the Boston city government”. By the 1920’s, GBREB was deeply involved working with planners in the formulation and implementation of the new zoning and building code ordinances.

 

We have no reason to question that most municipal and metropolitan real estate boards followed some version of the GBREB’s evolution–at least until World War II.[4] The Boston Exchange, by virtue of its specificity focus and intense and consistent involvement, its professional membership, and its pivotal intermediary role to private financing and insurance supported a near monopoly over the city’s residential/commercial expansion. As discussed, the Big City grew beyond its periphery during this era. It did so because transportation innovation propelled real estate development, making it a gazelle of the Gilded Age. The transformation of the CBD was essentially a real estate-driven activity dominated mostly by private real estate organizations like real estate exchanges and property owners associations.

 

Functions, which today are viewed as inherently public (bus, street car, subway lines, bridges, electric power stations, and water/sewer plants). In the Gilded Age privately-owned and managed public franchises or utility-style corporation–in close alliance, if not partnership with the municipal administration and real estate exchanges. These firms fit the image associated with the infamous growth coalition of future years. The obvious reality is these firms translated population growth into private profit. While individually, these real estate firms may have been members of the chamber of commerce, they could not control or easily manage chamber policy positions or decision-making and the likelihood is that the latter could do little to influence their actions as well.

 

In the Gilded Age, Exchanges were neither responsive to, or sympathetic with larger political or partisan issues. They preferred to stick to their own real estate “knitting”. In this more Privatist age, Real Estate Exchanges  participated heavily in what today would be physical economic development matters including CBD, neighborhood and commercial development and redevelopment. Much of their growth and prosperity resulted from “streetcar chasing” or following the street car routes out toward city peripheries and beyond. To repeat some observations the reader should remember that in the late 1880’s stretching past World War I, the CBD and periphery expansion were the engines of Big City economic growth and industrialization. New industrial districts, new subdivisions of working and middle class neighborhoods, commercial development of streetcar routes—annexation and eventually suburbanization all were critical to municipal economic development and heavily involved with Exchange membership. Real Estate Exchanges therefore extended their tentacles into hinterland cities well beyond the confines of the larger central city. They became metropolitan-wide players in the jurisdictional policy systems.

 

This centrality to city growth remained largely unchanged through World War II, if not the 1970’s. These metropolitan-wide real estate exchanges, therefore, played a very serious role in local public policy—and would form a national association (eventually becoming the Urban Land Association and the National Association of Real Estate Bureaus). Real Estate Boards and national associations such as the National Realtors Board and Urban Land Association would play a major role in the evolution of economic development during the 1920’s thru 1950.

 

[1] These private real estate-based trade associations had many names, but in this history we refer to them as “real estate exchanges”.

[2] Jon C. Teaford, the Unheralded City, op. cit., p. 199.

 

[3] Jon C. Teaford, the Unheralded City, op. cit., p. 203.

[4] Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Post-War Detroit (Princeton, Princeton University Press, 2005).