Table 83.-Type of families: Ratio of subfamilies to total primary families and subfamilies in selected areas, 1940 and 19461-Continued 1 The areas selected had central cities with populations of 100,000 or more in 1940. The 1940 data include public housing dwelling units but the number of such units in any locality in 1940 was too small to have any significant effect on the figures. The 1946 data are for privately financed dwelling units only. Both the 1940 and the 1946 figures exclude families in commercial rooming houses, institutions, transient hotels, military posts, and trailer camps. In all cases, the 1946 figures are for the city, county, or "area" as indicated in the stub. For places designated city, both the 1940 and the 1946 figures represent the city only. For places designated "area", the 1940 data were not available for the smaller communities included in the 1946 survey area so that the 1940 and the 1946 figures do not cover identical geographical areas. In most of these places, the 1940 area covers a sufficiently large proportion of the 1946 area that percentages on families are probably not affected by the exclusion of the smaller communities from the 1940 figures. In general, the 1946 "area" covered the central city and nearby communities, a detailed description of which is contained in the individual report for the survey. A veteran household is one which contains a veteran of World War II. He may or may not be related to the head of the household or he may be a lodger. The 1946 figures are estimates based on the results of sample surveys. The primary family consists of the household head and all persons in the household related to the head by blood, marriage, or adoption but who are not members of a subfamily or a parent child group. A subfamily consists of a married couple and their unmarried children under 18 years of age, if any, who live in a dwelling unit in which the husband is not the head of the household. Married couples classified as subfamilies may or may not be related to the head of the household. The geographical boundaries of the areas underlying the 1940 and the 1946 surveys are not identical. The 1940 data are for the central city only which represented, in 1940, 90 percent or more of the total dwelling units in the "area" included in the 1946 survey. The 1940 data are for the metropolitan district which included slightly more than the geographical area covered in the 1946 survey. The 1940 figures for the Bridgeport "area" are for the Bridgeport metropolitan district which represented, in 1940, approximately 101 percent of the total dwelling units in the area included in the 1946 survey. The corresponding proportions for Los Angeles County and the Cleveland "area" are 104 percent and 112 percent. The 1946 survey in this area was made by the Bureau of Labor Statistics. All others were conducted by the Bureau of the Census. Sources: 1946-Veteran Housing Surveys conducted July 1946-January 1947 for the National Housing Agency, by the Bureau of the Census and the Bureau of Labor Statistics. 1940-April 1940 Census of Housing. PART THREE HOUSING FINANCE Introduction This part of the handbook presents statistics on financing the construction and sale of residential structures. The data shown are confined to nonfarm properties. Primary emphasis is placed upon Nation-wide data because of limitations of space as well as the lack of uniform data for localities, although the existence and sources of available local data are indicated. The chief local sources of housing finance statistics are the municipal departments such as the recorders of deeds and mortgages. The chief assemblers of such statistics are the Federal Housing Administration and the Federal Home Loan Bank Administration. Types of Data Which Are Available Because the savings of individuals represent the principal source of funds for mortgage lenders, chapter I deals with this type of savings. Data are presented on a broad category of savings to show the national trend, and also on the flow of long-term savings of individuals into the principal types of institutions which make mortgage loans. Builders seeking construction loans and prospective home purchasers seeking long-term mortgage loans look to certain financial institutions and others for these forms of credit. The extent to which various types of lenders grant mortgage credit is explained in chapter II. Also included is the limited information available on the purposes for which loans are made, such as for financing construction and home purchase. These latter data cover the lending activity of only the savings and loan associations, and point up the desirability of similar information covering the lending activity of all institutions. The volume of mortgage loans made indicates the current activity of mortgage lenders, but the outstanding balance on mortgages held represents the creditors' investment in the Nation's housing supply. Chapter III tells this story for one- to four-family properties, showing recent changes in the amount of this debt, how it is related to public and private debt, and how it is distributed by type of financial institution. Comparisons also are made between the change in outstanding mortgage debt and the volume of mortgages made. These comparisons reveal the extent to which the addition of a gross volume of loans made is offset by loan terminations and repayments of principal, resulting in net additions to or reductions in the outstanding debt. A final table in this chapter shows the degree to which selected types of financial institutions specialize in home financing operations. The past 15 years have witnessed the establishment and growth of a number of Federal credit agencies which exert considerable influence on home financing and building operations. During this period, marked improvements have been made in mortgage lending practices and construction standards. The operations of these Federal agencies are described in chapters IV and V. Chapter IV presents appropriate detail for each agency. Chapter V explains the operation and importance of the secondary mortgage market, that is, the purchase and sale of mortgages. Chapter VI is devoted to rental housing and presents summary data on the rental housing insurance operations of the Federal Housing Administration under sections 207 and 608 of the National Housing Act. Chapters VII, VIII, and IX review the data available on interest rates, loan and borrower characteristics, and loan delinquency and foreclosure experience. Deficiencies in Data The study of local conditions in housing finance and the consolidation of statistics into metro politan, regional, or national totals is made difficult by the inadequacy of housing finance statistics for localities on a uniform and current basis. Classification of total mortgage lending by purpose, that is, for construction, home purchase, etc., is impossible because of lack of data. More information is needed on the volume of construction loans and on the terms under which construction loans are made. A major gap in the information regarding the purchase and sale of mortgages is the lack of data concerning the volume of transactions in home loans guaranteed by the Veterans' Administration and in home loans which are neither insured by the Federal Housing Administration nor guaranteed by the Veterans' Administration. Lifeinsurance companies are among the leading purchasers of mortgages. Because such purchases often do not involve another recording of the mortgage, the mortgage recordings data presented in chapter II understate the extent of the participation by these companies. There is need for a long-term statistical series on interest rates charged on first mortgages. However, in using such a series it should be recognized that mortgage financing methods have been altered considerably during the last 25 years. More information is desirable on other lending terms and borrower characteristics for various types of mortgage lenders; also, on loan delinquency experience and loan terminations according to the type of termination. Suitable data are lacking on the volume of real-estate sales and changes in real-estate sales prices. Deed recordations are often used as a measure of sales activity but these recordations include a variety of legal instruments other than deeds for bona fide sales. Only a small number of communities have developed statistics on deeds representing bona fide sales. Real-estate prices are hard to measure statistically because of the variations among local markets, the lack of uniformity of the product, the length of life and rate of depreciation of a home, and the infrequency of sales and varying intervals of time between sales of the same house. A number of experimental attempts have been made to provide information on sales prices. One method is to compare the sales prices on repeat sales of the same properties. Another method is to tabulate prices of single-family homes appearing in classified newspaper advertisements. In the National Housing Agency's experimental survey for a large metropolitan area, opinions were obtained on sales prices for a number of selected typical single-family homes, each of which was located in a homogeneous neighborhood. Five brokers specializing in particular neighborhoods reported opinions for typical homes in such neighborhoods. An average sales price and an index were computed from reported prices for each typical house. The indexes in turn were averaged to obtain the area index. Still another method, developed by the Residential Research Committee of Los Angeles with technical assistance from the Federal Housing Administration, is to select a substantial number of specific homes located in homogeneous neighborhoods. At least three real-estate brokers who operate in the area in which the specific home is located and two appraisers, independently report estimated sales prices. From these data, the most reasonable price for each specific house is determined by a "jury" and that price is expressed as an index with sales price in 1940 equal to 100. The indexes for the various homes are then averaged to obtain the area index. The SecurityFirst National Bank of Los Angeles compiles quarterly sales price data based on a sample of about 10 percent of the actual sales of singlefamily dwellings in Los Angeles County. Chapter I Savings of Individuals This chapter presents statistics on the savings of individuals. Such data are helpful in a study of the demand for housing and in an estimate of the supply of loanable funds in the mortgage market. Housing demand, which results from the interplay of various and complex market forces, depends on the savings of potential home purchasers, among other considerations. Also, savings of individuals which are placed in mortgage lending institutions represent an important source of funds available for mortgage lending purposes. In addition to the portion of savings already accumulated in mortgage lending institutions which is available for making loans on real estate, these institutions are constantly receiving additional savings. Therefore, the current rate of such savings, as well as the probable rate during the coming year or two, are important factors in estimating the potential volume of funds which will be available for mortgage loans. Table 84 shows personal savings by year since 1929 and its relationship to disposable personal income. The amount saved in 1946, both in dollar amount and in proportion to disposable income, declined sharply from wartime peaks although remaining above prewar levels. The figures on personal saving and disposable personal income are recently revised estimates of the Department of Commerce. Persons are defined to include not only individuals and owners of unincorporated businesses, but also nonprofit institutions, private trust funds, and private pension and welfare funds. Measurement of Personal Saving Annual personal saving may be measured by changes in cash and bank deposits, security holdings, indebtedness, and reserves of life-insurance companies and mutual-savings institutions, net investments in unincorporated enterprises, and acquisition of real property, after depreciation. The estimates of personal savings were several types of institutions engaged in mortgage lending operations. In addition, statistics are presented on postal savings and United States savings bonds. Savings and loan associations invest the largest proportion of their funds in home mortgages, while the other institutions make loans for a variety of purposes, of which home loans are one important type. For data on the relationship of mortgage investments to total assets of selected financial institutions reference should be made to table 92, chapter III. Table 85 also shows the large amount of savings which have been flowing into United States savings bonds during the war and recent postwar years. During these years, many financial institutions had more funds available than they could invest readily, and consequently were not aggressively seeking additional savings. As mortgage investment opportunities continue to expand however, mortgage lending institutions will have to compete for additional funds with expanding outlets for consumer purchases, as well as with United States savings bonds and other forms of savings and investments. Compilation of Records of Savings The data on savings in selected types of institutions are compiled by the Federal Home Loan Bank Administration from various sources as indicated in the footnotes to table 85. The total savings of individuals in savings and loan associations are obtained from the annual reports of Federal Home Loan Bank member associations and from reports to State regulatory agencies by nonmember associations. For the few States not submitting reports, estimates were made of the amount of savings in nonmember associations based on information for reporting Table 85.-Accumulated long-term savings of individuals: In selected types of institutions and in Government bonds, as of Dec. 31, 1920-46 1 Estimated private investments in savings and loan associations, including deposits and investment securities, but excluding shares pledged against mortgage loans. Source: Federal Home Loan Bank Administration. Estimated accumulations in United States life insurance companies. Includes reserves plus unpaid dividends, dividends left to accumulate and surplus to policyholders; minus premium notes, policy loans and net deferred and unpaid premiums. Source: The Spectator. Data prior to 1938 represent savings deposits in mutual savings banks as reported by the Comptroller of the Currency. Other years represent deposits taken from "The Month's Work" published by the National Association of Mutual Savings Banks. Data prior to 1934 represent deposits evidenced by savings passbooks, Comptroller of the Currency figures for all active banks except mutual savings banks; for subsequent years, savings deposits in insured commercial banks. Source: Assets and Liabilities of Insured Commercial Banks, report of Federal Deposit Insurance Corporation. Postal Savings due depositors: outstanding principal and accrued interest on certificates of deposit, outstanding savings stamps and unclaimed deposits. Postal Savings bonds: 21⁄2 percent bonds. Sources: Post Office Department and Treasury Daily Statements. Current redemption value: from 1920 to 1928, War Savings Securities; 1935 to May 1941, U. S. Savings bonds, Series A-D; May 1 1941 to date, also includes U. S. War Savings bonds, Series E. Source: Treasury Daily Statements. 'Preliminary. Compiled by: Federal Home Loan Bank Administration. |