|37. Special Message to the Congress on Housing|
February 23, 1948 |
To the Congress of the United States:
In the next few weeks legislation authorizing rent control and emergency financial aids for housing construction will expire. The Congress should extend and improve this essential legislation, and at the same time should enact urgently needed new housing legislation. The objective should be an integrated program to assist in obtaining more housing at lower cost, both in the immediate future and for the long run.
This program should be based on the needs of all our people for housing, the ability of the housing industry to meet those needs, the most practical and effective method of giving Federal assistance, and the urgent necessity for reducing costs and prices in the housing field. I am glad that the Congress through several of its Committees has been making an extensive study of these matters.
Today, far too many of our families are living in sub-standard housing, in painfully cramped quarters, or doubled up with friends or relatives. Over five million of our present homes are below minimum standards. About two and one-half million married couples live with other families, a 50 percent increase since 1940. Large numbers of families do not have enough space to give their children decent accommodations. These conditions cannot help but be reflected in unsatisfactory home life and lowered standards of health. Their impact is greatest on our low income families, minority groups and new families started by veterans.
These are some of the symptoms of our long-range housing problem. To provide better homes for families now in substandard or cramped housing, to meet the increased needs of a growing population, and to replace our supply of housing as it wears out we must look ahead to a long period of high volume construction. It will be necessary to produce an annual average of more than one million new houses and apartments in urban areas during the next ten years, and in addition a substantial amount of housing in rural areas, if we are to have the housing this Nation needs and can afford. This will require the joint strength and effort of management and labor in the building industry, of private financial institutions and of Federal, state and local governments.
As we make progress toward this goal, we will overcome the critical housing shortage by providing enough dwellings at prices which families who need them can afford. At the same time, we can also stabilize the housing industry and thus make a contribution toward preventing the violent fluctuations of the business cycle in general.
The expansion of housing production is necessary in this inflationary period, just as it is necessary to expand the production of other articles in short supply which are vitally needed by our people. The critical housing shortage is contributing to the upward pressure on the selling price and rental price of housing. While we need rent control until this shortage can be overcome, the basic problem is to increase housing production to eliminate the shortage.
The long-range and immediate aspects of the housing problem are intermingled. We must now take steps both to increase the immediate volume of housing construction and to achieve progressively better housing at lower cost over the years ahead. Without measures to achieve both these objectives we shall be in danger of a serious drop in housing production. Such a drop in production, whether now or later, would affect and injure the stability of our whole economy. This happened when housing production declined after 1925--and it would happen again. We must take steps now to assure stable housing production at high levels, as an essential part of our determination to maintain an economy of maximum employment and production.
During 1947 nearly one million housing units were added to our housing supply. About 835 thousand of these were new houses or apartments and an additional 150 thousand were obtained by conversion or temporary construction. This volume of construction was an excellent accomplishment.
In other respects the 1947 achievement was not so satisfactory. Not enough of the housing produced was for rent. Too much of it was priced beyond the means of those who needed it most.
Less than 15 percent of the new housing built in 1947 was rental housing. This was well below the average for the past thirty years, and falls far short of present needs. The evidence is clear that the shortage of housing for rent is far more acute than that of housing for sale.
The housing made available in 1947 was too high-priced for millions of our people to buy or rent. Some progress was made toward building houses which the middle income groups could afford. But almost no housing at all was built for low-income families.
These facts should guide us as we lay out our program for this year and the years ahead.
I recommend that the Congress enact at the present session legislation directed toward five objectives.
1. To continue and strengthen rent control.
2. To stimulate a higher volume of home building on a sustained basis, with special emphasis on rental housing, and with proper safeguards against possible inflationary effects.
3. To reduce building costs.
4. To assist communities in providing low-rent housing for families in the lowest income groups.
5. To aid cities in rebuilding and modernizing run-down areas.
This program will help to combat those elements of the inflation which stem from the housing shortage. By concentrating more upon the housing needs of middle income and low-income families, it will broaden the market for housing and thus safeguard us against a serious drop in housing production in the years ahead. And it will advance us far toward the goal of a decent home for every American family.
The acute shortage of rental housing makes it imperative to continue emergency rent control.
The want-ad sections of metropolitan newspapers still contain desperate pleas by families seeking apartments. On the average those rents which were eliminated from control by the present law have risen more than 60 percent. Tenants in many parts of the country have been receiving notices from landlords that their rents will be substantially raised if rent control legislation is allowed to. expire on February 29th.
On numerous occasions, I have pointed out the serious effect that large increases in rents would have upon the excessively high cost of living for millions of our families. Rent accounts for nearly one-fourth of the budget of low-income families--the families most seriously affected by the high cost of living.
The recent declines in certain prices in the commodity markets cannot be regarded as a valid reason for failing to continue and strengthen rent control. The cost of living is still so much higher than it should be that we cannot allow price reductions that may be achieved in some elements of the cost of living to be cancelled out by increases in rents.
I recommended therefore that rent control legislation be extended at least through April 30, 1949.
In extending this legislation it is essential that the Congress provide vitally needed enforcement authority which is now lacking. The enforcement provisions of the present law are so inadequate that it is virtually impossible for the Government to enforce rent ceilings or for most tenants to protect themselves.
The Office of the Housing Expediter estimates that in twelve cities surveyed by the Bureau of Labor Statistics for the period from June 15 through November 15, 1947, rents were raised illegally on from 6 to 21 percent of the units. In the city of Boston, for example, 14 percent of the rental units had illegal rent increases.
The large number of over-ceiling violations under the present law is due primarily to the elimination of the authority which the Housing Expediter previously had to bring treble damage suits and to protect tenants from being evicted for refusing to pay over-ceiling rents.
Most tenants do not have the knowledge or funds to bring effective legal action in their own defense. Even those who could bring suit hesitate to do so for fear of blacklisting or other forms of retaliation by landlords.
The new legislation, therefore, should provide adequate authority to enable the Government to enforce the law, and appropriations should be sufficient for an adequate enforcement staff.
The legislation also should protect those tenants--more than a million and a half in number--who have agreed to the so-called voluntary 15 percent increases provided for under the present law. These families have no protection beyond December 31, 1948. They should be given protection at their present rents for the duration of the new law.
Provisions should, of course, be continued for adjusting rents to correct inequities and to compensate for increased operating It is important also to continue to for the orderly decontrol of rents in individual communities as local shortages relieved. During the past year a of areas have been decontrolled as tions permitted. This orderly "should be continued as rapidly as feasible.
Higher volume housing construction with special emphasis on rental housing
To achieve an increased volume of construction in 1948, and a higher proportion of rental housing, the Government should continue its financial aids, with appropriate modifications, and should assist in the expansion and proper distribution of the supply of building materials.
For the last fourteen years the Federal Government has given incentive and support to the construction of housing through assistance to private loans for home building. These credit aids have been temporarily modified and liberalized in recent years to fit the housing needs of the war and postwar periods, and especially to aid veterans.
These aids have been signally successful in stimulating a high volume of home building. They should be continued and modified to assist in meeting current needs and at the same time to move toward a sound long-run system of Government assistance to housing credit. In particular they should be revised to provide relatively more incentive during the next year for the construction of rental housing than for the construction of housing for sale. In addition, careful safeguards should be provided against inflationary impacts.
My recommendations with respect to credit aids fall into three groups. First, I recommend the extension and revision on a transitional basis of Title VI of the National Housing Act, containing the principal emergency credit provisions.
Title VI should be extended, with modifications, for one year to March 31, 1949, with an increase of $2 billion of insurance authorization. Half of this amount should be specifically allocated for insuring loans for rental housing. To increase the proportion of rental housing, the statutory basis for insuring loans should be made less liberal on housing built for sale while the present basis for rental housing projects should be retained subject to provisions which would prevent giving support to further cost increases.
Second, I recommend that Federal support for home mortgage loans in the form of a secondary market be continued, but modified to introduce adequate safeguards against inflationary effects.
For this purpose I recommend the further consolidation of Government housing activities in the Housing and Home Finance Agency by placing the secondary market authority in that Agency. The Housing and Home Finance Agency would continue the present secondary market for loans guaranteed by the Federal Housing Administration and would reestablish a secondary market for those guaranteed by the Veterans' Administration.
The purchases of mortgages by the Government should be limited to local situations where the absence of sufficient credit is endangering home production or availability of houses to veterans, and where government support will not result in higher costs and prices or unsound credit standards.
This standby secondary mortgage market will give assurance to lenders of a source of liquidity in time of need and thereby contribute substantially to the stability of interest rates and the supply of necessary credit.
Third, I recommend that the Congress provide a sound incentive for the construction of rental housing in the form of Government insurance of an adequate return on direct investment in large-scale rental projects with supervised rent schedules. Such a yield insurance plan should encourage substantial investment of private capital in well planned rental housing.
The long-range housing legislation which has been before the Congress for some time contains additional proposals for stimulating large-scale rental housing which should be enacted.
In addition to these various forms of credit assistance, the Government can encourage a high volume of home building by improving the distribution of scarce raw materials to building materials manufacturers.
As part of the anti-inflation program, I recommended last November that the Congress enact legislation to permit the allocation of important materials, including housing materials, in extremely short supply. In the absence of such legislation the Secretary of Commerce is attempting to develop voluntary industry-wide agreements to channel more raw materials into the production of scarce housing items, such as nails and cast iron soil pipe. I am still convinced that allocation authority to supplement these voluntary measures would make an essential contribution to the rapid and effective expansion of the supply of building materials.
In addition, it is clear that the supply of many building materials must be permanently expanded to make possible a continuous high volume of construction at lower costs. As a practical measure toward this end the Department of Commerce, in cooperation with other government agencies, will regularly prepare long-range estimates of building materials requirements.
All these measures are designed to assure a high volume of housing construction. But this high volume cannot be maintained, nor can we produce housing that the bulk of our families can afford, unless building costs are lowered.
Lower building costs
To obtain good housing at reasonable prices requires broad-scale efforts to reduce building costs. The basic problem facing the housing industry in this regard is to achieve the constant improvements in productive efficiency characteristic of other great industries of our country.
Considerable progress has been made in the last few years, as labor and management alike have begun to realize the possibilities for long-run efficiency inherent in stabilized housing production at high levels. Large-scale operations, both on the building site and in factories, have demonstrated possibilities for significant reductions in cost. In addition, some coordination has been achieved in the sizes of materials and household equipment. This permits small-scale builders as well as large to lower costs through simplified assembling of houses.
We can expect further progress as these advances are more widely adopted and as further innovations are developed. The Government can assist in a number of ways.
The vigorous program of research to develop new building materials and more efficient building methods, on which the building industry has made an encouraging start, can be aided by the Government, particularly through such research agencies as the Bureau of Standards and the Forest Products Laboratory. In addition the Government can assist the industry through a sound program of research concerning the housing market and related community development problems. I recommend that the Congress provide authority and funds for an integrated program of building research, recognizing the paramount interest of the Housing and Home Finance Agency in the housing field and related interest of the Department of Commerce and other agencies in the more general field of construction, and using the best research facilities available throughout the Government.
The use of modern methods and materials, large-scale operations, and improved working techniques are hampered in some communities by obsolete and restrictive requirements embodied in local building codes. These codes should be rapidly modernized to permit the prompt use of proved and safe technical advances.
Many communities have already made substantial improvements in their codes. The Federal Government's research program should assist further improvement by testing building materials and methods and determining proper performance standards. Agencies of the Government will also continue to promote better building codes by working with state and local officials and with representatives of labor and management.
The full development of large-scale operations, both on-site construction and prefabrication, has been delayed by serious gaps in financing methods. In the case of on-site construction I recommend that the Government be authorized to guarantee loans for working capital during the period before regular mortgage loan financing is available. In the case of prefabrication I recommend that the Government's present power to guarantee production loans should be extended to cover the entire period between the time the house is started in the plant and its erection on the site.
Cooperatives have been effective in lowering costs in many parts of our economy. Farm cooperatives are a notable example. I recommend that special provision be made by the Congress for insuring loans to housing cooperatives.
Another promising means for reducing costs of construction is to improve the marketing system for building materials, which in many respects is now unduly complicated and costly. This problem presents a challenge to the industry to establish a system adequate to distribute at low cost the large volume of materials required to meet our housing needs.
The Antitrust Division of the Department of Justice has been attacking unlawful obstacles to free competition in the housing industry. Restraints on channels of distribution, price-fixing, and other practices in violation of the antitrust laws add to the cost of housing. More vigorous enforcement of these laws depends upon the appropriation by the Congress of additional funds that have been requested for the Antitrust Division.
There are also possibilities for cost reduction through higher labor productivity as the skill of building workers is increased and efficient methods are more rapidly adopted. As in other industries, labor costs per unit can be reduced by these means without lowering the annual earnings of workers. I am sure that labor and management understand and accept these principles and recognize that their effectiveness depends upon uninterrupted high volume production of housing. I am confident that they will cooperate fully with each other to achieve these ends.
A complete housing program must deal with rural housing. Financial aids should be developed for rural housing as well as city housing. In addition, the technical building services provided by the Department of Agriculture to farmers should be expanded. This will enable farmers to do more of their own building, and reduce the high costs necessarily incurred when city builders are asked to do the relatively small-scale work involved in building or remodelling farm houses. I again recommend the enactment of the provisions for rural housing contained in the comprehensive housing legislation which has long been before the Congress.
All of these measures will result in progressively lower cost and higher quality housing. Some should be effective in the near future, such as the standardization of design, dimensions and methods of assembly of home building materials and equipment. Others will take longer to be fully developed. All should be strongly encouraged by the Government.
Low rent housing for families in the lowest income groups
The measures for cost reduction which I have recommended--even when they become fully effective--will not provide adequate housing within the reach of our lowest income families. The private housing industry cannot in the foreseeable future provide decent housing for these families. Their incomes are far too low to cover the cost of new housing of any adequate standard. They are too low to cover even the cost of decent second-hand housing.
We have a national responsibility to assure that decent housing is available to all our people. We should replace present housing which is a menace to health and safety with simple but adequate housing at rents which low-income families can afford. To do this we must resume the program of public aid to low-rent housing, first authorized under the United States Housing Act of 1937.
Under this program, tested by experience, local public agencies construct and operate the housing, and the Federal Government contributes funds necessary to permit low rents. Communities also contribute by providing exemption from local taxes. The costs to the Federal and local governments have been modest in comparison with the benefits achieved, not only for low-income families but also for the community as a whole.
I recommend that the Congress authorize sufficient Federal funds to permit construction by local housing authorities of 100,000 public housing units each year for the next five years.
The limits on the cost of construction per unit set by present law would not permit the development of low-rent housing projects under any cost level likely to be achieved in the post-war period. The law should be amended to adjust these cost limitations to post-war conditions, and also to strengthen the provisions of the law which restrict the use of the housing to low-income families, to encourage the construction of units for families of larger size, and to extend certain preferences to veterans.
Public housing is an essential element in our total program. Even when these 500,000 units have been built, we will still have far to go to rehouse our lowest income groups.
The redevelopment of the central areas of our cities, now too often blighted and decaying, is of primary importance for our housing program. Housing does not exist in a vacuum. In planning residential areas, consideration must be given to such items as transportation, shopping centers, schools and playgrounds. Some sections of our cities must be replanned and rebuilt to be fit places for modern living.
To make it possible for the cities to start this work and to encourage participation by private capital, we should now make adequate provision for a program to assist in the elimination of slums and blighted areas. The task of assembling and clearing land in these areas and making it ready for rebuilding is great, and the need is urgent. The costs will be beyond the financial means of most cities. I recommend the enactment of legislation to give Federal assistance, to be combined with local resources, to permit the assembly and clearance of land in such areas. Federal aid for this purpose is one of the features of the comprehensive housing legislation which I have previously recommended.
While major expenditures of this type should be deferred at present, I recommend that the Congress now authorize the Housing and Home Finance Agency to enter into the necessary financial arrangements so that cities may proceed with their plans and be ready to undertake their projects as rapidly as economic conditions and local situations permit.
The program of action I have recommended is designed to meet the immediate housing needs of the Nation and at the same time to lay a sound basis for the years ahead. It is a comprehensive program, each part of which is necessary.
Many of the proposals which I have recommended are contained in housing legislation which has long been before the Congress. These proposals have received long study by many committees of the Congress. In recent months the other proposals that I have here made, as well, have been carefully studied and their need demonstrated. The way has therefore been paved for speedy action on the entire housing program that I here recommend and most of which I have recommended before.
Unfortunately, some of the elements of this comprehensive housing program which are most urgently needed--such as the provision of publicly-aided low-rent housing-have been subject to opposition based upon unfounded fears and upon errors about the facts. These elements of the program should not be put aside. Such action would result in a fragmentary housing program which would not meet the needs of the American people.
In the past, we have proceeded separately on short-range and long-range proposals. Now we must recognize the need for shaping the long- and short-range legislation with reference to each other. We must adopt them together so that they may work together. We must make orderly progress, not a staggering uncertain series of starts and halts.
We have learned much in the last decade about the ways to meet the housing needs of our great Nation. We should now act on this knowledge through farsighted legislation by the Government and farsighted planning by all who work in the building industry.
HARRY S. TRUMAN
NOTE: For the President's statements upon signing the Housing and Rent Act of 1948 and the Housing Act of 1948, see Items 58 and 172.
Provided courtesy of The American Presidency Project. John Woolley and Gerhard Peters. University of California, Santa Barbara.