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NATIONAL ASSOCIATION OF HOME BUILDERS,

Washington, D.C., October 11, 1963. Hon. JACOB K. JAVITS, Senate Office Building, Washington, D.C.

DEAR SENATOR JAVITS : On September 24, 1963, while testifying before the Subcommittee on Housing of the Senate Banking and Currency Committee on behalf of S. S. 811 and S. 2130, you posed two questions to me regarding the middle-income housing program. I indicated I would respond to these questions after a more complete analysis of the facts and figures.

The first of the two inquiries was directed at the progress of providing middleincome housing under the special mortgage insurance provisions of section 221 of the Housing Act of 1961. Implicit also in the question was the comparison of production under this program with the total need for such housing.

First, let us define the term “middle income” for the purpose of the question asked. Dr. Robert Weaver, the Administrator of the Housing and Home Finance Agency, in his statement on the provisions of the housing bill of 1961 before the Committee on Banking and Currency, defined the moderate- or middle-income family to be one with an income of $4,000 to $6,000 per annum.

Dr. Weaver indicated that there were approximately 11 million families within this income range. He also stated the number of housing units that were substandard, dilapidated, deteriorating, and sound but lacking some or all plumbing facilities. These figures were the total estimate, not merely the number of units in which moderate- or middle-income families dwelled.

The “U.S. Census of Housing 1960 (Metropolitan Housing)," volume HC (2) No. 1, “U.S. Summary," lists the number of housing units by income level by condition in the United States as of April 1, 1960. By the process of addition of dilapidated units and deteriorating units (those that lack plumbing facilities) both sales and rental, it can be seen that the total number of families living in substandard housing in the $4,000 to $6,000 income level was approximately 727,300 as of 1960. A copy of this report is attached.

These statistics represent probably the best, and very likely a fairly accurate standard of judgment by which we can measure the progress of the middleincome provisions of the National Housing Act of 1961.

According to the most recent available statistics from the Federal Housing Administration, from July 1, 1961, to July 31, 1963, 42,907 units were insured under section 221 (d) (2); 9,068 units were insured under section 221 (d) (3); and 1,131 units were insured under section 221 (d) (4). The total number of units insured under these programs in the 2-year period ending July 31, 1963, was 53,106 dwelling units. Also at that date FHA had commitments outstanding on an additional 25,688 units and applications were in process on 13,088 units.

There is, of course, a timelag between the enactment of a new housing program and its translation into finished units of housing. Nevertheless it would appear that the production of housing for moderate-income families has responded promptly to the call of the Congress in providing or about to provide approximately 90,000 units of such housing within a relatively short period of time. Additional units of middle-income housing provided during this period which were financed either conventionally or under the auspices of State programs such as the New York Mitchell-Lama program swell the total production statistics well above the number of units provided by FHA mortgage insurance.

No doubt the housing industry can and will do better in the future as these housing programs season with age. In an effort to publicize and promulgate these programs among our membership, we have prepared illustrative cases to aid builders and sponsors in preparing applications for projects under the sections 221 (d) (3) and 221(d)(4) programs. In addition, we have sponsored workshops and conferences designed specifically to explain the programs and assist builders in the implementation of middle-income housing programs. The most recent of these meetings was the eastern States rental housing conference held in New York City on October 1 and 2, 1963.

Your second inquiry asked our views of the program of the New York Housing Agency which is based on debentures issued by the agency to provide funds for consolidated groups of middle-income mortgages. Frankly we do not feel sufficiently acquainted with the program here in Washington to give you a prompt opinion. Therefore, we have referred this question to some of our leading members from the State of New York. As soon as we receive their views, we will forward a reply to you promptly. Sincerely,

W. Evans BUCHANAN, President.

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METROPOLITAN HOUSING

Table A-4.-Condition and plumbing facilities for owner- and renter-occupied housing units, for the United States, 1960

[Based on sample; see text. Minus (-) after number indicates median below that number]

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PERSONS

1 person.
2 persons
3 persons.
4 persons.
5 persons.
6 persons or more
Median.

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YEAR STRUCTURE BUILT

1959 to March 1960.
1955 to 1958.
1950 to 1954.
1940 to 1949
1939 or earlier.

373, 556
1, 112, 734
1,798, 670
2, 669, 456
14, 272, 739

358, 735
1,041, 100
1,625, 507
2,095, 187
9,821, 399

343, 091

992,589
1,546, 455
1,935, 475
8, 437, 417

15, 644
48, 511
79,052
159, 712
1,383, 982

9,637
49, 399
125, 976

418, 438
3,240, 056

4,052
23, 322
68,094
242, 239
1,890, 234

5,585
26,077
57, 882

176, 199
1, 349, 822

5, 184
22, 235
47, 187
155, 831
1, 211, 284

INCOME IN 1959 1

Less than $2,000.
$2,000 to $2,999.
$3,000 to $3,999.
$4,000 to $4,999.
$5,000 to $5,999.
$6,000 to $6,999.
$7,000 to $7,999
$8,000 to $9,999
$10,000 to $14,999.
$15,000 or more
Median

4, 929, 507
2,359, 294
2,530, 979
2,542, 043
2, 301, 518
1, 658, 476
1,166, 609
1,374, 807
1,023, 913
340, 009

4, 100

2,869, 481
1,563, 339
1,833, 766
1,962, 804
1,860, 149
1,389, 744
1,003, 687
1, 210, 412

927, 997
320, 549

4, 600

2, 143, 663
1, 286, 967
1,605, 824
1,787,693
1,739, 930
1, 324, 072

967, 354
1, 175, 524

908, 384
315, 616

4,900

725, 818
276, 372
227, 942
175, 111
120, 219
65, 672
36, 333
34,888
19, 613
4,933
2, 400

1,330, 262

568, 100
529, 727
459, 994
360, 127
223, 044
136, 345
138, 412
81, 240
16, 255
3,000

500, 263
297, 714
334, 693
327, 127
277, 089
179, 197
112, 848
116, 369
69, 197
13, 444
3,900

829, 999
270, 386
195, 034
132, 867
83,038
43, 847
23, 497
22, 043
12,043
2, 811
2,000-

729, 764
227,855
167, 486
119, 245
81, 242
45, 688
26, 577
25,983
14, 676
3, 205
2,000-

dollars

GROSS RENT AS PERCENTAGE OF INCOME

Total..

19, 293, 718

14, 444, 453

3, 544, 410

Less than 10 percent.
10 to 14 percent.
15 to 19 percent
20 to 24 percent
25 to 34 percent
35 percent or more.
Not computed.

1, 947, 476
3, 548, 698
3, 462, 352
2, 368, 198
2, 430, 201
3,736, 384
1, 800, 409

1, 427, 783
2,769, 373
2, 745, 428
1,867,869
1,845, 707
2,650, 442
1, 137, 851

12, 947, 121
1, 229, 133
2,534, 631
2, 559, 667
1,739, 718
1, 680, 449
2, 296, 414

907, 109

1, 497, 332

198, 650
234, 742
185, 761
128, 151
165, 258
354, 028
230, 742

375, 967
599, 173
553, 970
382, 482
436, 989
780, 551
415, 278

2, 157, 760

207, 630
402, 380
390, 633
266, 304
281, 747
452, 863
156, 203

1,386, 650

168,337
196, 793
163, 337
116, 178
155, 242
327, 688
259, 075

1,304, 855

143,726
180, 152
162, 954
117, 847
147, 505
305, 391
247, 280

1 Income of primary families and individuals

METROPOLITAN HOUSING
TABLE C–4.—Condition and plumbing facilities for owner- and renter-occupied housing units, for the United States, 1960-Continued

(Based on sample; see text. Minus (-) after number indicates median below that number]

Condition and plumbing facilities

Deteriorating

4, 189, 085
5, 422, 552
3,654, 552
2, 967, 171
1, 818,011
2, 175, 784

2.6

3, 145, 487
4,326, 398
2,831, 824
2, 246, 853
1, 261, 590
1, 129, 776

2.5

2,460, 200
3, 974, 465
2,619, 521
2,081, 576
1, 151, 906
967, 359

2.6

685, 287
351, 933
212, 303
165, 277
109, 684
162, 417

1.9

750, 882
828, 177
630, 605
550, 618
411, 557
671, 667

3.0

328, 054
505, 454
409, 229
367, 171
264, 416
353, 617

3. 2

422, 828
322, 723
221, 376
183, 447
147, 141
318, 050

2.8

292, 716
267, 977
192, 123
169, 700
144, 864
374, 341

3.3

Sound

Subject

Total

Dilapidated

Total

With all
plumbing
facilities

Lacking
some or all
facilities

Total

With all
plumbing
facilities

Lacking
some or all

facilities

PERSONS

1 person
2 persons
3 persons.
4 persons
5 persons
6 persons or more
Median

PERSONS PER ROOM

0.50 or less
0.51 to 1.00..
1.01 or more

6,896, 852 10,066, 413 3,263, 890

5, 447, 121 7,758, 343 1,736, 464

4,969, 473
6,861, 256
1, 424, 298

477, 648
897,087
312, 166

1,097, 027
1,771, 781

974, 698

672, 503 1,078, 745

476, 693

424, 524
693, 036
498, 005

352, 704
536, 289
552, 728

(The prepared statement of Mr. Buchanan follows:)

TESTIMONY OF W. Evans BUCHANAN, PRESIDENT, NATIONAL ASSOCIATION OF

HOME BUILDERS

Mr. Chairman and members of the committee, my name is W. Evans Buchanan and I am an active homebuilder in the metropolitan area of Washington, D.C., and in the State of Maryland.

I appear here today as president of the National Association of Home Builders to present to you our views on the bills S. 810, S. 811, and S. 2130 upon which this hearing is being held.

As you may know, the National Association of Home Builders is composed of some 40,000 members affiliated in 375 local and State associations in all of the 50 States, Puerto Rico, and the Virgin Islands.

The association headquarters and our staff of 145 are located here in Washington in our national housing center at 1625 L Street, NW. The housing center serves as a meeting place for all segments of the housing industry and as a showcase to exhibit the latest developments in building methods, equipment, and materials.

This association is the sole spokesman for the organized homebuilding industry. We estimate that our members build about 80 percent of all single-family homes constructed by professional builders, which is about 70 percent of the total volume of new one-family housing. In addition, our members build onethird or more of the new multifamily housing, which currently occupies about 35 percent of all new construction. Thus we estimate, conservatively, that NAHB builders account for at least 62 percent of the total nonfarm housing starts in the United States.

CONVENTIONAL FINANCING OF MAJOR SIGNIFICANCE In recent years, increasingly, our industry has learned to use and rely upon conventional mortgage financing. These are mortgage loans which do not depend upon insurance by the Federal Housing Administration or a guarantee by the Veterans' Administration.

Today such conventional lending is an overwhelming force in the mortgage market. Let me illustrate this:

As of March 1963, FHA-VA financing accounted for roughly $52.8 billion of the' estimated mortgage debt outstanding on nonfarm, 1- to 4-family homes. Conventional financing accounted for $108.9 billion of such debt-63 percent.

At the end of 1962, records of nonfarm mortgages of $20,000, or less, showed that 77 percent were conventional. FHA accounted for only 15 percent and VA for just 8 percent.

In the first 5 months of 1963, similar mortgage recordings also show that 77 percent were conventional. Again, FHA accounted for only 15 percent and VA for 8 percent.

It is interesting to note that the same pattern is reflected in the total volume of mortgage lending in 1962. For example, of the $34.2 billion of home mortgage lending in 1962, 77 percent was on a conventional basis. Looking closer at the sources of mortgage funds, it is equally of interest to observe the following:

About 94 percent of all mortgage lending by savings and loans was on a conventional basis.

Approximately 75 percent of mortgage lending done by insurance companies was conventional.

Roughly 67 percent of the mortgage lending from mutual savings banks was conventional.

About 79 percent of mortgage lending by commercial banks was on a conventional basis.

And about 97 percent of all mortgage lending done by individuals, pension funds, and other miscellaneous sources was on a conventional lending basis.

Most FHA-VA loans originated with or through mortgage banking or brokerage companies, where only 27 percent of mortgage lending was conventional and about 73 percent was insured or guaranteed by FHA or VA.

A BETTER CONVENTIONAL MORTGAGE MARKET WILL AID HOUSING

Historically this association has always favored proposals for new legislation which will advance, in a sound manner, new ideas for improvements of the mort

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