town, and eliminating that ramshackle building and replacing it with

a new structure.

The idea that you can't inject new housing into older areas is a misconception. We find that going on in our downtown areas all the time, where we have the very highest values, and in apartment areas, where you have high values. An old building is torn down and a new one is put up. I think in most instances in these older neighborhoods, that the new building will probably be a rental building, rental units, and probably, by reason of the fact that it is an older neighborhood, but now rehabilitated, I would say that those rental units would be on the low side, and there is in this bill provision for financing rental units in these older areas.

Mr. McVEY. Mr. Chairman.

The CHAIRMAN. Mr. McVey.

Mr. MCVEY. I am only going to take a moment, and I should like to take the discussion away from public housing because this bill is concerned with slum areas to a great extent.

Before doing that I want to say that I was interested in what Congressman Dollinger said a moment ago, when he gave us the formula that a week's wages should pay for a month's rent.

I have great respect for that formula, but I am afraid some of the Congressmen are paying too much for rent.

I want to go back to this report of Mr. Burns for just a moment. You have quoted, Mr. Burns, from the President's Advisory Committee report on housing, on page 111: "If we continue only at the present rate of clearance and rely on demolition alone to eliminate slums, it will take us something over 200 years to do this job."

Now I have always been interested in research and documentation. I am wondering if the committee had any documentation for that particular statement or were the figures just picked out of the air?

Mr. BURNS. I explored the statement to some degree. Frankly, Congressman, I don't think it makes much difference whether it would take a hundred years or two hundred, but I explored it to the extent where, what they were talking about, in making that statement, was doing the job on a basis of complete demolition to the extent of razing the area to the ground, tearing the buildings down, replaning the area and building it new, at the present rate of what was formerly known as urban redevelopment and is now known as urban renewal. Mr. McVEY. Of course, in 200 years we may develop a great many more slums.

Mr. BURNS. It would be a losing proposition. You never could catch up with yourself.

Mr. SUMMER. The complete summary of that is on page 111 of the President's Advisory Committee report.

Mr. McVEY. I was interested in that 200-year figure.

Mr. SUMMER. But to save the Committee's time, I suggest that you have this report.

Mr. MCVEY. I don't think it is necessary.

Mr. SUMMER. It breaks it down right to a unit and how that figure is arrived at, and it wasn't a bald guess, sir.

Mr. BURNS. If we defer the job to the extent of where another generation has to be brought up in the slums, that is very serious. I think our program should be aimed at eliminating the slums within the next 5 or 10 years.

Now as far as perfecting certain areas, and tearing everything down and putting curves into straight streets, and so forth, I would rather leave that until we have done the first part of the job.

Mr. MCVEY. It certainly shows that it is a tremendous job and some of it will have to be done by our grandchildren.

Mr. BURNS. I don't imagine they will mind doing part of it. I don't suppose they would like to have to do their part of the job and also pay for our part. I think that is the thing we should watch out for.

Mr. McVEY. You have a point there. That is all, Mr. Chairman, The CHAIRMAN. Are there further questions of these gentlemen? If not, we are very grateful to you for this very valuable contribution to our considerations, and the tolerance which you have shown to our questions, which you have answered very fully and very frankly. Thank you very much.

Mr. WALTEMADE. Mr. Chairman, may I just apologize that my associates and myself sometimes inadvertently and in our enthusiasm have failed to address the Chair in our remarks, and we want to thank you and the committee for the thoughtful consideration given to us; we appreciate the opportunity of appearing before you, as we always have.

We want to assure you that the National Association of Real Estate Boards will continue in its effort to cooperate with this Committee and the members of this committee, and further I might state that if our staff can be of any assistance to you, and if any of our remarks want any further development, we will be glad to supplement our testimony.

You only have to call upon our staff to do so.

The CHAIRMAN. Thank you.

We next have Mr. DuLaurence of the National Apartment Owners Association.

We are very glad to have you with us, Mr. DuLaurence.

Mr. DULAURENCE. Thank you very much, Mr. Chairman. I shall try to be as brief as possible.

STATEMENT OF HENRY DuLAURENCE, CHAIRMAN, LEGISLATIVE COMMITTEE, NATIONAL APARTMENT OWNERS ASSOCIATION.

INC.

Mr. DULAURENCE. My name is Henry DuLaurence, and I am chairman of the legislative committee of the National Apartment Owners Association. My home is Cleveland, Ohio. The National Apartment Owners Association appreciates the privilege of being permitted to give its views on the proposed housing bill under consideration.

At the outset, I would like to say that we are unalterably opposed to Government's interference or participation in activities which are part of or competitive to private business. We believe that none of these activities should be continued by Government unless they are absolutely essential to the national welfare and cannot be provided just as efficiently and economically by private enterprise.

The housing bill now being considered is very broad in scope. It includes "aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and the develon

ment of urban communities." It will affect our banks, savings and loans, and mortgage banking institutions. The National Apartment Owners Association will limit itself to the consideration of its effect on our present supply of housing.

I would like to emphasize that we believe it highly desirable and extremely beneficial to have virtually every American family own its own home. We believe the family and society benefit through home ownership. Nevertheless since the Second World War we have been living under laws designed for the encouragement of home construction and ownership. We have had increasingly generous provisions for higher financing and lower downpayments. We must face the fact that some time, if we have not already done so, we will reach a point where all these seeming benefits will work a great disfavor to their recipients, and a hardship on the entire Nation.

In coming here as a representative of the association, I wish to emphasize that, of necessity, I must speak for all housing, whether privately owned or rental. Private and rental housing are joined together with the common purpose of furnishing homes for our people. What affects one segment of our housing very quickly affects the other. With but minor exceptions their economic life is inseparable.

In our considerations we are deciding not only the fate of future housing but, more importantly, solving the fate of our present housing as well. There are approximately 43 million non-farm-housing units. This total is composed of approximately 24 million owneroccupied units, 18 million tenant units, with about 1 million unclassified. These 43 million housing units are the Nation's largest single asset. It is larger than any industry in the country and may well be of more value than all industries combined.

The importance of maintaining the values of our present stock of housing becomes evident when we realize that to 24 million families the equity in their home is their largest asset. Any situation which may adversely affect the values of their homes will in turn affect the financial stability of their owners and the Nation.

This bill is of equal interest to some 7 million citizens, owners of the 18 million rental units in the country. To a large extent this property represents the savings of the great American middle class. These people are equally anxious to prevent a chain reaction causing vacancies, cheaper housing, cheaper rents, followed by a deflation in the values of homes and rental property.

We have studied the report of the President's Advisory Committee on Housing, and have been impressed by the diligent effort it represented and the laudable purposes which it liberally expressed. However, I would also like to suggest that a well-planned housing program could help keep our economy on an even keel. Conversely, an illconceived plan could further emphasize our excessive inventory in all goods and throw us into a serious depression.

In considering this problem we should remember the significant fact that virtually every serious depression in this country has occurred when there was a recession in industry coupled with a recession in real estate. The depressions of the 1840's, 1870's, 1890's, and 1930's are examples of this economic phenomenon.

I have brought a chart along to show just exactly what I mean, and what has occurred.

At the top you will notice the 2 different charts, 1 of business activity, which is the well-known Cleveland Trust chart, and the other is on real-estate activity, which is the Roy Wenslick chart.

You will notice, and we do know-we have had some very serious depressions especially in the 1870's, in the 1890's, and, of course, in the 1930's. In each case where we have had a business recession, plus real-estate recession, we have had a serious depression. In each case the real-estate recession has followed an excessive building of houses. You will notice in this chart that over these valleys and hills, in the real-estate activity chart, you have an idealized cycle of 183 years. Give and take 1 or 2 years more or less, the crest of a realestate boom, down to the valley in the recession, back up to the crest of the boom, is approximately 18 years. This chart is a chart representing the business activity and the real-estate activity for the last 100 years of our country.

Interestingly enough, if this chart were long enough you would find the same cycle going along from the year 1800 on. This cycle has continued on that basis over periods of 18 years, and you would find that the valleys and the crests of the booms were very similar, and corresponded with the depressions and recessions in business.

Now, I think in considering what we should do with this housing bill, we should recognize just exactly where we are in this cycle. This chart has been drawn up to January 1, 1954. You will notice that at the present time we are on the downgrade of our real-estate cycle, a cycle that has lasted for 150 years. We have also, as we know, constructed more housing in the last 8 years than in any other 8-year period in the history of our country.

Recently we have had some questionable repercussions in business, plus a large housing construction program and I think that we should recognize the fact that we may be in a vulnerable spot if we espouse and permit a forced increase in the construction of housing.

Recessions and booms in real estate have occurred in periodic cycles of fairly equal length. This is the longest perceptible business cycle and takes almost a generation to complete. Although undoubtedly affected by other business conditions, they are generally considered to occur independently of them. Consequently, we must come to the conclusion that a depression in real estate occurs for the normal causes, the existence of a buyer's market, which is caused by overproduction or excessive inventory.

The recession or boom in housing is further accentuated by two important characteristics seldom found in other commodities.

1. Homes cannot follow demand. Build too many homes in one city and you have a real-estate depression in that city regardless of how great the demand might be a hundred miles away. This can be cured only by the natural growth of population or the natural collapse of old houses in the community, both of which take a long time.

2. Housing is very sensitive to overproduction. Almost every commodity is susceptible to increased consumption except housing. No family can use more than one house in a given community. Consequently, too many houses does not mean more use of housing but

rather a vacancy of housing, thus affecting adversely the value of other housing in the community.

I have taken the liberty of considering some of the economic fundamentals of housing in order to emphasize the importance of housing and the ease of overproduction once supply and demand have come into balance. That it would be highly undesirable to undermine the value of the average family's and the Nation's largest asset cannot, I believe, be disputed.

Are we overbuilt?

One of the characteristics of a building boom is that it seems to feed on itself. Even at its crest most people see the need for more building and are fully convinced that it will continue. I think this is our situation today. Before we decide to go along with the crowd we must consider the following:

1. That the building boom has continued for over 8 years.

2. That much of this building has been fostered by increasingly liberal credit terms.

3. That we have more housing per capita than ever before in our history. If we occupied our housing as we did in 1940 we would have 6,500,000 vacant units, or 13 percent vacancy.

4 That the growth of our housing compared to the growth of our adult population indicates phenomenal growth in housing. Between 1940 and 1952 our adult population increased 14 million; our housing

12.700.000.

5. That our marriage rate has been going down for several years. At the present time it is at the lowest rate in 14 years.

6. That there will be fewer young people of marriageable age for the next few years than in the past few years.

7. That normal economic conditions will cause a contraction in the use of housing.

8. The clearance of slum housing and the rebuilding of slums will not prevent our overbuilt condition. However, it will give us a chance to build some extra units for direct replacement.

a. The need for rehabilitation is far greater than housing replacement.

b. We have a larger percentage of good housing in the country than ever before. It will be difficult to determine how much replacement we will need, and where, pending normal occupancy.

We can see there is ample evidence that we may be past the crest of the housing boom and evidence that we may be overbuilt. The provisions of our housing bill must be limited so that the civic benefits may be available without causing a surplus and destroying the value of existing housing.

We would like to discuss the various provisions of H. R. 7839, 83d Congress, 2d session. We are familiar with housing because housing is our business. More so we believe than the builder who builds the housing for sale, the real-estate broker who sells the housing for his commission, and the mortgagor who finances the transaction for his interest return. We are the ones who own and operate housing, it is our responsibility and our problem. We have the following suggestions, by section:

Section 101, title I, provides for repair and rehabilitation loans, We believe that this section provides for sound and beneficial help