UNITED STATES SAVINGS AND LOAN LEAGUE

CHICAGO 1, ILL.

FAMILY INCOME AND HOME OWNERSHIP

The theory that home ownership in this country is limited to the well-to-do and that only a fraction of American families can afford to buy a home received a shattering blow by statistical studies recently released by two Government departments-the United States Bureau of the Census and the Federal Reserve Board. The tables presented in these four pages tell the story. They are taken from these studies and are pretty much self-explanatory. The high points are brought out in the accompanying comments.

The most significant data are presented on page 2. They merit careful study. The data, for example, show that in 1947 over half of American families owned their own homes; 46.3 percent of all families with incomes under $3,000 and 46 percent of all families with incomes under $2,000 a year owned their own homes. How home ownership has increased with all income groups since 1940 is shown in the following summary:

Source: U. S. Bureau of the Census; 1940 Population and Housing, Families, Tenure and Rent, p. 96; 1948, Current Population Reports, Consumer Income, Series P-60, No. 3, p. 96.

These, of course, are national data and the high percentage of home ownership in the low-income brackets is influenced by the inclusion of families from smaller cities and rural nonfarm areas in which the price of homes is relatively low, but where family incomes are also lower. Additional census data show, however, that about 43 percent of all urban families with less than $1,000 annual incomes are home owners. It is erroneous to assume that all or even the majority of the low-income families are welfare families needing public assistance in housing, or otherwise. Many of these families are retired couples living on savings or family support in addition to their current income or couples having partial subsistence from part-time farming. This is confirmed by the census findings that almost 40 percent of the nonfarm families with less than $1,000 income had no civilian earners and 62 percent had no children under 18 years of age.

That there is much less difference in the economic status of home owners and tenants than is often assumed is evidenced by the fact that the median (average) income of the nonfarm tenant families was $2,769, or only 13.4 percent lower than the $3,197 median income of nonfarm home-owning families. Thus, if the experience and ability of families now owning homes is any guide, and certainly it should be, many of the present tenant families are able to afford home ownership.

Faminly income, home ownership and tenancy, urban and rural nonfarm, United States (29,652,000 families), 1947 census

NOTE. The above figures are based upon a sample survey made in April 1947 by the Bureau of the Census The income data are those of 1946 and comprise total money income of families exclusive of income in kind The above table is comparable with that prepared by the Bureau in 1940; U. S. Bureau of the Census, 1940, Population and Housing, Families, Tenure, and Rent, p. 96.

Source: U. S. Bureau of the Census, 1948, Current Population Reports: Consumers Income, Series P-60, No. 3, p. 16.

That many low-income families can buy homes and do not need public housing assistance is shown by the fact that many such families are actually buying homes. This is brought out in the following table, which also explodes the idea that lower-priced homes are not available.

1 The percentages in this table do not add up in every case to the percentage in the left-hand column due to rounding off of fractions to the nearest whole number.

2 Less than one-half of 1 percent.

Source: Federal Reserve Board: 1948 Survey of Consumer Finances, pt. I, Expenditures for Durable Goods, table 10.

In 1947 approximately 2,200,000 houses were purchased by American families— 700,000 new houses and 1,500,000 used houses. Of the total, 858,000, or 39 percent, were purchased by families with annual incomes under $3,000. Only 396,000, or 18 percent of the homes purchased last year, were purchased by families with incomes over $5,000. Eighty percent of all homes purchased last year had a price under $10,000. Forty percent of all homes purchased last year had a price under $5,000. Certainly these facts do not indicate that suitable private homes are not available in the lower price ranges as the advocates of Government housing indicate, nor that all families making less than $2,500 or $3,000 need public assistance to obtain adequate housing. Incidentally, it is interesting to note that 38 percent of the 7,200,000 automobiles, new and used, bought byb American families in 1947 were purchased by families with annual incomes under $3,000, with about 10 percent of all under $3,000-a-year families buying automobiles last year.

Additional data show purchases of homes in 1946 and intended purchases in 1948 which shed further light on the ability of low income families to purchase homes. These data are given below:

Actual and intended purchases of homes by American families
[Percentage of all families buying homes]

Source: Federal Reserve Board, 1948 Survey of Consumer Finances, part I, Expenditures for Durable Goods, table 4.

If the intended purchases for this year are made, 17 percent of all families with incomes from $2,000 to $3,000 a year will have become owners in the 3-year period of 1946 through 1948. The proportion is not significantly less than the percentage of $3,000 to $5,000-a-year families who will have become home owners, and further bears out the ability of many of the lower-income families to take care of their own housing needs.

Of the 15,250,000 home-owning families in this country, 23.2 percent have incomes less than $2,000 a year, and 45.5 percent have incomes less than $3,000 a year. Thus almost half of America's home owners are in the income group that advocates of public housing say need some governmental assistance in acquiring and maintaining suitable living accommodations. Detailed data on the incomes of home-owning and tenant families are in the following table: Income of all nonfarm families, home owners, and tenants, as of Apr. 1, 1947

1 29,679,000 families. 215,250,000 families. 14,401,000 families.

NOTE. The total of all families includes a small number not reporting on tenure.
Source: U. S. Bureau of the Census, Current Population Reports, Series P-60, No. 3, table 6.

With the fact showing the large percentage of home ownership by families of low income, the large purchases of homes in recent years by families of low income, and the fact that home-owning families have about the same average

income as do tenant families, the conclusion is inescapable that home ownership is possible for practically every American family and that the majority of lowincome families do not need public assistance in their housing problem. The taxes on the homes of American families, almost half of which are owned by families with incomes less than $3,000 a year, should not have to be used to subsidize homes for other and possibly less thrifty families with incomes under $3,000 a year.

The constant rise of home ownership plus production of new housing at the current record rate of about 1,000,000 units a year mean a steady if not rapid improvement in the quality of housing, since those who can own their homes are careful about maintaining property values and anxious to improve them. Recent Census Bureau data, in fact, show that the physical condition of American housing in 1917 was at an all-time high with only 6.8 percent of all dwelling units in need of major repair compared to 11.4 percent in 1940.

It is obvious that the past 8 years have seen the greatest progress toward home ownership and high standards of housing ever made in this country. Endangering continued progress in home ownership is the tendency of cities to throw the entire cost of local government, schools, and other public services on home and property owners. Another threat to home-ownership progress is the program of public officials to build houses and apartments for a portion of the voters, such houses and most of their share of the cost of government, schools, and services to be paid for by the taxes of the others.

JULY 1948.

MORTON BODFISH.

Mr. PATMAN. Now you mentioned the different steps that you have to take in England to get a house started. Did you ever consider the number of steps you have to take in your own city of Chicago before you can get a house started?

Mr. BODFISH. Yes.

Mr. PATMAN. These steps are minor compared to what you have to do in your own city of Chicago, are they not?

Mr. BODFISH. Oh, no, Congressman.

Mr. PATMAN. Suppose you enumerate them.

Mr. BODFISH. We can get our building permit, our sewer permit, and everything in a week.

Mr. PATMAN. There are over a hundred things that have to be done before you can start building a house in Chicago. I am not defending what they are doing in England. I do not know anything about that. Of course, I am concerned about our own country.

Mr. BODFISH. Well, private builders have just given up there as far as building any private housing is concerned, and here are three of them building over in this country, so that they can make some

money.

Mr. PATMAN. Have you noticed H. R. 2811, the bill sponsored by the American Legion concerning cooperative housing?

Mr. BODFISH. No; I have read your bill.

Mr. PATMAN. That is the one.

Mr. BODFISH. Yes; I have read that.

Mr. PATMAN. How do you like that bill?

Mr. BODFISH. I think the basic theory of it, of encouraging various types of cooperation, is good. I happen to believe in the cooperative idea. All our savings and loan associations are based on that principle.

Mr. PATMAN. That is private financing, too, you know.

Mr. BODFISH. I do not know whether it would work when you get into the rural sections. I think you have pulled the rate down to the point where it might be difficult."

Mr. PATMAN. Well, maybe we might have to change that, but the whole idea is to build homes at wholesale instead of retail. A hundred people can go in together and build homes by purchasing their materials at wholesale prices. Nearly all homes are now being built at the highest retail prices; are they not?

Mr. BopFISH. Yes, although the larger builders do effect some economy in their purchases, and some have their own mills and the like. But I like, Mr. Patman, any encouragement of the cooperative idea. The trouble you have with various types of cooperatives in this country is that it does take some evangelism and a persistent leadership that is not always available without the incentives of financial profit. Mr. PATMAN. We need a crusading type sometimes.

Mr. BODFISH. That is right.

Mr. PATMAN. Your own association is a cooperative; is it not ? Mr. BODFISH. Yes.

Mr. PATMAN. And you consider that it is doing a good job, and I think it is doing a good job all over the country.

Mr. BODFISH. Yes.

The CHAIRMAN. What effect do the municipal building codes have upon the construction of homes? Have they retarded the construction of homes?

Mr. BODFISH. Yes, I think so. It seems to me that our building codes frequently are the result of efforts on the part of material people to protect the use of their materials, and efforts on the part of the crafts, at times, to protect what have been their customary methods of construction; and I think the total result has been one of slowing down both the use of labor-saving materials and other economyproducing economies.

Mr. O'Hara knows that in Chicago we cannot put a dry wall in the house, no matter how it may satisfy the Board of Fire Underwriters. We have to use masonry construction, and so forth, growing out of our experience in the Great Fire of 1872.

I think our codes, most of them, could be made more flexible and made more modern. I do not think it is going to take any tremendous amount out of the cost of building. After all, the cost of building is people working, and the only thing you would get would be a little more efficient use of materials, possibly, and some more labor-saving devices. We cannot use ready-mixed concrete in Chicago, as you know.

The CHAIRMAN. What is the present trend of the organization you represent? Are they increasing?

Mr. BODFISH. We are increasing about a billion dollars a year in net savings, and we are lending it all for the building and buying of homes.

The CHAIRMAN. How does that compare with previous years?

Mr. BODFISH. We have done about a billion dollars each year for the last 3 years, and it is probably greater than any previous increase we have had. And we are keeping all the money working, Mr. Chairman, in the building and buying of small homes."

The CHAIRMAN. I think you are doing a good job.

Mr. BODFISH. I think the modern savings and loan association which was planned largely in this committee room by you gentlemen, is going to turn out to be a very useful institution.