According to the monthly reports of the Federal Housing Administration, the average mortgage amount per family unit insured during 1947 under section 603 of the National Housing Act was $6,745. Under this section of the act, the FHA insures loans on new one- to four-family dwellings up to 90 percent of the FHA estimate of current necessary cost.

Allowing for cases in which the loan percentage was less than the statutory maximum of 90 percent and also allowing for differences between the FHA cost estimate and the actual sales price, the average price of new FHA-financed dwelling units probably was in the neighborhood of $8,000. On this basis, the average FHA mortgage would be 84.3 percent of the average sales price. average sales price of $8,000 would be $1,515 less than the amount the average American family could afford to pay for a new house.

An

Here again, new houses financed with FHA loans represent a fair sample of all new houses built during 1947. Almost 180,000 new units in one- to four-family dwellings were placed under construction last year under the FHA program, or more than 20 percent of all new units of this type. The FHA generally operates neither in the luxury market nor in the lowest segment of the market.

These corroborating data from the Veterans' Administration and the Federal Housing Administration are completely independent from the figures of the Bureau of Labor Statistics, which were used in the previous analysis. They strongly support the other evidence of the broad market served by private home building.

EFFECT OF GEOGRAPHIC DISTRIBUTION

A large proportion of new housing in 1947 was built in the so-called rural-nonfarm areas, outside of the political boundaries of cities, where land and construction costs are generally lower than in cities. The question might be raised, therefore, that the findings of this survey could be explained by an undue concentration of new home building in rural sections far away from the places of employment for the majority of city dwellers.

This, however, is not the case. About two-thirds of all new nonfarm dwelling units started in the first three quarters of 1947 were located within metropolitan areas containing cities of 50,000 population and over, or in commuting distance for the vast majority of employees and workers. This proportion is approximately the same as before the war.

6

Since the data used in this study are national data, they do not necessarily apply to any particular areas or cities. However, the available figures even for large industrial areas known to be high-cost areas refute the theory that new private housing is serving only the upper-income families, as the following table shows:

TABLE IV.-Cost and price distribution of new single-family houses in industrial areas, second quarter of 1947

Even in the large industrial areas, 57 percent of the houses were in the price ranges below $9,642, which corresponds closely to the figure of $9,515 previously calculated as the average price that the family with average income could afford. Yet, it is generally recognized that family incomes in the large industrial centers are higher than the national figures used in this comparison.

The sample of industrial areas from which the Bureau of Labor Statistics' figures on construction costs are drawn comprises 27 centers including New York,

Statement of the Chief of the Construction Division of the Bureau of Labor Statistics before the Joint Committee on Housing, table 5.

Boston, Chicago, Philadelphia, Cleveland, San Francisco, and Los Angeles, as well as other metropolitan districts. Each area includes entire counties or groups of counties containing the central city or cities.

RECORD VOLUME OF SINGLE-FAMILY HOUSE BUILDING IN 1947

Not only was the price distribution of the single-family houses built in 1947 proportionately related to family incomes, but-in addition-a record volume of such houses was produced during that year.

The number of single-family dwellings placed under construction in 1947 is estimated at 750,000. The previous highs for this type of dwelling were 603,500 in 1941 and 572,000 in 1925. Although there were a few years in the twenties when the total number of new dwelling units, including two-family and multifamily structures, exceeded the 1947 volume, last year's record for single-family houses is without precedent.

Volume production, in combination with the wide market distribution of singlefamily houses, marks 1947 as one of the outstanding years in the history of American housing.

APPENDIX

The Bureau of the Census recently released 1946 income data for nonfarm families and individuals (Current Population Reports, Consumer Income, series P-60, No. 1). These data are at variance with the data in the Economic Report of the President, which are used in this monograph. The differences are explained as follows:

1. The Bureau of the Census release shows the income data as reported by the income recipient to the Census enumerator. The Bureau qualifies its findings as follows:

"The memory factor in data derived from field surveys of income probably produces underestimates, because the tendency is to forget irregular sources of income. Other errors of reporting are due to misrepresentation or to misunderstandings as to the scope of the income concept."

66

* * there is considerable evidence that nonreporting is more prevalent at the upper-income levels, so that the estimated proportion of cases in these levels is smaller than it should be."

In contrast, the Economic Report of the President adjusts income data obtained in a field survey for the Federal Reserve Board for underreporting of income. By expanding the sample of families interviewed in the field survey to cover the entire population, a total figure for personal income was obtained and then compared with Commerce Department data on personal income, which were derived independently in connection with national income figures. It was found that the survey figures adjusted for population coverage "still fell short of the national total of civilian noninstitutional money income derived from the personal-income series prepared by the Department of Commerce."

Accordingly, the Economic Report of the President expanded the total amount at each income level by 16 percent.2

Since the Bureau of the Census data were known to the Council of Economic Advisers when the economic report was prepared, it is safe to assume that the council considers its adjusted figures superior and more representative of the facts in respect to income distribution.

*

*

2. The Bureau of the Census "did not record the specific amount of income for those persons who received $10,000 or more income This affects, of course, any average or median income that may be derived from the data. 3. The Bureau of the Census, in addition to data on income distribution, publishes "median income" of families. This should not be confused with the “average income" per family shown in the Economic Report of the President. The median income is the amount which divides the families into two equal groups, one having income above the median and the other having income below the uedian. The average income is obtained through dividing the sum total of all i comes by the number of all families. Quite apart from the other differences, the median in such computation is likely to be below average.

1 Economic Report of the President, Jan. 19, 1948, p. 104.

2 Op. cit., p. 105.

3 Bureau of the Census, Current Population Reports, Consumer Income, series P-60, No. 1, p. 7.

With these qualifications, the census data for nonfarm family incomes are shown in the following table side by side with the family income data from the Economic Report of the President and the estimated price distribution of new single-family dwellings.

Comparison of family income distribution and price distribution of new
single-family dwellings

2 Bureau of the Census, Current Population Reports, Consumer Income, series P-60, No. 1, table 1. Refers o families in urban and rural-nonfarm areas. Percentages are rounded. 3 Table III, column 3.

In spite of their stated incompleteness, the census data do not modify the broad conclusions of this study. Comparison of the price range of new singlefamily dwellings with the census income data shows that 20 percent of the housing units were in the price range of families with incomes below $2,000 who constituted 26 percent of the total; 23 percent of the houses were in the price range of families with incomes between $2,000 and $3,000 who constituted 25 percent of the total; 25 percent were in the price range of families with incomes between $3,000 and $4,000 who constituted 20 percent of the total; 18 percent were in the price range of families with income between $4,000 and $5,000 who constituted 12 percent of the total; and only 14 percent were in the price range of families with incomes of $5,000 or more who constituted 17 percent of the total.

Mr. WHITLOCK. There is another question about the requirements of these contracts which we want to lay before this committee. We find on page 64, line 20, of the bill S. 866. [Reading:]

When land acquired or held by the local public agency in connection with the project is sold or leased, the purchasers or lessees shall be obliged (i) to devote such land to the uses specified in the redevelopment plan for the project area; (ii) to begin the building of their improvements on such land within a reasonable time; and (iii) to comply with such other conditions as the Administrator finds are necessary to carry out the purposes of this title.

We find nowhere in this bill any safeguards about how this land, when acquired by a public agency, shall be sold. It does not say that it shall be offered for sale at competitive bids in which private industry has an opportunity to bid. It says "when it shall be sold." We presume the requirements will be set up by the Administrator.

We believe that in dealing with public lands and public property in which the United States Government or a local community has an interest, there should be safeguards as to the method of sale of such property or land. It has been a practice of the Government to sell things in a competitive market, giving opportunity for buyers to bid on that property. We can find no such safeguard at any place in this title V which safeguards the interests of the people in that property owned by the Government or that portion which they have contributed to buying.

Mr. BUCHANAN. You discount, then, the entire social benefits gained by the improvement to our cities through the elimination of the slum areas.

Mr. WHITLOCK. I do not discount the social gain arising from the improvement of our cities through the elimination of slums. I think it is very necessary, and it is a proper social undertaking to clean up slum areas. But I believe that it is better to let the States and communities work on this problem, with some assurance that, if they go ahead and do it, they are not going to be suckers as they would be if Congress came along and gave money to other communities which did not proceed on their own account, but held back waiting for some decision by Congress.

Mr. BUCHANAN. Of course, you are familiar with the report of the Joint Committee on the Economic Report. I have a reference before me in which the committee has gone on record as to this matter, and your testimony this morning has been in direct contradiction. to the findings of this committee. Is that not a fact?

Mr. WHITLOCK. There are certainly some contradictory statements in there and some contradictory positions taken. I also question very seriously whether the United States Government, with a per capita debt of $1,754, against the per capita debt in the States, some as low as 77 cents and some of them as high as $55. I do not know the whole story of the local communities. It seems to me that at the present time the fiscal condition of the United States Government is far less able to stand this expense than the communities and the States. It seems to me that if slum clearance is to be promoted-and I certainly agree that slum clearance should be promoted—it is far better for this Congress to encourage States and local communities to do the job instead of incurring further indebtedness on top of an already overexpanded indebtedness.

Mr. BUCHANAN. And if their financial structure does not permit them to do so, then what?

Mr. WHITLOCK. I have seen the whole list of States, and I know of no State whose financial condition would not permit it to do it, if it wanted to.

Mr. MULTER. Mr. Whitlock, the figures and comparative percentages you gave me a few moments ago in answer to my question appear on the next-to-the-last page of that pamphlet you submitted for the record; is that correct?

Mr. WHITLOCK. The table is on the last page, "Comparison of family income distribution and price distribution of new singlefamily dwellings."

Mr. MULTER. In other words, what you have done, in the percentages you gave in answer to my inquiry, was to compare new singlefamily houses against the low-income groups; is that right?

Mr. WHITLOCK. That is right.

Mr. MULTER. Do you think that any family with a gross family income of $2,999 can buy a $6,981 house?

Mr. WHITLOCK. The rule that the Government and industry have used for a long time is two and a half times the income. That is considered a fair amount in the purchase of housing. If you will do the multiplication, I think you will get the answer.