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Mr. VINTON. I think it might be interesting to the committee to know what we have already done for larger families, even though we have been somewhat handicapped by the limitation on cost. In the public-housing projects last year, the average size of family was 4.1 persons, which compares, for the United States as a whole, with only 3.19 persons as the average size of urban families. In other words, public housing was accommodating families on the average almost i person larger than the average-size family in the country. That shows the emphasis we have tried to place on accommodating families with children.
The number of rooms that have been provided is also larger. Among tenant families in the cities of the Nation as a whole, the average size dwelling has only 3.9 rooms, whereas the Public Housing projects average 4.4 rooms.
Mr. DOLLINGER. Mr. Egan, we all claim to be, and I think we are, sincere when we make the statement that we are generally upset by the shortage in new construction. There has been some testimony that, even with the increase in materials and supplies, we have had less building of new construction last year than we had the year prior, when there was a shortage of supplies. We find those buildings that have been erected have been erected at a unit cost or price per room at a price so high that the average individual could not afford to pay.
Can you tell me if you are able to, sir, why we have had less private construction in this past year than we have had before?
Mr. EGAN. Do you mean in general, Mr. Dollinger!
Mr. FOLEY. The fact of the matter is that we have been building up the production of housing privately ever since the war. The limitations took place first during the depression, out of which we were gradually building a more productive industry, until we hit the war, when we had to put definite governmental limitations upon production. We came out of the war with a very low annual production of housing and, of course, with a shortage of materials and a general situation of dislocation.
There has been, as a matter of fact, rather remarkable recovery by the private building industry since that time. We have built up to just short of the peak production for all time. That is not enough production. As I have said before, in committees of Congress, as well as elsewhere, it is a mistake, in my opinion, for us to judge it something slightly below a million production a year in the last year or two, against a similar production back in the twenties, and say that we are doing fine, because a quarter of a century has passed since, our needs have changed, and the possibilities of production have changed. We should judge the sufficiency of our production against our future needs. Presently it is not sufficient. However, it does represent a rather remarkable recovery in two or three years from a very low point.
Mr. DOLLINGER. I think, personally, that private industry can build more than they are building now, but they also will not build more because they cannot get people to take the property form them at the price they want to dispose of it.
Mr. FOLEY. That is another factor, Congressman, that has begun to make itself quite manifest in the last year and particularly the last 6 months of last year and so far this year. Namely, that the costs of building have risen so high, and so much out of proportion to the increased ability of the mass of the people to buy, that we have begun to price ourselves out of the market.
Mr. DOLLINGER. Have prices not been coming down on materials?
Mr. Foley. The indication or trend is downward, but actually it has been rather spotty and in the total cost of production of housing it is not yet large. Again it is a mistake to look only at certain items of material, such as lumber, which we most commonly think of, and which, as was brought out here yesterday, has had a drop of perhaps 7 percent in the over-all, or 6.5 percent. We could say that ought to be reflected in a large reduction. To start with, the item of lumber is only a fraction in the total cost of producing a house. The drop, as indicated by some of the indexes, has been, I would guess, about 2 points. The over-all figure of production cost is down about 2 points from its peak of last fall. However, the trend is encouraging and the trend is downward. That is production cost.
Cost to the public may be another matter, and in many cases is.
Mr. DoLLINGER. Is that predicated upon a necessary amount of profit?
Mr. FOLEY. There are expenses that might have been necessary under the stringent conditions after the war which need to be eliminated now.
Mr. DOLLINGER. I have introduced a resolution to investigate the spread in the cost of production as against the cost to the consumer. I feel there is a great amount of profit that is passed on to various middlemen that is out of proportion to what Mr. and Mrs. Public can afford to pay. I personally feel that, if they reduce the amount of profit they receive, they can build houses at fair and reasonable prices so that the average person might be able to purchase them and live in them and be able to reduce and curtail this housing shortage. It may sound socialistic, but we have to be practical, and we have to come down basically to something that is important. We must take care of these people who need housing. I personally was concerned yesterday when some question was put to you about why we cannot get enough of it out in a hurry and why we have not been able to do it, to find out why the Government could not go in at the source and obtain the materials and, with a building superintendent, erect these houses if private industry refuses to come down and reduce the profit to a fair and reasonable return. This is really serious, and if we do not start building soon we are going to run into a situation which will take us years to overcome. We do not want to continue with rent controls. We will have to do that if we cannot get housing in a hurry. I was wondering whether you could give us some information in that field, whether the Government could do something to force private industry to build houses at a fair price where they can be utilized.
Mr. FOLEY. My answer to that offhand would be that what we are endeavoring to do, and with some cooperation in the industry now, is to reduce rather than enforce the removal of as many as possible of the unnecessary costs, which I think is mainly what you are talking about. There may be unnecessary handlings in that sequence which add to the cost and which in a highly competitive situation in housing might readily be removed. I think we are approaching that period where we have a buyer's market, where many of the contingent costs of the immediate possible-war period will disappear.
Mr. McKinnon. I know you are a practical man and a practical operator, but I wonder about this fund that is being set up for a study in developing lower-cost housing, if we are going to get any good out of that. You already know surely that we have several things that have already been determined as causing these high prices in housing: archaic systems of merchandising our building supplies. I guess there are thousands of lumber yards throughout the United States that do not have the lumber in them that we have in this room. Those building the houses go to the lumber yard and order their lumber. That lumberman goes to the second lumber yard and the second lumber yard delivers. We know there is a bathtub, for instance, where the manufacturer gets a price from the first purchaser and retails the merchandise on down the line. Perhaps the cost is only onetenth of what it finally sells to the consumer for. We know those things exist. Just having those facts does not help us solve the problem. What are we going to do to solve that difficult problem?
Mr. FOLEY. I think you are stating two rather broadly different types of problems there. One is a matter of merchandising method.
Mr. McKinnon. You would not call it merchandising, would you, Mr. Foley? It is selling, perhaps.
Mr. FOLSY. It is the method by which the goods finally reach the ultimate consw.er, commonly called merchandising. One is that and the other is the actual effort to develop less costly and better methods of doing things with materials and with the skills. In both of them I think there is great opportunity for development of useful knowledge. The application of that knowledge in the industry, of course, we cannot compel. There is nothing like that contemplated in any legislation proposed by us or that we intend to propose that would give us or any housing agency of the Government the righ to compel its use. However, I think there is inherent in the privateenterprise system, as it functions in anything that approaches a normal period where a sales effort is necessary to move a large production, very much of the answer to the problem of bringing about adoption once the knowledge is achieved. Competition will help very materially as soon as we get away from the high stringency of buying under compulsion. · Mr. McKinnon. That is not true under the building codes. There are certain things provided to protect against building of substandard housing. Yet we know there are certain things that keep the building code up so high as to make building very expensive. We have that knowledge but we cannot do anything about it; can we?
Mr. FOLEY. That, of course, is another phase of the same general subject. I think it might probably be described as a third phase. Fundamentally the question raised is whether your local law permits the application of a new and improved method as it is developed. The question of codes was touched upon only lightly yesterday with this question: Was it contemplated under this bill that we would have the authority to compel communities to adopt a model code that we might develop under the authority we already have? The answer was "No." I might go a little further on that and say that actually the question of compulsion toward adoption is not really expressive of the situation as it exists everywhere. There are undoubtedly exceptions. The fact of the matter is that more and more we are under urgent requests of communities to come forward with assistance in the development of the model codes which will help to get away from the very type of situations you are talking about: Either obsolete or antiquated codes or differences between codes and conflicts; conflicts within a community and conflicts between communities which limits the possibility of marketing things.
Actually we are receiving many requests from communities for as sistance. I do not say that everywhere they will be ready to adopt a new and improved code once it is demonstrated to be better, but I think the trend will be that way, Congressman.
Mr. McKinnon. You have a mode pretty well set up in another bureau?
Mr. FOLEY. No; we do not. If I understand your question correctly, as a matter of fact, in the special session of the last Congress a part of the research authorities previously requested was granted in the housing agency. One authority was to conduct the research necessary for the development and “promotion," I believe, is the word, of the use of uniform codes in the country and the development of uniform methods of administration of them. The administration of the code is frequently as important or more important than the code itself.
Also in that same legislation was the authority to conduct the research necessary for the development and promotion of standardized building measurements, which is probably a very fruitful field for the saving of cost.
Mr. MCKINNON. Do you mean no agency of the Government has a simplified building code that has been pretty generally accepted as a standard among all communities?
Mr. Foley. Covering all of the home building field, I would say "No." We have developed in cooperation with private groups and other agencies of government, the draft of a uniform plumbing code for housing upon which we are receiving comment from all over the country now. I do not know of any other similar type of code that has been developed at this time. That is an assignment we presently have to work on.
Mr. McKinnon. When you go into some of these communities under the Public Housing Act either a year or a year and a half ahead of us, the cities will have to put in the utilities and provide the ground and make ready for the housing authority as part of their one-third contribution to the whole program; is that correct?
Mr. FOLEY. On the slum-clearance program? I am not sure I followed exactly what you said, so perhaps I had better repeat what it would be, to be sure: What would happen there would be that the land would be accumulated by condemnation or negotiation or purchase at what would be the best price obtainable under whatever considerations had to be encountered.
Mr. McKINNON. Would you obtain that or would the housing authority or the Federal Housing Administration ?
Mr. FOLEY. The local community would do it, not the Federal Government. The necessary clearance would take place, in preparation for redevelopment if it was a slum, rather than an open area, and the necessary added facilities for whatever use was determined that this could be redeveloped for. You would have a cost of accumulation and you would have a return from the final disposition for the purpose into which it was to be redeveloped and you would have a difference. The difference would be the net cost to be borne by the Federal Government and the local body under the ratio of 2 to 1. Now that one-third borne locally might be paid in kind through the services and facilities provided into redevelopment. Is that a correct statement? I understand it is.
Mr. McKINNON. Would it be unfair for us to add an additional responsibility to the Government of having a code formed, one that you could determine after this study?
Mr. FOLEY. The bill contemplates we should take into consideration the things involved in the proper enforcement of a code. It does not require the adoption of any specific given code. Is your question whether it should require the adoption of a certain specific code?
Mr. McKinnon. Do you not agree that if we are going to get building costs down it has to be done first of all by simply filing a lot of our building codes and taking out a lot of the make-work provisions in those codes and we also have to provide some form for marketing our building materials? Until that is done, it is not very likely that we are going to get very much of a reduction in building costs.
If we are going into these various communities and insist on them meeting the building program to a certain degree by creating cleared ground or utilities in these various projects, then it would not be extremely a hardship on the community and it would certainly be a great thing for the people living there if the authority took over.
Mr. FOLEY. It would be the Administrator of the Housing and Home Finance Agency.
Mr. McKinnon. They would simply put a condition in that they must come up to a simplified building code; that they cannot have a code with make-work provisions, if the Federal Government is going to participate.
Mr. FOLEY. I would think that the language of the bill would give quite a lot of authority and certainly a lot of responsibility. The Administrator shall give consideration to the extent to which appropriate local bodies have undertaken positive programs for encouraging housing cost reduction through the adoption, improvement, and modernization of building codes and other regulations. It describes the purpose there. As I say, that would put a pretty broad responsibility in there and I would expect a very broad field of discretion upon the Administrator to determine whether or not abuses of the kind that
you have in mind exist to the extent that loans should not be granted, or this assistance should not be granted.
Mr. Egan. As a matter of experience in producing the low-rent housing units under the original Housing Act, where our local engineers encountered code requirements that we thought were extremely excessive, we have on many occasions sought and obtained waivers of those provisions to reduce the costs.
Mr. McKINNON. Was that done mostly during wartime?
Mr. FOLEY. While that is very interesting and indicative of the possibilities, it would apply only to the particular project that Public Housing had in mind. Whereas I think what you had in mind, and what this bill has in mind, in its express language is the development of a situation where there would be improvement for all projects whether federally assisted or not.