Chapter I

SUMMARY: 1947, A YEAR OF TRANSITION

Nineteen hundred and forty-seven was a year of transition in housing. It saw major modifications in the postwar emergency approach to our housing problems. Although by year's end, emergency controls had been dropped, the question of what the long-range approach should be was still being studied. Nevertheless, steps were taken during the year that foreshadowed a more stabilized and longrange approach to our housing problems, prominent among them being the establishment of the Housing and Home Finance Agency as the first over-all, permanent peacetime, housing agency. Moreover, by year's end, it was becoming more and more apparent that, despite differences of opinion with respect to details of approach and method, there was an ever wider acceptance of certain fundamentals about our housing problems: That every American family should have an opportunity for a decent home in a suitable environment; that substandard housing conditions threaten the stability of our people and our society; that the solution of this problem is a matter of national concern; that to overcome it will require a volume of housing construction ranging from 1,250,000 to 1,500,000 units a year over an extended period, and that it is necessary to provide such housing in types suited to the needs of all our people and at price levels they can afford. This broadening area of agreement on fundamentals about our housing situation provided a base on which to develop plans and proposals for a successful approach to the housing problem.

By the end of 1947, some 221⁄2 years after VJ-day, the Nation was witnessing a remarkable postwar recovery in the volume of home building and home financing. In the second full year after a war which saw home building reduced to only a fraction of prewar production and limited to essential war needs, the volume of home production not only exceeded the immediate prewar levels by substantial amounts, but rose to the highest yearly total since the all-time record year of 1925. During 1947, 845,600 new privately financed permanent units were started, and 833,300 completed; together with other types of construction, including temporary units, trailers, and conversions over a million housing accommodations were provided during 1947. Also, materials production had so far recovered from wartime lows that, according to the Department of Commerce Index of Building Materials production, 1947 output was at an all-time peak. Moreover, during 1947, the volume of mortgage financing for both new and existing homes,

supported by such major government programs as FHA mortgage insurance, VA home loans, and the facilities of the Home Loan Bank System, reached the highest level in our history, with a total recording in nonfarm areas of 2,527,000 instruments (of $20,000 or less) and a total value of $11.4 billion.

Housing Programs Changed During Year

Also, extensive changes in postwar emergency housing programs took place in 1947. During the first half of the year Federal programs initiated under the Veterans Emergency Housing Program, such as restricting over-all construction in order to aid housing, were continued on a modified basis, as were various reconversion aids to building materials producers, and financial aids for factory-built housing. Effective June 30, 1947, the Housing and Rent Act of 1947 ended virtually all the VEHP programs. The only exceptions were those restricting amusement construction, and paying premiums for pig iron. The act retained the requirement that new housing be held for 30 days for veterans. The act also modified earlier rent control programs.

FHA operations under Title VI, providing for liberal mortgage insurance for homebuilding, were continued throughout the year.

Despite substantial housing production achievements, it was apparent throughout 1947 that the Nation's housing problems were far from being solved and that we would be confronted for some time to come with a severe housing shortage, particularly of rental and low and moderate priced sales units. It was also apparent that the problem could not be considered in terms of volume alone; much of the housing produced during 1947 was at prices beyond the reach of a great part of the potential market. The heavy demand for housing, however, meant a ready market for the homes that were constructed during 1947, although undoubtedly many persons bought at prices that will put a severe strain on their long-range financial capacity.

Of considerable significance on the housing front during 1947 was the inception in the fall of the year of a general housing investigation by a joint committee of the Congress. This investigation, which carried over into 1948, included hearings in Washington and 32 other cities; several reports on special phases of housing and a final report recommending comprehensive housing legislation were issued.

Housing Production Near All-Time Record

For the economy in general, 1947 was a very good production year, despite high and rising prices. For home building in particular, it was the fourth best year on record in the number of units started and the best year since the all-time record year of 1925 when 937,000 units were started. By the end of the year homes were being built at

rates equaling the all-time peaks of the mid-twenties. However, this comparison loses some of its force when we consider the over-all social and economic changes in America in the last quarter century. In that time our population has increased to more than 143,000,000 as compared to almost 115,000,000 in 1925, the number of families by the end of 1947 was more than 40 percent higher than in 1925 and more new families were formed during the past 2 years than during any comparable period in our history. Moreover the value of goods. and services produced in 1947, the so-called gross national product, reached 229 billion dollars, approximately 2%1⁄2 times that in 1925, actual output of goods as measured by the Index of Industrial Production in 1947 stood at 187, or more than double the 1925 figure, and the disposable income per capita, expressed in 1947 price levels, increased from $817 in 1925 to $1,217 in 1947.

By the end of 1947, most of the critical postwar shortages in civilian goods has been overcome. The shortage of housing was the most important and vexatious of those remaining, Unlike some of the other shortages, it is, unfortunately, a shortage that admits of no easy and rapid solution. Solving it requires the active and effective cooperation of management, labor, finance, and the Government. One of the most important questions facing the American people at the beginning of 1948 was that of deciding the nature and method of such cooperation to achieve the common goal of better and more adequate housing.

Chapter II

HOUSING SUPPLY, NEEDS AND PRICES

A. The Nature of Our Housing Supply

In April 1947, according to Bureau of the Census estimates, there were 41,625,000 dwelling places both farm and nonfarm in the United States ranging all the way from 20-room mansions to 1-room shacks. Reflecting a continuation of a trend away from the farms, the 34,133,000 nonfarm dwellings in 1947 represented the highest proportion of nonfarm units in our history.

About 55 percent of the total number of dwellings was owner occupied, a sharp jump over the 40 percent of 1940. This trend is a reversal of the gradual decline in home ownership during the previous

50 years.

Also, the combined effect of an extremely urgent demand for housing as a result of war activities, curtailment of new construction and a warinduced rise in earnings worked as a powerful stimulus to repair and rehabilitate run-down properties between 1940 and 1947. As a result, the proportion of all units in good condition or in need of only minor

repairs rose from 82 to 90 percent of the total between 1940 and 1947. By 1947, an estimated 27,300,000 dwelling units, 66 percent of the total, were reported to have both a private bath and a private flush toilet. This compares with 20,600,000 units or 55 percent in 1940. Reflecting both a decrease in family size and improved economic conditions, overcrowding was reported in only 6 percent of all dwellings in 1947 compared with 9 percent in 1940. Dwelling units which had more than 1.5 persons per room were classified as overcrowded. There still remained, however 4,100,000 units in need of major repairs and 11,000,000 units in good condition but lacking private baths and toilets. Proportionately more of the housing in farm areas is poor quality than in nonfarm areas.

There also remained the areas of slums and blight created not only by houses in poor condition, but by congestion and overcrowding of land, lack of recreational space, and all the other adverse environmental factors which structural factors alone could not hope to correct. Also, nonwhite families, which generally tend to have less desirable housing than white families, were particularly subject to being forced to live under congested and slum conditions.

Housing Problem Continues Critical

Despite improvements in the physical and occupancy standards of the housing inventory and the remarkable strides made in adding to the supply recently, the housing situation was still critical at the end of 1947. The sharp rise in marriages during and after the war led to a rate of new family formation far above the rate at which new homes were being added to the supply. There were 2,000,000 marriages in 1947, 2,300,000 in 1946, and an average of 1,650,000 during the war years as compared with an average marriage rate of only 1,220,000 in the period of 1920-39. As a result, virtually every useable nonfarm dwelling, whatever its location or environment, was occupied in 1947 and vacancies were practically nonexistent. In April 1947 the Bureau of the Census reported that in all nonfarm areas in the United States there were only 166,000 vacant units on the market for rent and only 94,000 on the market for sale. In other words, only eight-tenths of 1 percent of the 34,000,000 nonfarm dwelling units were available for prospective home seekers.

Rate of Doubling Climbs Sharply

Reflecting the extreme shortage of housing, the rate of doubling has risen sharply. In April 1947, the Bureau of the Census reported that some 2,712,000 families were sharing their homes with other families. An additional 149,000 families were living in makeshift accommodations, such as furnished rooms, trailers, and tourist cabins. The number of families lacking homes of their own represented a new all

time high and compares with the 1,846,000 who were doubled up, and the 100,000 in makeshift dwellings, in 1940.

This extraordinary pressure on the housing supply would have led to substantial rent increases had not rent control been in effect during 1947 in areas of housing stringency. Bureau of Labor Statistics figures indicate that for the same or equivalent units, rents rose only 4 percent from 1940 to April 1947. However, from April to December 1947, after changes in the Rent Control Act, the Bureau of Labor Statistics rent index increased another 6 percent.

An examination of the rent trends for identical units tells only part of the story, however. While it is true that rent control stabilized the rents of many units, a significant decrease had occurred in the number of low-rent units. Thus, between 1940 and 1947, the Bureau of the Census indicates that the number of units renting for less than $30 a month declined by more than 3,500,000 and the total number of rental dwellings declined from 16,335,000 to 15,329,000.

B. Housing Needs

From the foregoing data it is apparent that the Nation's immediate housing requirements are great, although precise measurement of the need offers many difficulties. The many estimates which have been prepared show considerable variation because of differences in concept in use of statistical data, and in area and time covered. There is general agreement, however, that, as a bare minimum, enough housing must be provided in decent neighborhoods to take care of the future needs arising from increases in the number of families. Differences of opinion exist, however, in estimating the number of units needed to replace substandard units. Since so many of the substandard units are occupied by families of low income, these families are not apt to enter the housing market at present high price levels. This fact is responsible, in large degree, for the gap between effective market demand and what might be termed the social need which contemplates the elimination of slums and dilapidated housing.

Estimates of Housing Needs

The most authoritative recent estimate of needs is that formulated by the Joint Congressional Committee on Housing in its final majority report submitted March 15, 1948. This report calls for the building over the next 12 years of between 1,300,000 and 1,500,000 nonfarm units and between 200,000 and 300,000 farm units annually. Its estimate is presented below.

The Joint Committee estimate is cast in terms of the social needs for housing. Thus, more than half of the 12-year requirements are to replace substandard and otherwise inadequate housing. Although there

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