at higher cost or at sacrifice of space. Also, those whose occupational characteristics require a high rate of mobility are at a similar disadvantage-because of the risk of short-term home ownership and the high cost and uncertainty of remarketing a housing unit when it is no longer needed. Typical costs of 10% to 20% attached to the resale of an existing home--when real estate commissions, closing and settlement costs, accrued interest and taxes during vacancies, mortgage prepayment penalties, etc. are all added up. A less costly, more efficient, secondary marketing system appears to be sorely needed--if real estate liquidity is to be maintained at a level favorable to home ownership. This liquidity has been provided during the past two decades by a steady upwar'd climb of prices. But continued inflation is neither a certain or desirable way to maintain a liquid market.

RENTER CHOICES ALSO NEED TO BE BROADENED ... Consumer choice should likewise not be slighted in the rental housing markets. While the limited measures of consumer preference have consistently shown a high majority desire for ownership--they likewise have indicated that among home owners, there is a significant minority who would have preferred to rent.

The gradual decentralization of urban employment centers has no doubt made the 1-family dwelling the only available housing choice in many instances. A limited number of these are, of course, on the rental market. But the rental prospect's choice is obviously limited in these areas--both quantitatively and qualitatively.

Householders may well prefer to pay the premium of renting--in order to be free of the responsibilities and risks of ownership. And a free market should permit and provide for that choice.

There are ample indications that many who could easily qualify for home ownership exercise their preference for renting.

But on both sides of the buy versus rent issue--the main unanswered question is to what extent the exercise of preference may have been for location, type of structure, or community facilities, rather than for tenure.

Most available evidence suggests consumer preferences favor ownership in high proportion over rental. This fact is acknowledged by Louis Winnick in his ACTION series book Rental Housing --Opportunities for Private Investment--even though a principal conclusion of the book was (in 1958) that the rental housing market was being underbuilt. He cites several surveys which typically show preference for ownership by well over two out of three household heads.

at higher cost or at sacrifice of space. Also, those whose occupational characteristics require a high rate of mobility are at a similar disadvantage-because of the risk of short-term home ownership and the high cost and uncertainty of remarketing a housing unit when it is no longer needed. Typical costs of 10% to 20% attached to the resale of an existing home--when real estate commissions, closing and settlement costs, accrued interest and taxes during vacancies, mortgage prepayment penalties, etc. are all added up. A less costly, more efficient, secondary marketing system appears to be sorely needed--if real estate liquidity is to be maintained at a level favorable to home ownership. This liquidity has been provided during the past two decades by a steady upward climb of prices. But continued inflation is neither a certain or desirable way to maintain a liquid market.

RENTER CHOICES ALSO NEED TO BE BROADENED... Consumer choice should likewise not be slighted in the rental housing markets. While the limited measures of consumer preference have consistently shown a high majority desire for ownership--they likewise have indicated that among home owners, there is a significant minority who would have preferred to rent.

The gradual decentralization of urban employment centers has no doubt made the 1-family dwelling the only available housing choice in many instances. A limited number of these are, of course, on the rental market. But the rental prospect's choice is obviously limited in these areas--both quantitatively and qualitatively.

Householders may well prefer to pay the premium of renting--in order to be free of the responsibilities and risks of ownership. And a free market should permit and provide for that choice.

There are ample indications that many who could easily qualify for home ownership exercise their preference for renting.

But on both sides of the buy versus rent issue--the main unanswered question is to what extent the exercise of preference may have been for location, type of structure, or community facilities, rather than for tenure.

Most available evidence suggests consumer preferences favor ownership in high proportion over rental. This fact is acknowledged by Louis Winnick in his ACTION series book Rental Housing--Opportunities for Private Investment--even though a principal conclusion of the book was (in 1958) that the rental housing market was being underbuilt. He cites several surveys which typically show preference for ownership by well over two out of three household heads.

Table XII

PREFERENCE FOR OWNING AND RENTING AS EXPRESSED IN VARIOUS SURVEYS

Consumer preferences are important, but it must be recognized that their fulfillment depends on both financial capacity and occupational mobility requirements, and perhaps others as well. Supply factors are likewise important-including not only what homebuilders are providing and where, but on lender policies, zoning, transportation, community facilities and others.

In this perspective, it would be legitimate to ask if the 1960 rate is not "abnormally" high. And the answer would have to be somewhat conjectural. But consumer preference for ownership is still indicated as higher than fulfillment. It is also quite likely that home ownership was held to unduly low levels during the 1890 to 1940 period by the heavy waves of immigration and then by the depression. Low wages, lack of assets for equity purchase, and the tendency to concentrate in large urban centers where rental housing was the type primarily available--probably all combined to preclude most immigrants from the home ownership markets during first and second generations.

The high

But the historical evidence should not be summarily dismissed. wages during the World War II period, rationing, and price controls probably created a somewhat "artificial" situation in reverse. The result of these factors was an accumulation of financial savings by occupational classes who might otherwise have been unable to accumulate them.

High levels of savings plus new generous terms provided by government underwritten housing programs added considerably to effective demand for owneroccupied homes during the late 40's through the mid-50's.

One of the questions in looking to future markets is whether or not this "new" market is becoming saturated--and the extent to which the climb in land and construction costs has erased "effective" demand ("effective" demand as used here means that which is economically feasible from the standpoint of equity assets and income--as contrasted to potential demand resulting from preference and need).

IS THE SALE HOUSE MARKET FULLY SUPPLIED?

One of the answers here seems

to be that there likely remains a very substantial untapped market at lower income levels than are presently being reached at the current "market floor". The problems that have to be solved in tapping this market are tough ones but they are not insurmountable. The cooperation of many parties other than builders is required if substantial inroads on this market are to be made--and if the market is to be prevented from going the public housing route by default.

But the progressively lower rate of building in the low-cost home market plus the sharp upward shift of homebuilders turning toward the rental and apartment markets raises the question of whether or not we are avoiding the solution of hard, but essential market problems and are taking the "easy-wayout". Rental housing construction is not necessarily the most satisfactory diversion of productive capacity made idle by the shrinking of the ready-made sale home market of the 50's.

THE CHALLENGES: Inadequate zoning for small house and town house sites; high land costs; outmoded lending practices; improper credit qualification standards; high construction costs; overly conservative FHA mortgage underwriting policies; excessive building codes; rising closing and settlement costs; climbing real estate taxes; and many others.

Some tough-minded builders and not all of them giants--have succeeded in breaking through enough of these barriers to succeed. Many more who have the talent for it should give it a try.

COLLAPSIBLE HOUSEHOLDS

...

It should be noted that a substantial portion of recent new household formations have been of the non-family type--households headed by unrelated individuals as compared to the more usual family type-consisting either of married couples or of a single parent with other dependents.