The point of entry to do major studies, I believe, would be a half million to a million dollars, to take wide sectors of the country. Perhaps 98 percent of the country could be covered with something like five such groups.

Chairman BOLLING. Would you be a little more precise in what the five groups would be? Just give me one illustration.

Mr. EHRENKRANTZ. I think one obviously would have certain regional differences that relate to climate, patterns of life, use of outdoor space, scale of the urban community that might change community facilities available to people living in housing. Whether you live in the suburbs or in the heart of the city, the mix of things that must be provided within the dwelling unit might change because of the context in which the housing was placed.

You would therefore be looking for an urban situation where certain ranges of services and activities would be available-say within walking distance.

You would also have to look at suburban communities which I believe are most in need of a good user requirement study because in suburbs we spend money on two cars and many other things in order to make it possible for a family to survive. To find out how can we deal with the nature of their problems, and if there were a way to analyze in four or five different major organizational cuts at the problem, I think that a very substantial portion of the requirements could be covered.

Chairman BOLLING. Thank you very much, Mr. Ehrenkrantz. Do you have anything you would like to add?

Mr. EHRENKRANTZ. No. Thank you.

Chairman BOLLING. Your testimony has been to me absolutely fascinating. I am very grateful to you for coming and also for undertaking to help the staff in trying to convey as much as possible of what you have said to us here. I must say I am encouraged to know that you exist, and to listen to you. I repeat our gratitude. I am only sorry that this happens to be a day in the year in Congress when there are too many committees meeting in too many places and, therefore, other members of this subcommittee were unable to attend.

This subcommittee will recess today to meet tomorrow morning in this room at 10 o'clock to hear further witnesses. Again, our thanks. Mr. EHRENKRANTZ. Thank you, Mr. Chairman.

(Whereupon, at 11:35 a.m., the subcommittee was adjourned, to reconvene on Thursday, July 24, 1969, at 10 a.m., in room G-308, the auditorium of the New Senate Office Building.)

32-679 069-pt. 24

INDUSTRIALIZED HOUSING

THURSDAY, JULY 24, 1969

CONGRESS OF THE UNITED STATES,
SUBCOMMITTEE ON URBAN AFFAIRS

OF THE JOINT ECONOMIC COMMITTEE,

Washington, D.C.

The Subcommittee on Urban Affairs met, pursuant to recess, at 10 a.m., in room G-308, the auditorium of the New Senate Office Building, Hon. Richard Bolling (chairman of the subcommittee) presiding. Present: Representatives Bolling and Reuss; and Senator Javits. Also present: James W. Knowles, director of research; and Douglas C. Frechtling, minority economist.

PROCEEDINGS

Chairman BOLLING. The Subcommittee on Urban Affairs will be in order.

This morning the subcommittee continues its hearings on industrialized housing in order to hear from officers of two firms in the building industry: National Home Corp., Lafayette, Ind., a firm engaged in factory production of housing, and Urban Systems, Inc., of Boston, Mass.

We will hear the first group and then the second witness separately. Our questions will be concluded with the first group before we get to the second.

Mr. James R. Price, chairman of the board and chief executive officer of the National Homes Corp., will lead off. I would appreciate it, Mr. Price, if for the benefit of the committee and the record you would introduce your colleagues. You may proceed in your own way.

STATEMENT OF JAMES R. PRICE, CHAIRMAN OF THE BOARD, NATIONAL HOMES CORP.; ACCOMPANIED BY DAVID R. PRICE, PRESIDENT, NATIONAL HOMES CONSTRUCTION CORP.; FRANK P. FLYNN, JR., PRESIDENT, NATIONAL HOMES ACCEPTANCE CORP.; EDWARD DURELL STONE, JR., CONSULTANT ON SITE PLANNING AND ENVIRONMENTAL DESIGN; MILTON P. SEMER, WASHINGTON COUNSEL

Mr. PRICE. Thank you, Mr. Chairman and members of the committee. My name is James R. Price. I am chairman of the board and chief executive officer. With me is my son, David Price, at the end of the table, who handles the construction for National Homes. They are one of the 15 largest homebuilders in the United States, and a member of the Housing Producing Council. Next to him is Edward D. Stone,

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Jr., who advises National Homes on the sociological and environmental aspects of housing, and is a very important member of our team. To my right is Milton Semer, our Washington counsel. Next to him is Frank P. Flynn, who heads our National Homes Acceptance Corp., which has made over two and a half billion dollars' worth of loans since 1947. The Acceptance Corp. is an important part of our company in providing both permanent and construction financing for all of our Government programs.

This is the management team that has developed over the years a wide range of capabilities including: Land acquisition and development, site planning and environmental design, construction, merchandising and sales, governmental relations, construction and permanent mortgage financing, business management, and marketing services.

I greatly appreciate your inviting us to discuss the role of industrialized housing in meeting this Nation's critical need for housing. I would like to briefly summarize my presubmitted prepared statements, just hitting some of the highlights.

National Homes is the largest home manufacturer in the United States. Over the last 29 years we have produced 350,000 homes. One point I think is significant: Last year taking the average of all the homes we shipped-which was 16,000, and into some 37 States-the retail price, including lots, financing costs, points, everything that goes toward cost, was $18,350. The national average for all home building was $25,400. I think this pretty clearly demonstrates even at the early stage of our technology there can be a significant saving made. I say "early stage" even though we have been at it 29 years, because we are not as far as we are going by a long shot. We will manufacture this year 24,000 living units. In the first 6 months of this year we showed a sales gain of 32.4 percent over the same period last year, while the industry itself was only showing a 6-percent increase. Our single-family house production was up 30.3 percent while the industry was down 4.6 percent.

At this point, I would like to point out a significant fact. A worker earning $10,000 a year, according to the norm set by FHA, should spend 20 percent of his income for mortgage payments, which would include principal, interest, taxes and insurance. Today this man cannot afford to buy a $20,000 FHA-insured home.

I want to point out, also, that taking our whole population, people earning $10,000 and less represent 65 percent of our population.

Our $10,000-a-year worker can afford a monthly payment of $166, but his payments on a $20,000 house, at the 7.5-percent interest which we currently have, with a maximum 30-year mortgage, amounts to $173. So he is not eligible for homeownership. By increasing the term to 40 years, still keeping your 7.5-percent interest, you would reduce the monthly payments by $8.23, to $164.77 a month and the worker would be eligible. This would help close a gap in homeownership that is not being served by anyone.

I want to point out that we do have subsidy programs that, on a limited funded basis, supply some housing to families earning $7,500 a year or less, but there frankly is no program for families earning between $7,500 and $10,000 annually. They are in no-man's land: No subsidy and no eligibility and no homes.

Since 1941 National Homes' products have been union made and carried the union label. The building trades have handled our products in the entire United States and in many of its possessions. The Brotherhood of Carpenters and Joiners organized National Homes' first manufacturing plant when they won an election in 1941. All National Homes' manufacturing plants have been organized by the Brotherhood of Carpenters over the years. In addition to Lafayette, our plants are located in Effingham, Ill.; Horseheads, N.Y.; Martinsville, Va.; Thomson, Ga.; Tyler, Tex., and New Albany, Ind. Builders franchised by National Homes are independent businessmen, and there are more than a thousand of these builders serving our major markets in 37 States generally east of the Rockies.

I would like to make some mention about our degree of industrialization. I would like, also, to identify some of the different types of factory manufactured products used to provide assistance and shelter. The conventional builder who operates on-site is increasingly calling on factories, both small and large specialty shops, for prefinished windows, doors, wall sections, cabinets, roof trusses, and the like. Virtually all homes built today in the United States have some degree of prefabricated parts used in them. Eighty percent of our builders rely heavily on these components. I want to call your attention to the fact that this compares to the European countries where they refer to their open system. National Homes does not supply components for this conventional system. We have really two technologies that we work under. Both of them meet the FHA and Government engineering standards. Our first technology-which does tie into the European system-is referred to in Europe as a closed system, which really means this: The system uses large sections of walls, floors, trusses. They are designed and built in an integral system. The components are unique and not interchangeable with any other system. In other words, we undertake the design of a building as far as style, size, arrangements, and so forth, and these related items are marketed as a package. As you can see there in this picture, we have cranes mounted over our tractors and all our homes are erected by cranes.