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Home Builders Association 1/19/90 10A 8309] [1]
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5
7
THE WHITE HOUSE
WASHINGTON
Davis/Martin
Jan. 16, 1990
Title: Habitat
Draft: Two
PRESIDENTIAL ADDRESS: HOME BUILDERS ASSOC., OMNI, ATLANTA
((Time)) FRIDAY, JAN. 19, 1990
((Thank you, Shirley Wiseman -- Martin Perlman, Mark Tipton,
Jay Buchert, Kent Colton and Bob Bannister -- great to see you.
Hasn't been so long, has it, since our last meeting in
November?) ) Newt binglich, Steve Bontlett, chalmes Wylie
( (And it's great to be hall back in Atlanta. In fact, I believe
that it was in this very hotel, about a year and a half ago, that
the Democrats held their 1988 Convention. \\ Of course, I have
fond memories of that convention. It gave me an excuse to go
fishing in Wyoming. )) 111
( (But frankly, I never thought my silver foot would stand on
the same spot as Ann Richards. ) )
In any event, it's great to be back among the Home Builders
of America. ( (I just hope you appreciate one thing -- it's not
every day that this association gets to hear from someone who
actually lives in public housing. ) )
Before we moved to the White House, Barbara and I were a
45
realtor's dream. We lived in 28 places in 44 years. And yet, in
real sense, wherever we lived -- whether it was in Houston,
THE WHITE HOUSE
WASHINGTON
Washington, New York or Beijing -- our family had one true home
that we took with us wherever we went.
I remember the first place Barbara and I lived in, when
George Junior was just a baby -- an old ramshackle shotgun house
in the oil town of Odessa, Texas. It had a makeshift partition
down the middle that cut the house into two apartments, leaving
us with a small kitchen and a shared bathroom. An old water-drip
window unit that cranked up like a West Texas dust storm still
couldn't drown out the noise of the all-night parties next door.
Lord
Yet despite it all, Byron was right -- a home is place in
the heart. I can't speak for our neighbors, but for us, that
little shack was home. And I have to wonder, and worry, how many
families break apart because they can't afford to buy or rent a
home even as half decent as our first place.
We cannot allow the high costs of housing to suffocate the
financial life of America's young people. When it comes to
housing, this must not become a society of "haves" and "have
nots.
To create decent housing people can afford, government must
cut some redtape -- and that's exactly what Jack Kemp and I
propose to do. Industry, too, must cut its regulation -- for
example, by easing up on the demanding, often redundant,
paperwork necessary to get a mortgage in America.
(And while I'm at it, can I get something off my chest? As
I travel around this country, I see so many new suburbs utterly
denuded of trees -- ironic, since the new owners' first instinct
THE WHITE HOUSE
WASHINGTON
will be to plant as many trees as possible. So I respectfully
suggest, as a former businessman, that leaving the original trees
might be a shrewd sales strategy.)
But the truth is, there's one housing policy, and one sales
strategy, that's better than all others combined -- a healthy,
growing economy. This first month of the 1990s marks the 86th
month of economic growth in America. As Shirley says, it was
housing that paved the way to the longest peacetime recovery in
modern history. You built ten million homes in the '80s. And by
working together, the housing industry will help keep this
country going strong in the '90s.\\
But to keep America moving, we will need the cooperation of
Congress. I can think of one simple action Congress can take to
give the economic expansion a boost. It has already been
debated. It has already won the support of the majority of
Members. What we need now is a simple up-and-down vote to cut
the tax on capital gains. \\
What would such a cut mean for America? Senator Bob Dole
told me he was having lunch at a restaurant in New York. And
just as he was getting ready to leave, Bob's waiter stopped him
and said: "Senator, please pass this capital gains tax cut. I'm
getting ready to sell my house, and a tax cut would mean a world
of difference to my family." So when someone tries to convince
you that this is a tax cut for the rich, remember that waiter.
Remember the retiree who's selling a home. Remember the farmer
and the small businessman.
THE WHITE HOUSE
WASHINGTON
A capital gains tax cut will help every American who holds a
job or owns a home. So I call on the leaders of Congress to give
the American people a break, to let democracy work in the House
and Senate.
Also vital to home buyer and home builder alike is a fair
and stable rate of interest. A one-percent increase in the
interest rate knocks two million families out of the market. But
in the last few years, millions of families could afford a new
18
home because mortgage interest rates have dropped from 14 percent
in the early 1980s to less than 10 percent today. And I want
to see them come down even more.
The 1990s must be another decade of lower taxes and lower
interest rates. But to have a stable economy, it must also be a
decade in which Washington, at long last, adopts fiscal policies
as sound as those of the average American household.
None of us is allowed to spend our bonus before we earn it.
Nor should Congress start planning where to spend a possible
"peace dividend." To the extent that world events allow us to
cut defense spending, then we should recognize that cutting the
federal budget deficit would be a true dividend for America's
taxpayers.
And too often, Congress forgets that every house is the
handiwork of an architect, a surveyor, a mason, a plumber, a
carpenter, a painter and dozens of other working men and women.
If Congress levies new burdens on our economy, it is these very
people who will be put out of work.
THE WHITE HOUSE
WASHINGTON
But, of course, even if we do cut the capital gains tax;
even if we do keep interest rates low; even if we do protect the
economy -- this is cold comfort for those Americans who languish
in the projects, or the thousands of others who know no shelter
at all.
These Americans need help. And they need hope -- so that's
just what I call our program -- HOPE, which stands for Home
Ownership and Opportunity for People Everywhere.
Our program addresses the full range of housing concerns --
from shelter for the homeless, to affordable housing for low-
income families, to greater access to jobs.
Let's start with what HOPE can do for first-time home-
buyers. It's time Congress let Americans use their IRA savings
to get into that first house. \\\
Then there are those who must live in the poverty and fear
of public housing. They are disproportionately minority
Americans. They suffer abuse from drug-dealing predators within
-- and the last thing they need is abuse from without. And
concerning the latter, let me say just one thing: Atlanta is a
great, cheerful city that has proudly risen from the ashes of a
distant past. And so for those who plan to revel in a rally of
hate tomorrow, let them know this: Atlantans, like all Americans,
turn their backs on bigots.
To escape violence and crime, to live in decent housing --
our public-housing tenants must first be empowered. Empowered to
choose where they want to live. Empowered by housing vouchers.
THE WHITE HOUSE
WASHINGTON
Low-income families don't need us to build new public-
housing horrors. They need decent low-income housing. And
that's why I call on Congress to renew the low-income housing tax
credit. III
Earlier, I discussed capital gains. But even this cut would
not be enough for America's impoverished inner-cities -- often as
desolate and shattered as a war zone. No, for these communities,
we've got to go one step further and eliminate the capital gains
tax altogether with enterprise zones.
There is something perverse about destructive practices that
have kept the FHA out of the very places that need the most help.
So my administration will ensure that FHA is true to its first
mission -- to make housing affordable for low- and moderate-
income families. It's wrong to draw a red line around the inner
city. It's not right or fair. And we're going to strike this
redline policy altogether.
The centerpiece of HOPE is to let all Americans enjoy the
dignity of controlling their destiny -- and dignity is exactly
what resident management projects allow, from the Kenilworth-
Parkside project in Washington, D.C., to the ((name)) right here
in Atlanta. Tenant management and tenant ownership is no longer
an experiment -- it's the future.
But even more is needed. We are all going to have to work
in a partnership to solve the problems of the helpless and the
homeless. My administration is going to do its part by expanding
emergency shelters. Late last year, I signed a bill that boosts
THE WHITE HOUSE
WASHINGTON
funding under the McKinney Act to reduce homelessness. And Jack
will tell you of other steps we are taking.
You're certainly doing your part -- building and renovating
shelters for the homeless; for battered women; for troubled
children and retarded adults. And you're working with the Job
Corps, taking the unskilled, the out-of-work, and training them
for lifetime careers in construction and maintenance, and I
congratulate you on your commitment.
But our partnership needs a third element -- that
constellation of volunteers I call the Thousand Points of Light.
I couldn't come to Atlanta, without taking note of one such point
of light, a part-time carpenter and his wife who have provided
shelter for so many in this very city -- former President Jimmy
and Rosalynn Carter. They deserve our thanks, as do all the
people behind Habitat for Humanity.
And so does a woman named Ella McCall. Ella once a homeless
mother. Now she has her master's degree, and serves the homeless
up
as a social worker at a shelter in Washington, D.C. When a
11-26-88
family strives to move out of a shelter into a home, they need
Ella. When a homeless mother wanders lost, with her children her
in tow, she needs Ella. And when I look out the south window of
the White House at dusk, and see the distant figures of ragged
men bedding down for the night -- I pray to God that this country
finds more people like Ella McCall.
Your work in job training, Jack Kemp's work in tenant
management and ownership, Ella McCall's work with the homeless --
THE WHITE HOUSE
WASHINGTON
all of this ultimately saves the taxpayers money. But this isn't
about money. It's about caring.
And if it takes love to make a house a home, then perhaps
the same could be said of a country. For the poorest among us,
America must not just be a place to live in, but a home for all.
Thank you, God bless you and God bless America.
#
#
#
HATIONAL ASSOCIATION OF HOME SUILDERS
OF THE UNITED STATES
National Association
of Home Builders
National Housing Center
15th and M Streets, N.W.
Robert D Bannister
Senior Staff Vice President
TO:
Executive Committee
Washington, D.C. 20005
Government Affairs Division
FROM:
Martin Perlman
Telephone (202) 822-0470
RE:
Legislative Update
DATE:
January 5, 1990
Attached for your information and use are legislative updates
prepared by the Government Affairs Division. I hope this will
prove useful in keeping you up-to-date on the key legislative
priorities.
BUDGET ISSUES
Federal Budget
1
Federal Budget Reform
2
Legislative Update
TAX ISSUES
Tax Legislation
4
MORTGAGE FINANCE
Financial Institutions Legislation
6
HOUSING PROGRAMS
Federal Housing Programs - HUD
10
Rural Housing Programs
13
VA Housing Programs
17
Military Housing
19
ENERGY AND THE ENVIRONMENT
National Energy Policy
22
Endangered Species
24
Coastal Barriers Resource System
26
Clean Air Act
28
Infrastructure
30
LABOR AND BUSINESS ISSUES
Construction Industry Labor Law Amendments
32
Davis-Bacon Reform
33
Parental Leave
34
Occupational Disease Notification and Prevention Act
36
Mandated Benefits
37
Job Corps
38
HOUSE AND SENATE COMMITTEES
SENATE COMMITTEES
39
HOUSE COMMITTEES
44
November 8, 1989
January 5, 1990 (Revised)
FEDERAL BUDGET
BACKGROUND
The Gramm-Rudman-Hollings Budget Act (GRH), requires Congress and the
Administration to meet declining deficit targets each fiscal year, leading to
a balanced federal budget by FY'93. The deficit target for the upcoming fisal
year, FY'91, is $64 billion. Should Congress and the Administration fail to
enact legislation by October 15, 1990, which comes within $10 billion of this
target, automatic sequestration is triggered, whereby across-the-board
spending cuts are activated to reduce the deficit to the actual target level.
The sequester is lifted once Congress and the Administration agree on final
budget reconciliation actions. Sequestration went into effect at the
beginning of the current FY'90, which began on October 1, 1990, and it is
expected to reduce the deficit by $4.6 billion in the 130 days Congress
allowed it to remain in effect.
STATUS
The President's FY'91 budget will be submitted to Congress just prior to
the convening of the Second Session of the 101st Congress. Details of the
package remain sketchy, but it appears likely that sizeable cuts in the
Defense budget, currently in excess of $300 billion, are likely. Several non-
defense proposals of recent years which Congress has chosen to reject are also
likely to reappear, including various "user fees" on mortgage credit program
activity and other government loan guarantee programs.
The "savings" cut from defense may either be applied to deficit reduction
or increased spending in other areas, with Congress ultimately making this
decision in consultation with the Administration. Neither the Executive nor
the Legislative branch has reached a consensus internally on this issue.
OUTLOOK
Much of the debate in the early months of 1990 may focus on the issue of
whether to apply the savings from defense to domestic programs or towards
deficit reduction. In addition, the political debate of raising taxes to
meet the deficit targets will begin anew.
COMMITTEE JURISDICTION
Senate: Budget Committee
House: Budget Committee
1
November 8, 1989
January 5, 1990 (Revised)
FEDERAL BUDGET REFORM
BACKGROUND
Numerous bills, introduced during the First Session of the 101st
Congress, addressing reform of the budget process remain pending for debate
during 1990. The following are of particular interest to NAHB.
Constitutional Amendment to Balance the Budget
(S.J.Res.183/H.J.Res.268) -- Sen. Simon (D-IL) and Rep. Stenholm
(D-TX) have introduced similiar legislation calling for ratification
of an amendment to the Constitution to require a balanced federal
budget. NAHB submitted a statement in support of this legislation.
Base-Line Budgeting (S.447) -- Sen. Boschwitz (R-MN) has introduced
legislation to deny automatic inflation increases from inclusion in
the "baseline" from which Congress and the Administration "cuts"
Ravo
spending to meet the Gramm-Rudman-Hollings deficit reduction
no
targets. The bill would disallow the current practice of calling
actions that slow the rate of growth in spending "cuts".
afficiation
Joint Committee on the Budget (S.391) -- Sen. Domenici (R-NM) and
Sen. Johnston (D-LA) have introduced legislation, supported at least
in part by the Administration, calling for a Joint Committee on the
Budget. The Joint Committee would be composed of the House and
Senate leadership of both political parties, as well as the
than
bipartisan leadership of the tax, spending, and the current budget
Speallie X490
committees in an effort both to expedite and unify the budgetary
process. The Joint Committee would originate two-year budget
resolutions, which would require the President's signature, but
would continue the current annual appropriations process.
Reassion
Spending Control Enhancement Act (S.6) -- Sen. Dole (R-KS) and Sen.
In 5.1553 fare
McCain (R-AZ) have introduced legislation to revamp the rescission
process. The legislation would require Congress to vote within 10
days to restore all or part of a Presidential request to withhold
specific funds appropriated by Congress. Under current law, inaction
50/
by Congress results in a defeat of a rescission request.
Coadis
Colex
Federal Credit Reform (S.584/H.R.1120) -- Sen. Heinz (R-PA) and Rep.
Gradison (R-OH) have introduced legislation to change the way
mecain
federal credit is treated within the budget. The purpose is to
provide better control over the $1.3 trillion of outstanding federal
credit. It would result, however, in "subsidies" being assigned to
all credit programs -- the difference between the rate one would pay
without a federal guarantee and the rate with the guarantee. The
legislation also would consolidate all federal credit within the
Treasury Department, although the individual programs would continue
to be run by their respective agencies/departments.
2
November 8, 1989
January 5, 1990 (Revised)
FEDERAL BUDGET REFORM (cont'd)
NAHB POSITION
NAHB supports an amendment to the Constitution to require a balanced
federal budget, and legislation to provide for base-line budgeting without
automatic inflation adjustments, a Joint Committee on the Budget and for the
revamping of the rescission process. NAHB opposes either legislative or
administrative changes in federal credit policy which could further restrict
the use of federal insurance and loan guarantees on mortgage loans.
COMMITTEE JURISDICTION
Senate: Government Affairs Committee
Judiciary Committee
House: Government Affairs Committee
Judiciary Committee
3
November 8, 1989
January 5, 1990 (Revised)
TAX LEGISLATION
BACKGROUND
The Revenue Reconciliation Act of 1989 passed amidst the last minute
flurry of activity prior to Congressional adjournment. Its passage marked the
first time since 1981 that federal tax legislation contained more positive
housing-related provision than negative.
Notably, the Act expands the exclusion from alternative minimum tax to
all income derived from home construction contracts regardless of the amount
of the taxpayer's production volume. Under prior law, large volume home
builders (over $10 million annually) had to include this income in the AMT
calculation. The Act also contained short-term extensions of the mortgage
revenue bond, low-income housing tax credit and targeted jobs tax credit
programs, as well as the provision which allows self-employed individuals to
deduct 25% of their health insurance costs.
Of the many positive programmatic changes to the low-income housing tax
credit, the most significant is the easement of the passive loss limitation as
it relates to investors in the credit. Prior law phased-out the amount of
passive losses/credits a taxpayer making over $200,000 could take, so that by
$250,000 no passive losses/credits were available. The Act repeals this
limitation as it relates to investors in the low-income housing tax credit.
Inclusion of this provision is the first reversal of the passive activity
rules enacted in 1986.
Even the potentially negative provisions of this Act were effectively
fought. Once again, severe limitations to the ability to make like-kind
exchanges of real estate were proposed. Once again, they were scaled back.
Only the imposition of a two-year holding period for exchanges made between
related parties was enacted, as well as a prohibition on tax-free swaps of
foreign property for U.S. property.
While the onerous provisions regarding non-discrimination in employer-
provided health care (Section 89) were repealed, this repeal was passed on the
Federal Debt Ceiling bill rather than on Reconciliation.
The only major disappointment faced this year was the failure of Congress
to re-enact favorable capital gains tax treatment. This issue will be
revisited next year, however, and will be one of the driving forces behind any
tax legislation.
Other issues that may arise this session include the expiring provisions,
estate freeze provisions and the taxation of unrelated business income of
associations. As always, the mortgage interest deduction is susceptible to
attack. NAHB will seek to have the contributions-in-aid of construction,
employee vs. independent contractor, and definition of "home construction
contract" (i.e., inclusion of condominiums) issues considered.
4
November 8, 1989
January 5, 1990 (Revised)
TAX LEGISLATION (cont'd)
STATUS
Congress likely will not begin to consider any of these issues until mid-
March at the earliest.
OUTLOOK
REASSURE
The scope of tax action taken this year will depend largely on the
political debate over capital gains. If capital gains passage is tied to an
increased tax rate, a large omnibus tax bill is possible.
COMMITTEE JURISDICTION
Senate: Finance Committee
House: Ways and Means Committee
5
November 8, 1989
January 5, 1990 (Revised)
FINANCIAL INSTITUTIONS LEGISLATION
BACKGROUND
On August 9, 1989, the President signed into law the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), a sweeping
reform measure aimed at resolving the current thrift crisis and ensuring that
a similar crisis does not recur. FIRREA provides for a substantial
recapitalization of the federal insurance fund for thrift deposits, imposes
new statutory and regulatory restrictions on permissible activities for
thrifts and restructures the regulatory agencies overseeing the thrift
industry. In addition to shifting some of the responsibilities of existing
financial agencies, FIRREA also creates several new agencies -- at least two
of which will be of direct interest to builders. The newly created Resolution
Trust Corporation (RTC) is charged with resolving insolvent thrifts and
disposing of the assets of those thrifts, including real estate assets. The
newly established Federal Housing Finance Board (FHFB) replaces the Federal
Home Loan Bank Board as overseer of the credit activities of the Federal Home
Loan Banks. The FHFB will also oversee the Banks' new Community Investment
and Affordable Housing programs, both required under FIRREA. The new FIRREA-
created agencies, as well as those agencies restructured under the law, began
carrying out their new missions the day the bill was signed into law.
OUTLOOK
Since returning from its August recess, the Congress has taken an active
oversight role with respect to FIRREA's implementation. Both the Senate and
House Banking Committees held hearings in October to receive testimony from
the regulatory agencies on how FIRREA is to be executed. NAHB testified on
October 19, 1989, before a House oversight panel on the RTC, expressing
builders' concerns regarding the impact which the RTC's asset disposition
policies may have on their industry, particularly in those regions already
experiencing glutted real estate markets and dropping prices. NAHB will
continue to work closely with both the Congress and the regulatory agencies to
ensure that the homebuilding industry is not adversely affected by decisions
made by the RTC or any of the other federal agencies charged under the
legislation.
NAHB POSITION
NAHB worked closely with the House and Senate during the drafting of
FIRREA, and will be closely monitoring the law's implementation, particularly
as it may affect the homebuilding industry and the continued viability of a
reliable housing finance delivery system. Because of its successful efforts
in improving the legislation in a number of areas, NAHB supported final
passage of FIRREA. Following is a brief summary of those aspects of FIRREA
which are of most direct interest to NAHB:
6
November 8, 1989
January 5, 1990 (Revised)
FINANCIAL INSTITUTIONS LEGISLATION (cont'd)
Loan-To-Value Ratios
The Senate version of FIRREA would have established maximum loan-
to-value ratios for real estate loans from banks and thrift
institutions.
The Congress agreed to delete this provision from the Conference
Report on FIRREA. Instead, the appropriate federal banking agencies
are charged with the responsibility of implementing loan-to-value
ratios.
Resolution Trust Corporation
The Resolution Trust Corporation (RTC) is charged with managing
insolvent thrift institutions and disposing of their assets. The
FDIC will be the exclusive manager of the RTC.
The general policies governing the RTC's duties are set by an
Oversight Board consisting of five members. Serving as members of
the Oversight Board are the Secretary of the Treasury (Chairman),
the Chairman of the Federal Reserve Board, the Secretary of the
Department of Housing and Urban Development and two persons
appointed by the President.
FIRREA required the FDIC to establish a Real Estate Asset Division
(READ) to assist and advise the RTC with respect to the management,
sale or other disposition of real property assets. The Division is
responsible for performing asset inventories and such other duties
as the FDIC prescribes.
The RTC is required to adopt special asset disposition procedures to
protect the economies of distressed areas. Distressed areas include
the States of Arkansas, Colorado, Louisiana, New Mexico, Oklahoma
and Texas.
The RTC is required to give low-income persons, public agencies and
non-profit organizations three months within which to purchase
moderate-priced RTC single-family properties before they are offered
to the general public. With regard to moderate-priced multifamily
properties, the RTC is required to give 45 days preference to public
agencies, non-profit organizations and for-profit entities that
agree to set-aside at least 35% of the units for low-income
families. The RTC could provide loans to non-profit or agency
purchasers of these properties at or below market interest rates.
7
November 8, 1989
January 5, 1990 (Revised)
FINANCIAL INSTITUTIONS LEGISLATION (cont'd)
Capital Standards
FIRREA imposes new capital standards effective 120 days after the
law's August 9, 1989, date of enactment.
Thrift institutions are required to maintain core capital of at
least 3% of total assets and tangible capital of 1.5% of total
assets, and to meet a risk-based capital standard.
Supervisory goodwill acquired before April 12, 1989, may be included
in calculating core capital in decreasing amounts over the next five
years. Beginning January 1, 1995, no supervisory goodwill may be
included in core capital.
Failure to comply with the new capital standards prior to January 1,
1991, could result in the regulator of savings institutions
restricting an institution's asset growth. After that date,
increases in assets must be prohibited or restricted to an amount
not exceeding net interest credited, accompanied by an increase in
tangible capital of not less than 6%, and only in such "low-risk"
assets as one- to four-family homes and fully secured consumer
loans. In addition, the institution must comply with a capital
directive, which can include restrictions on compensation and
dividends.
Qualified Thrift Lender Test (QTL)
Thrift institutions will be required to meet a tougher QTL test
beginning July 1, 1991. The new test will require that 70% of
"portfolio" assets be in qualifying assets, measured by a daily or
weekly average over a two-year period. Portfolio assets are total
assets minus the sum of goodwill and other intangible assets, fixed
assets and liquid assets up to 10% of total assets.
Qualifying assets include single-family loans, multifamily loans,
mortgage-backed securities, home equity loans, retail mobile home
loans, home improvement loans, FSLIC, FDIC and RTC notes and certain
loans on land that will be developed for residential purposes.
Up to 15% of the 70% requirement can be met by counting half the
mortgage loans made and sold in 90 days, certain service corporation
investments with heavy ties to residential real estate, starter home
developments (double credit) and loans for churches, schools,
nursing homes and small business (double credit if in areas of unmet
needs). Five percent of the 70% requirement can be met with
consumer and education loans.
8
November 8, 1989
January 5, 1990 (Revised)
FINANCIAL INSTITUTIONS LEGISLATION (cont'd)
An institution failing the QTL test will be required either to
convert to a bank charter or restrict its activities. Three years
after failing the test, an institution will be required to divest
itself of investments not permissible for national banks and to
repay advances.
Non-Residential Loans
Investments in non-residential real estate are limited by FIRREA to
four times an institution's capital.
Affordable Housing
Two new advance windows are required by FIRREA to be established at
FHLBanks. Under the Community Investment Program, which each bank
is required to establish, members can borrow at the FHLBanks'
consolidated obligations rate plus reasonable administrative costs
for community-oriented mortgage lending. Each bank also is required
to establish an Affordable Housing Program to subsidize the interest
rates on advances to members for below-market rate long-term lending
on low- and moderate-income owner-occupied rental housing.
To fund this program, the FHLBanks will contribute annually 5% of
net income in 1990 through 1993 (but not less than a total of $50
million per year), 6% of net income in 1994 (but not less than a
total of $75 million) and 10% of net income thereafter (but not less
than a total of $100 million a year).
Limits on Loans to One Borrower
In general, FIRREA subjects thrift institutions to the same limits
on loans to one borrower as apply to national banks. Exceptions are
provided for loans of up to $500,000 and real estate construction
loans under certain circumstances.
Appraisals
FIRREA requires, after July 1991, that any appraiser performing an
appraisal in connection with a federally-related estate transaction
must be state licensed or certifed.
COMMITTEE JURISDICTION
Senate: Banking, Housing and Urban Affairs Committee
House: Banking, Finance and Urban Affairs Committee
9
November 8, 1989
January 5, 1990 (Revised)
FEDERAL HOUSING LEGISLATION - HUD
BACKGROUND
In a rush for adjournment for 1989, Congress separated HUD reform
legislation from a more comprehensive package in both the House and Senate and
handed the HUD Secretary a major victory in the HUD Reform Act of 1989, which
Congress passed on November 22, 1989, and was signed by the President on
December 15, 1989.
The legislation will:
Requires HUD to establish, and adhere to, published selection
procedures in all HUD programs;
Establishes a new HUD Chief Financial Officer and FHA Comptroller;
Requires annual audited FHA financial statements;
Eliminates private investor loans under FHA;
Repeals the Title X Land Development Insurance program;
Places dealers and loan brokers who origiante Title I Home
Improvement Loans under stricter penalties for violations;
Subjects both consultants and developers to more stringent controls
and makes them subject to new penalties for violations of these
requirements;
Extends the current prepayment moratorium on privately owned,
federally assisted projects, until September 30, 1990;
0
Extends the reciprocity agreement on subdivision approval among FHA-
VA-Farmers' Home for six months from date of enactment; and
Establishes in law the procedures for determining rent increases in
subsidized Section 8 projects in light of the Ranier View Ninth
Circuit Court decision.
Additionally, numerous housing bills were introduced during the 101st
Congress, action on which remains pending. A brief summary of the various
proposals is listed below:
Sen. Sasser (D-TN) and Sen. Heinz (R-PA) have introduced S.197, The
Homeownership Assistance Act of 1989 -- to provide increased
mortgage limits in high-cost areas, to lower downpayments for first-
time homebuyers, and to modify the FHA-ARM and to promote two
demonstration programs with no downpayment at the time of closing.
10
November 8, 1989
January 5, 1990 (Revised)
FEDERAL HOUSING LEGISLATION - HUD (cont'd)
No new authorization of funds would be needed for this legislation.
The companion House bill, H.R.182, has been introduced by Rep. Price
(D-NC) and Rep. Wylie (R-OH).
Sen. Cranston (D-CA) and Sen. D'Amato (R-NY) introduced The National
Affordable Housing Act, S.566, in March 1989, then modified it in
late October, to include HUD reform and other changes. The bill
focuses on expanded homeownership opportunities, an increased role
for states and local governments in the production of affordable
housing, direct rental assistance in the form of rent credits in
lieu of either Section 8 certificates or vouchers, special needs
housing for the elderly, the handicapped, the homeless and families
with children who live in public housing and creates an Office of
Preservation to address expiring federal commitments and
preservation of the existing stock. Companion bills in the House
are H.R.1637, introduced by Rep. Roukema (R-NJ), Rep. Rangel (D-NY)
and Rep. Johnson (R-CT) and H.R.1532, introduced by Rep.
Kleczka (D-WI).
Rep. Gonzalez introduced H.R.1180, The Housing and Community
Development Act of 1989, a comprehensive two-year bill. The
legislation reauthorizes existing programs, incorporates The
National Housing Trust provisions to assist first-time homebuyers
with interest rate buydowns not to exceed 6% on a 30-year mortgage,
and incorporates H.R.973 described below.
Rep. Frank (D-MA) and Rep. Kennedy (D-MA) have introduced H.R.973,
The Affordable Housing Act, to add 5 million housing units over five
years. The legislation authorizes $10 billion per year for each of
the next five years to provide $9 billion a year in capital grants
for the rehabilitation and new construction of low cost housing and
$1 billion a year for community partnership grants to support cities
and states that assist non-profit groups to construct and
rehabilitate moderate and low-income housing. Funding for the
legislation would come from an increase in the alternative minimum
tax and transfers from the defense budget.
Rep. Vento (D-MN) and Rep. Saiki (R-HI) have introduced H.R.140,
Permanent Housing for Homeless Americans Act of 1989, to authorize
$2 billion a year for two years to create 140,000 housing units a
year for permanent housing for the homeless and those at or below
50% of the area median income.
11
November 8, 1989
January 5, 1990 (Revised)
FEDERAL HOUSING LEGISLATION - HUD (cont'd)
Sen. Mikulski (D-MD) has introduced S.408, The National Community
Service Act, to establish a civilian volunteer service program
modeled after the National Guard. In return for part-time service,
volunteers would receive a $3,000 voucher annually for each year of
service, maximum service of six years, which could be applied as a
downpayment for the principal residence by first-time homebuyers or
be used for educational expenses.
o
Rep. Kanjorski (D-PA) has introduced H.R. 3372, to limit eligibility
for FHA mortgage insurance based on borrower income of 115% or less
of the applicable area median family income and 125% or less of the
applicable statewide median income.
STATUS
Congress has not yet received the Administration's housing initiatives
legislation, highlights of which were released by President Bush and HUD
Secretary Kemp in October in speeches outlining the HOPE proposal --
Homeownership Opportunity for People Everywhere.
OUTLOOK
While housing leaders in Congress and among the industry are likely to
call for early enactment of long-term housing policy, it would appear that
final action on housing authorization is unlikely prior to September.
COMMITTEE JURISDICTION
Senate: Banking, Housing and Urban Affairs Committee
House: Banking, Finance and Urban Affairs Committee
12
November 8, 1989
January 5, 1990 (Revised)
RURAL HOUSING PROGRAMS
BACKGROUND
Funding
The Conference Committee on Agriculture Appropriations recently reported
out FmHA appropriations for FY'90. Total funding is $2,290,185,000.
This is an increase of $104,732,000 over the FY'89 appropriations. For
the first time, Farmers Home utilized virtually all of its 1989 rural
housing appropriations, including 100 percent of the Section 502 very
low-income appropriations.
The specific authorization of FY`90 FmHA appropriations is as follows:
Section 502 Low-Income
$797,532,000
Section 502 Very Low-Income
531,680,000
Section 504 Loans
11,330,000
Section 504 Grants
12,500,000
Section 509 Construction Defects
500,000
Section 514 Farm Labor Loans
1,480,000
Section 516 Farm Labor Grants
11,000,000
Section 515 Rental
579,900,000
Section 521 Rental Assistance
305,310,000
Section 523 Self Help TA
8,750,000
Section 523 Self Help Site Loans
500,000
Section 524 Site Loans
570,000
Section 533 Preservation
19,140,000
TOTAL
$2,290,185,000
Rural Housing Authorization Legislation
Both the House and Senate Banking Committees are considering legislation
that includes rural housing programs. The House bill (H.R.1180) was
introduced by the Chairman, Henry Gonzalez (D-TX) on March 1, 1989.
The Senate legislation (S.566) was introduced on March 15, 1989, by Sen.
Cranston (D-CA) and Sen. D'Amato (R-NY). S.566, The National Affordable
Housing Act, was developed by the Committee over the past two years to
address housing policy into the 1990's.
Section 502 Conversion to Section 515
At NAHB's request, the Senate bill allows for-profit developers to
convert Section 502 inventory properties to Section 515. This
legislation is currently restricted to nonprofit entities.
13
November 8, 1989
January 5, 1990 (Revised)
RURAL HOUSING PROGRAMS (cont'd)
Section 502 Deferred Loan Program
A deferred loan program under Section 502 is included in both H.R.1180
and S.566. Under the bill, the borrower may defer repayment of not more
than 20% of the principal (currently a homebuyer can get a loan reduced
down to 1% interest) if an average of 10% of the states very low-income
funds have not been used since November 30, 1989. Under the House bill,
the borrower may defer mortgage payments up to 50% of the amount due at
1% taking into consideration income, taxes, insurance, utilities and
maintenance. The House bill provides for a two-year demonstration
limited to 10% of each year's 502 funding with a recapture provision.
NAHB opposes a deferred loan program as negative amortization may occur.
Too much subsidy is also given to one household when there is
overwhelming need and tight budgets. Additionally, the homeowner may
still not be able to maintain the property even with the added subsidy.
Section 515 Prepayment Restrictions
The House bill, H.R.1180 places a restriction on the prepayment provision
of new Section 515 loans for up to 50 years. While S.566 does not have a
similar provision, it is likely that the rural prepayment section will be
looked at by the Senate as well. NAHB has voiced strong concerns over
unrealistic prepayment restrictions on both HUD and FmHA rental projects.
Underserved Areas
The Senate bill provides a set-aside of 1% of the funding in FY'90 and 2%
in FY'91 for underserved rural areas. If the money is not used by
September 1st of the fiscal year, it can be reallocated to other counties
that meet the requirements of targeted areas. The Secretary is to
designate 30 counties in FY'90 and 50 in FY'91 that have "severe, unmet
housing needs," for this purpose. NAHB has reservations about these
provisions because geographic designations often do not work.
The House bill simply states that the Secretary may not refuse to make a
loan in an area that is excessively rural in character or remote.
Housing Opportunity Partnership Program (HOP)
S.566 expands the supply of affordable housing in rural areas through the
HOP. HOP will be administered by the HOME Corporation which will also
act as a secondary market entity. Rural communities will be eligible to
receive assistance through HOP, which is a new program to provide housing
production funding divided equally between cities and states. There is
concern, however, that there is no requirement that states spend their
money in rural areas.
14
November 8, 1989
January 5, 1990 (Revised)
RURAL HOUSING PROGRAMS (cont'd)
H.R.1180 does not have similar provisions, but does provide for a
Community Housing Partnership Act for grants and loans to nonprofits and
local government for low- and moderate-income family rental and
homeownership units. In separate House legislation, a program similar to
HOP was introduced.
Section 502 Loan Guaranty Demonstration:
In a last minute change, legislative language which would have exempted
the Section 502 moderate income loan demonstration from the
appropriations process was dropped in Conference last year. The original
legislation passed in the 1987 Housing Act made provisions for a four-
year pilot program to allow unused funds under Section 502 to be used for
a moderate income program subject to appropriation's act approval. This
legislation allowed the lesser of 10% of the current allocation or the
average of the state's unused funds over the past three years to be used
for moderate income families who have incomes between 80% and 100% of
median.
This legislation made two important changes, however. First, it requires
the FmHA to implement regulations within four months. An interim rule
was published in the Federal Register on March 29. Second, it ensures
that unused very low-income funds can be used for the program. Due to
the targeting law, which states that 40% of the funds must go to very
low-income families, this was unclear.
Other Rural Legislation
The Rural Housing Improvements Act of 1989 (H.R.2388) introduced on May
17, 1989, also provides a low- and moderate-income guaranty program.
Income cannot exceed 100% of median and the mortgage amount cannot exceed
FHA limits of $67,500-$101,250. Loans are guaranteed 100% by FmHA in
areas not adequately served by other mortgage lending institutions. It
also expands the Federal Agriculture Mortgage Corporation to create a
permanent, less costly flow of mortgage credit.
Sen. Sanford also introduced legislation (S.1371) on rural housing on
July 20, 1989. This legislation is similar to S.566 in that it includes
a Section 502 deferred loan program, conversion of Section 502 inventory
properties to Section 515 and rural set-asides for underserved areas.
(As compared to S.566, S.1371 doubles the set-aside for underserved
areas.)
15
November 8, 1989
January 5, 1990 (Revised)
RURAL HOUSING PROGRAMS (cont'd)
S.1371 includes a moderate-income guaranty program similar to H.R.2388
but only provides for a 90% guaranty. This legislation also provides for
two programs for non-profits: a capacity building grant program for
technical assistance and preparation of applications and a Public-
Private Partnerships Demonstration Program to provide grants to non-
profit organizations for up to 60% of the development cost of a rental
housing project.
STATUS
NAHB testified before the House and Senate Appropriations Committees on
rural funding on April 12 and 20, 1989, respectively. The House Housing Bill
(H.R.1180) was introduced on March 1 and the Senate bill (S.566) on March 15,
1989. A hearing on the rural section of H.R.1180 was held on May 18, 1989,
and on the rural section of S.566 on June 21, 1989.
OUTLOOK
It is likely that additional funding will be provided for rural housing
in FY'90. It is also likely that some form of the Cranston-D'Amato Affordable
Housing Act will pass in the 101st Congress.
NAHB POSITION
NAHB supports additional funding levels for FmHA rural housing programs.
NAHB supports the Section 502 moderate income loan guaranty program. NAHB
supports 502 conversion to 515 for private developers. NAHB opposes 50 year
prepayment restrictions on Section 515 projects.
COMMITTEE JURISDICTION
Senate: Banking, Housing and Urban Affairs Committee/Subcommittee on
Housing and Urban Affairs
Appropriations Committee/Subcommittee on Agriculture, Rural
Development and Related Agencies
Budget Committee
House: Banking, Finance and Urban Affairs Committee/Subcommittee on
Housing and Urban Affairs
Appropriations Committee/Subcommittee on Rural Development,
Agriculture and Related Agencies
Budget Committee
16
November 8, 1989
January 5, 1990 (Revised)
VA HOUSING PROGRAMS
BACKGROUND
The VA Home Loan Guaranty Program has run into financial difficulties due
to the economic downturn in our energy and agriculture producing states over
the past few years. To counteract the high level of appropriations now needed
to fund the VA program, the House passed, H.R.1415, the FY'89 Mortgage
Indemnity Act, to try to make the program solvent. It is almost identical to
legislation passed by the House last September. The Mortgage Indemnity Act
requires the veteran to pay a 1-1/4% "premium" rather than the current 1% fee,
with the government also contributing 3/4 of 1% over three years. If a
downpayment of 5% or more is made, the veteran would only have to pay a 3/4%
fee. The House passed this legislation on June 7, 1989.
The Senate VA Committee passed similar legislation (S.1158/S.13), The
Home Loan Guaranty Restructuring and Solvency Act on June 27, 1989. The
Senate legislation differs from the House by dropping the fee to 1/4% if a
veteran makes a 10% downpayment, by allowing a 20% fee increase if it is
needed and by permitting a veteran to increase his entitlement by paying a
.01% fee for each $1,000 in increased entitlement with an overall cap of
$5,000. The total of the guaranty and any downpayment may not exceed 25% of
the purchase price.
NAHB urged Congress to reconsider implementing this program stating
that it would likely cost more than the contributions being made. A Peat
Marwick study on the Mortgage Indemnity Act said that the program would reach
a deficit after four years from which it would not recover over the next 30
years. NAHB suggested that if additional fees are needed, they should be from
the government's share. We also pointed out that now two revolving funds
would exist (the current Loan Guaranty Revolving Fund and the Loan Indemnity
Fund) and neither would be self-sufficient. We also opposed it on the grounds
that it took away the benefit nature of the VA program. NAHB supported the
optional entitlement increase provided in the Senate bill.
In all our Congressional testimony, NAHB has restated its support for an
adjustable rate mortgage which was dropped in the Conference Agreement during
deliberations on the 1987 VA Housing Act.
STATUS
Just prior to adjournment in 1989, Congress enacted the Veterans' Home
Loan Indemnity and Restructuring Act of 1989. This Act raises the basic loan
fee to 1.25%, and also protects veterans from liability to the VA due to
foreclosure. Moreover, it raises the loan guaranty entitlement to a maximum
of $184,000.
17
November 8, 1989
January 5, 1990 (Revised)
VA HOUSING PROGRAMS (cont'd)
OUTLOOK
It is likely that additional funding will be provided for rural housing
in FY'90. It is also likely that some form of the Cranston-D'Amato Affordable
Housing Act will pass in the 101st Congress.
NAHB POSITION
NAHB opposes unnecessary fee increases on federal housing programs. NAHB
supports an adjustable rate mortgage for VA buyers. NAHB continues to express
reservations about the financial soundness of H.R.1415, S.1158/S.13.
COMMITTEE JURISDICTION
Senate: Veterans Affairs Committee
House: Veterans Affairs Committee/Subcommittee on Housing and Memorial
Affairs
18
November 8, 1989
January 5, 1990 (Revised)
MILITARY HOUSING
BACKGROUND
The Department of Defense (DoD) wrote legislation (Capehart
Revitalization Act of 1989) to revive the 1950's Capehart program, which
provided HUD insurance for turnkey construction for military family housing.
DoD revised the Capehart program to include rehabilitation, as well as new
construction, and urged that funding be provided on an installment basis.
Because of problems with the Office of Management and Budget (OMB) which
insisted that full funding for the program be scored in the first year, the
Capehart Act was not included in DoD's FY'90 proposals.
In congressional report language last year, however, it was made clear
that scoring of budgetary resources for any given year should be limited to
the amount of the installment for that year. With the encouragement of House
committee staff that the legislation has merit and will help in resolving our
large military housing deficits, NAHB has met with the Congressional Budget
Office (CBO) to try to resolve the Capehart scoring problem. CBO commented
that we have provided them with an intelligent proposal and they are
continuing to evaluate it.
NAHB testified before the House Armed Services Committee and the House
Military Construction Appropriations Subcommittee on the Capehart
Revitalization Act which includes the following provisions:
Under the Capehart Act, builders would receive a lease of government land
and a construction contract. The lease agreement would be with a special
purpose shell corporation that is sponsored by the appropriate military
service. When the houses are complete, the builder would place an FHA-
insured mortgage on them, repay his construction loan and take any profit
from the mortgage proceeds. The corporation would simultaneously be
transferred to a military department. So that DoD becomes the owner of
the property, the law gives authority for the Secretary of Defense to
acquire capital stock in the mortgagor corporation and to guarantee the
payment of the corporation's notes. The houses, thus, become government-
owned family housing subject to a mortgage.
The legislation also authorizes the DoD to contract with a "master
developer" who would become the contractor for a number of projects on a
regional or national basis. He could use his own workers or subcontract
for design and construction. Preference must be given to bidders who
primarily do business in the project's location.
19
November 8, 1989
January 5, 1990 (Revised)
MILITARY HOUSING (cont'd)
The Section 801 and 802 military family housing pilot programs, which
were created in 1983, also encourage private-sector participation in providing
family housing for the military. These programs, however, are subject to the
annual appropriation of funds, which translates into a higher interest rate
for financing each project and some builder reluctance to participate in the
program. The Section 802 rental guaranty program generally has not been
successful because it is based on a serviceman`s allowance for quarters, which
is not high enough to cover high land and construction costs when amortizing
the loan. Authority for Section 801 expires September 30, 1989, and was
extended in the FY'90 Defense Authorization bill for one year in the House and
two years in the Senate. Section 802 authority expires on September 30, 1990.
Report language in the FY'90 DoD bill states that Section 802 will not be
extended unless changes made this year create a workable program. The changes
made in Section 802 include a separate maintenance contract and provisions for
utilities and other services to be provided by the government.
The FY'90 House DoD report states that "the portion of the defense budget
allocated to military construction is inadequate" and calls for the Executive
Branch to assist in overcoming budget scoring problems.
Real estate leasing authority (U.S.C.2667) also is used to encourage
private-sector financing of military housing. Government owned land is leased
to a privately-owned housing project at no cost. The government retains some
control over the quality of construction, maintenance and rents. It is also
dependent on a serviceman's allowance for quarters. A possible use of
U.S.C.2667 is the Soldiers' Housing and Retirement Equity program called
SHARE, which is also being considered at DoD. SHARE is designed to allow
active service members to purchase cooperative privately-financed housing on
military installations.
STATUS
NAHB's Military Family Housing Task Force has been meeting with the Air
Force on producing a housing prototype. The revised Capehart plan is the
result of these meetings. NAHB testified on the Capehart Revitalization Act
before the House on March 20, 1989 and before the Senate on April 6, 1989.
The FY'90 Defense Authorization bill has been acted on by both the House and
Senate.
OUTLOOK
The DoD supports private-sector participation in providing military
family housing and will continue to seek necessary legislative changes to
provide suitable housing to retain military personnel in the service.
Overcoming the budget scoring problem is the biggest obstacle to the
construction of new military family housing.
20
November 8, 1989
January 5, 1990 (Revised)
MILITARY HOUSING (cont'd)
NAHB POSITION
NAHB supports extension of the Sections 801 and 802 programs and
legislation which gives the Department of Defense the option of long-term
leasing of military housing from the private sector. NAHB supports revision
to the Capehart legislation to provide housing for our military personnel.
COMMITTEE JURISDICTION
Senate: Armed Services Committee/Subcommittee on Readiness,
Sustainability and Support
Appropriations Committee/Subcommittee on Military Construction
House: Armed Services Committee/Subcommittee on Military Installations
and Facilities
Appropriations Committee/Subcommittee on Military Construction
21
November 8, 1989
January 5, 1990 (Revised)
NATIONAL ENERGY POLICY
BACKGROUND
Several bills introduced in the Senate and House this year seek to
establish a national energy policy to reduce global warming and the
"greenhouse effect". One characteristic that the bills share in common is the
formulation and implementation of more stringent conservation measures to be
enforced within different types of industries to mitigate global warming.
Some of the proposals would establish a numerical energy efficiency rating for
residential buildings. While a mandatory uniform rating system would be
unacceptable to the industry, the enactment of a voluntary rating system is
probable.
The bills would also authorize long-term funding for the Department of
Energy's renewable energy and energy conservation research programs. These
research programs are critical to the housing industry because they would
assist in finding ways to achieve higher energy efficiency levels that
ultimately would lead to more affordable housing.
The following are some of the bills that have been introduced:
o
S.324
-- National Energy Policy to Reduce Global Warming
o
S.201
-- Protection of World Environment From Future
Degradation
o
S.169
-- Amend National Science and Technology Policy
o
S.333
-- Global Warming Protection Act
o
S.1355
-- Residential Energy Efficiency Ratings Act
o
H.R.711 -- Amend Energy Policy and Conservation Act
o
H.R.1078 -- Global Warming Prevention Act
o
H.R.1216/ -- Renewable Energy and Energy Efficiency
S.488
Technology Competitiveness Act
STATUS
Senate and House committees are extensively examining the causes of the
greenhouse effect and are considering a number of bills aimed at a variety of
global warming issues.
H.R.1216/S.488, legislation to improve the commercialization and
competitiveness of energy efficiency and renewable energy technologies, was
approved at the end of the first session of the 101st Congress.
22
November 8, 1989
January 5, 1990 (Revised)
NATIONAL ENERGY POLICY (cont'd)
OUTLOOK
Legislation to mitigate global warming should get a lot of attention in
1990. The policy initiatives that have been placed on the table are inclusive
of every type of industry, and some policy solutions may be enacted on a
piecemeal basis.
NAHB POSITION
NAHB opposes mandatory rating of homes according to their energy
efficiency level. However, NAHB supports legislation providing long-term
funding for federal housing energy research programs, particularly the U.S.
Department of Energy's solar and renewable energy and energy conservation
programs. However, NAHB opposes any federally, state or locally mandated
energy standards or labeling of homes according to their energy efficiency
level.
23
November 8, 1989
January 5, 1990 (Revised)
ENDANGERED SPECIES
BACKGROUND
In the early 1900's, Congress began efforts to protect individual species
facing possible extinction. While the laws helped to protect the American
Bald Eagle, grizzly bears and other identified species, it did little to
identify potential threatened species.
In 1973, Congress passed the Endangered Species Act making it a federal
offense to buy, sell, possess, export or import any species listed as
endangered or threatened or any product made from such a species. The law
also directed federal agencies to ensure that their actions, including
granting construction permits to private companies, did not jeopardize listed
species.
Congress has amended the law six times since 1973, including the five-
year reauthorization of the Act last year.
STATUS
Environmental groups, for several years, have asked the Fish and Wildlife
Service to take action on the backlog of over 1,000 species that qualify for
listing as either endangered or threatened. Another 3,000 species have been
nominated for listing and await further studies.
Many of these groups have learned to circumvent this listing procedure by
using judicial review or emergency listing procedures to accomplish their
goals. Recent court injunctions threatened northwest lumber production after
concern was raised regarding the habitat of the spotted owl. In Utah and
California, the emergency listing procedures of the desert tortoise have
stopped housing projects.
Across the country, concern over particular species is causing major
disruptions in land planning and development.
OUTLOOK
Although the Congress last year reauthorized the Endangered Species Act
for another five years, NAHB has begun a major initiative toward improving the
administrative and regulatory procedures of the statute. Furthermore, a broad
based coalition is being formed to resolve problems in the implementation of
the Act, while protecting threatened and endangered species.
24
November 8, 1989
January 5, 1990 (Revised)
ENDANGERED SPECIES (cont'd)
NAHB POSITION
NAHB believes the Act should be amended to require a proposed listing of
species to be accompanied by an economic impact statement, a determination by
the Fish and Wildlife Service that the species can be recovered and that a
notice of proposed listing be given to all affected landowners in critical
habitat areas.
NAHB also believes authorization should be given for area planning
processes to address multi-species conservation needs and to permit local,
state and federal governments to enter into agreements for area-wide, long-
range, maintenance and protection programs of protected habitats.
25
November 8, 1989
January 5, 1990 (Revised)
COASTAL BARRIERS RESOURCE SYSTEM
BACKGROUND
The federal interest in coastal barriers began in the early 1980's when
Congress and the Administration looked for ways to reduce the cost to the
government of federal flood insurance. The solution was the prohibition of
the issuance of new federal flood insurance coverage after October 31, 1983,
for "any new construction or for substantial improvements of structures
located on undeveloped coastal barriers." In 1982, Congress passed a more
all-encompassing law, the Coastal Barrier Resources Act of 1982 (CBRA), which
prohibited a variety of other forms of federal assistance for coastal
barriers. Examples of prohibited federal expenditures include disaster
relief, community block grants, FHA housing loans, water systems and sewer
treatment grants, and flood control and beach erosion projects.
Under the law, the Secretary of Interior was directed to designate
coastal barriers for inclusion under the Act and to define undeveloped coastal
barriers. Upon the Secretary's recommendations, 186 units totaling 666 miles
of shoreline and 452,834 acres of undeveloped, unprotected coastal barriers
from Maine to Texas have been adopted as part of the system. Furthermore, a
coastal barrier has been categorized as undeveloped using a density threshold
of one structure per five acres.
The Act is unique in that it does not define specific areas included in
the system but instead references a series of maps that depict the specific
boundaries of the individual units. The units cannot be added to, or deleted
from, unless Congress passes a law to do so. CBRA requires the Department of
Interior to report to Congress suggested modifications to the system.
STATUS
In December 1988, the Secretary of Interior submitted to Congress a
report recommending the Coastal Barriers Resource System be expanded from 186
units to 461 units, including coastal barriers on the Florida Keys, Virgin
Islands, and Puerto Rico. Adoption of this recommendation would expand the
system by 1.2 million acres along with more than 1,000 miles of shoreline.
Some groups have also recommended to Congress the inclusion of coastal
barriers and shoreline along the Pacific and Great Lakes coasts. While the
Department of the Interior has not agreed with these suggestions, they have
completed a survey of 160 miles of Great Lakes shoreline in response to a
request by Congress and have made an initial survey of barriers along the
Pacific Coast.
26
November 8, 1989
January 5, 1990 (Revised)
COASTAL BARRIERS RESOURCE SYSTEM (cont'd)
OUTLOOK
The House is currently considering H.R.2840, the Coastal Barrier
Improvement Act of 1989, introduced by Rep. Studds (D-MA). H.R.2840 would
reauthorize and amend CBRA to include the units recommended by the Department
of Interior along the Gulf, Atlantic, and Caribbean coasts. It would also
expand the system to areas along the Great Lakes identified as qualified for
inclusion by the Department of Interior. Finally, it would require the
Secretary to submit maps identifying boundaries of eligible coastal barriers
along the Pacific coasts. Similar legislation is expected to be introduced in
the Senate and consideration of CBRA is expected during the 101st Congress.
NAHB POSITION
NAHB currently is analyzing CBRA to determine what position to take
regarding its reauthorization.
27
November 8, 1989
January 5, 1990 (Revised)
CLEAN AIR
BACKGROUND
The Environmental Protection Agency (EPA) and states have been trying to
reduce ozone and carbon monoxide pollution since passage of the 1970 Clean Air
Act. Although pollution levels have been reduced, many areas have not met the
standards. The blame is variously attributed to EPA, state and local
regulators, Congress, pollution drifting from one state to another,
insufficient scientific understanding, incorrect projections of emissions
increases and opposition to expensive or unpopular controls.
EPA plans to impose a ban on construction of major polluting facilities
in up to 13 metropolitan areas by early 1989. By November 1988, EPA had
imposed the ban in the Los Angeles area, Ventura County, California and the
Chicago area. The 100th Congress passed legislation prohibiting imposition of
sanctions before August 31, 1988, but that moratorium has expired.
EPA is applying the ban only in areas for which states have not submitted
and fully implemented state implementation plans that meet all Clean Air Act
requirements. However, critics say that citizens lawsuits could force the ban
to be imposed in all areas where the air did not meet the standards by the end
of 1987.
All sides agree that legislation is needed, but there is much controversy
over which pollution sources should be targeted for additional controls.
Industry says many of the controls favored by environmentalists would not
produce enough health benefits to be worth the cost. Another major issue is
to what extent the Congress should mandate particular control measures rather
than leave decisions on how to control pollution to EPA and others.
STATUS
Senate Majority Leader Mitchell (D-ME) has scheduled the Clean Air bill
as the first order of business when the Senate returns on January 23, 1990.
After a speedy committee mark-up with limited debate and few amendments a
lengthy Floor debate is expected. In the House, the Administration's bill has
become stalled during Subcommittee consideration in the Energy and Commerce
Committee. However, the bill is expected to reach the House Floor by late
spring or early summer.
NAHB is working on changes to provisions that may require onerous
transportation control measures in non-attainment areas and the listing of
certain substances used in building materials as hazardous pollutants.
28
November 8, 1989
January 5, 1990 (Revised)
CLEAN AIR (cont'd)
OUTLOOK
Reauthorization of the Clean Air Act is certain to pose a test of
political influence and cooperation. During the eight years of the Reagan
Administration, little effort was made on behalf of the White House to revise
the Clean Air Act. Without leadership from the White House, Congress fell
into parochial bickering. With the appointment of William K. Reilly, a
professional environmentalist, to be the Administrator of EPA, and President
Bush's stated commitment to clean air, the mood is ripe on Capitol Hill for
all parties to come together and forge a comprehensive piece of legislation.
NAHB POSITION
A resolution urging NAHB to place appropriate emphasis on Congress when
it moves to reauthorize the Clean Air Act to ensure that the burden of air
pollution control is not shifted from the point source (autos, power plants,
industrial plants, etc.) to the "indirect source" (land use and transportation
controls, i.e., subdivision development) was approved during the 1988 Fall
Board of Directors meeting in Reno.
29
November 8, 1989
January 5, 1990 (Revised)
INFRASTRUCTURE
BACKGROUND
With increasing attention being paid to America's aging and often
stagnant infrastructure, Congress is finding itself bombarded with calls for a
massive infusion of federal funds for public works. However, hamstrung by
fiscal spending constraints, Congress is looking for alternative and
innovative sources of funding.
During his confirmation hearing before the Senate Environment and Public
Works Committee, Transportation Secretary Samuel K. Skinner recognized the
problems of America's infrastructure and stated that he believed it should be
part of a long-range transportation policy -- he further promised that
developing this policy would be a priority item.
Secretary Skinner stated, "It's quite clear that our nation's
infrastructure is in need of substantial funding and substantial repair. But
before we find ways to solve these problems we've got to have a policy that
lets us look long-range as to what our needs are going to be, identify the
short-range steps and the areas that need immediate solution and then begin to
implement those steps as part of a long-range plan." Commenting on additional
highway spending, Skinner stated, "We've got to identify just what is
enough, what is realistic to do, and where we're going to raise the additional
funding." Many in Congress think that they have innovative approaches to
assist Secretary Skinner.
STATUS
Sen. Moynihan (D-NY) has introduced legislation to help finance
infrastructure projects. S.220 would set up a National Infrastructure
Corporation to provide low-interest loans through a revolving fund for
projects of regional and national importance. The loans would cover no more
than 33% of the total cost of a project, with the rest of the cost to be
picked up elsewhere. The corporation would be financed by interest on the
unspent balances in transportation trust funds -- the interest is about $2.3
billion a year.
Sen. Domenici (R-NM) has also introduced legislation, S.700, which would
provide tax-exempt status for bonds used to finance environmental
infrastructure. Environmental infrastructure would include sewage, solid
waste, hazardous waste or water facilities for the general public.
A handful of other bills have been introduced that would create emergency
public works jobs to work on infrastructure repair projects and the
establishment of federal programs to assist state and local governments with
the repair and rehabilitation of aging public works facilities.
30
November 8, 1989
January 5, 1990 (Revised)
INFRASTRUCTURE (cont'd)
NAHB POSITION
NAHB has long been involved with many infrastructure issues, such as the
Clean Water Act. NAHB is working hard to make sure that infrastructure
becomes and remains one of its long-term priorities. As part of this effort,
a Builder Task Force on Infrastructure, charged with examining all facets of
this issue including: financing, impact fees, the federal role, and
state/local input, has been created to develop policy.
During the 1989 Atlanta Convention, the Board of Directors approved a
broad infrastructure policy statement urging Congress to establish a category
of tax-exempt financing instruments for infrastructure activities that would
remove such instruments from state-imposed restrictions, allow favorable use
of arbitrage, eliminate the application of the alternative minimum tax and
shorten depreciation periods for such activities.
The Board also called for the establishment of state infrastructure banks
to provide grants, loans, and credit-enhancement support for infrastructure
activities -- and the establishment of a national infrastructure bank, similar
to Fannie Mae, to provide long-term financing for infrastructure projects on
"favorable" terms.
31
November 8, 1989
January 5, 1990 (Revised)
CONSTRUCTION INDUSTRY LABOR LAW AMENDMENTS
BACKGROUND
Sponsors of the "anti-dual shop" legislation, also known as "anti-double
breasting," (H.R.931/S.807) face an uphill battle trying to foster a majority
of support in the House and Senate for the bill. H.R.931/S.807 would impose
the collective bargaining agreements of a unionized construction firm on all
non-unionized construction firms over which it has substantial common
ownership or control. It would change the balance of employment relationships
in the construction industry by giving unions greater powers to organize
employees. Current law adequately addresses illegal dual shops and pre-hire
agreements.
STATUS
H.R.931 was referred to the House Subcommittee on Labor-Management
Relations, and S.807 was referred to the Senate Subcommittee on Labor.
OUTLOOK
The House is not likely to vote on H.R.931 until either the Senate Labor
and Human Resources Committee has reported out S.807 or the Senate leadership
makes a commitment to support the bill.
NAHB POSITION
NAHB opposes amendments to the National Labor Relations Act that would
effectively bar "dual shop" operations or alter the enforceability of pre-
hire agreements.
32
November 8, 1989
January 5, 1990 (Revised)
DAVIS-BACON REFORM
BACKGROUND
A House/Senate conference on the FY'90 Defense Authorization bill
(H.R.2461/S.1352) dropped an amendment that would have made minimal changes to
the Davis-Bacon threshold while expanding the scope of the law. It had been
attached to the House bill during the floor debate.
The amendment would have exempted all federally funded or federally
assisted construction contracts of less than $50,000 and repair and renovation
contracts of less than $15,000 from the Davis-Bacon Act. It also would have
expanded the law, however, by giving individuals, associations and unions the
right to sue employers in Federal District Courts for alleged violations of
the Davis-Bacon Act. This expansion of the law could lead to extensive
litigation against construction employers, and would change the way the law is
enforced.
The Davis-Bacon Act currently requires contractors on federally funded or
federally assisted construction projects of more than $2,000 to pay local
prevailing wages as determined by the Department of Labor.
STATUS
A House/Senate Conference Committee agreed to drop the amendment that had
been attached to the Defense Authorization bill.
OUTLOOK
Congress is expected to reconsider reform of the Davis-Bacon law next
year.
NAHB POSITION
NAHB urges Congress to reform the Davis-Bacon Act by increasing the
threshold significantly to allow for effective enforcement of the Act by the
Labor Department and encourage small construction employers to bid on
government projects.
33
November 8, 1989
January 5, 1990 (Revised)
PARENTAL LEAVE
BACKGROUND
H.R.770/S.345, legislation requiring companies to provide unpaid, job-
protected leave to workers has been side-tracked in the House and Senate after
being favorably reported out of Committee last April in both Houses.
Below is a side-by-side comparison of the House and Senate bills.
H.R.770
S.345
SPONSORS
Rep. Clay (D-MO),
Sen. Dodd (D-CT)
Rep. Roukema (R-NJ)
Sen. Packwood (R-OR)
Rep. Schneider (R-RI)
Sen. Hatfield (R-OR)
Rep. Hawkins (D-CA)
Sen. Jeffords (R-VT)
(151 co-sponsors)
(20 co-sponsors)
FAMILY LEAVE
10 weeks over 2 year
10 weeks over 2 years
period for birth,
same coverage
adoption or serious
illness of a dependent.
MEDICAL LEAVE
15 weeks over 1 year
13 weeks over 1 year
period for serious
same coverage
illness or injury.
EMPLOYER COVERAGE
50 or more employees;
20 or more employees
35 or more employees
after 3 years of enactment.
EMPLOYEE
1000 hours within
900 hours within
ELIGIBILITY
12 month period with
12 month period with
same employer.
same employer.
CERTIFICATION
Employer may require
SAME
doctor certification.
Second opinion may be
required at employer's
expense.
STUDIES
Two-year study on effects
SAME
COMMISSIONED
on small business.
34
November 8, 1989
January 5, 1990 (Revised)
PARENTAL LEAVE (cont'd)
STATUS
The parental leave bills in the House and Senate have been reported out
of committee and are ready for Floor consideration.
OUTLOOK
The only compromise guaranteed to bring opponents on board -- making the
"leave" benefit voluntary, not mandatory -- is not open to negotiation.
President Bush has threatend to veto any parental leave bill that is
mandatory.
NAHB POSITION
NAHB opposes legislation that would establish a mandatory national policy
on job leave for child or parental care.
35
November 8, 1989
January 5, 1990 (Revised)
OCCUPATIONAL DISEASE NOTIFICATION AND PREVENTION
BACKGROUND
Sen. Metzenbaum (D-OH) and Rep. Gaydos (D-PA) have introduced the High
Risk Occupational Disease Notification and Prevention Act, S.582/H.R.3067.
This legislation would establish a new federal bureaucracy within the
Department of Health and Human Services (HHS) that would duplicate many of the
responsibilities regarding occupational health concerns that now rest within
the jurisdiction of the Occupational Safety and Health Administration (OSHA).
It would create a Risk Assessment Board within HHS to determine employee
populations at risk of incurring an occupational disease because of exposure
to workplace hazards and individually notify those workers of the degree of
risk.
S.582/H.R.3067 are very similar to high risk bills considered in the
previous Congress. The new bills limit the costs of medical monitoring for
small businesses, and prohibit stress claims related to any aspects of the
notification process.
STATUS
S.582 was introduced in the Senate on March 15, 1989. The House bill,
H.R.3067, was introduced on August 1, 1989.
OUTLOOK
Oversight hearings are expected to be held next year on S.582/H.R.3067.
However, this legislation may take on a new dimension as Congressional
committees begin consideration of legislation to reform the Occupational
Safety and Health Administration.
NAHB POSITION
NAHB opposes legislation that would create a new federal program for
health risk notification that would be costly and duplicate OSHA's
responsibility to protect workers' health.
36
November 8, 1989
January 5, 1990 (Revised)
MANDATED BENEFITS
BACKGROUND
The Senate Committee on Labor and Human Resources reported legislation,
S.768, that would require all employers to provide a minimum package of health
insurance benefits to their employees working at least 17-1/2 hours per week.
Sen. Kennedy (D-MA) is the sponsor of the Senate bill, S.768, The Minimum
Health Benefits for All Workers Act. Rep. Waxman (D-CA) is the sponsor of the
House companion legislation 1845.
The bills contain no medical or pre-existing condition exclusions and
require employers to pay for 80% of the premium. The deductible would be
limited to $250 for an individual and $500 for a family.
STATUS
On July 12, 1989, S.768 was marked-up by the Senate Labor and Human
Resources Committee. The House has yet to act on H.R.1845, which was referred
to the House Energy and Commerce Subcommittee on Health and the Environment.
OUTLOOK
Proposals to expand access to health insurance -- ranging from public-
private sector initiatives to a universal health care arrangement -- will be
explored by the House and Senate labor and tax-writing committees.
NAHB POLICY
NAHB opposes federal legislation mandating all private employers to
provide all employees with specific minimum health benefits coverage.
37
November 8, 1989
January 5, 1990 (Revised)
JOB CORPS
BACKGROUND
Job Corps is a residential education and training program which supplies
thousands of entry level workers for the housing and building industry.
STATUS
On November 21, 1989, Congress passed a deficit reduction measure, the
Budget Reconciliation Act, which cut overall Job Corps funding for FY'90 by
approximately 1.4% from the amount allocated in the Labor, Health and Human
Services, and Education Appropriations bill.
Congress had approved Job Corps funding at $813 million in its FY'90
appropriations bill; however, the 1.4% reduction cuts back the final
appropriation to $802.2 million. Compared to last year's $741.8 million
appropriation, Job Corps will still receive an 8.1% boost in funding.
NAHB POLICY
NAHB supports the growth and expansion of construction craft training
into additional training centers throughout the country. Job Corps represents
a proven method of supplying the construction industry with a supply of well
trained and motivated workers.
38
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31
21ST STORY of Level 1 printed in FULL format.
Copyright (c) 1988 The Washington Post
November 26, 1988, Saturday, Final Edition
SECTION: METRO; PAGE B1
Performed for
LENGTH: 1229 words
NHBA in 11/89
HEADLINE: Friend to the Homeless Has Been There Herself
BYLINE: Patrice Gaines-Carter, Washington Post Staff Writer
Anecdote
BODY:
A stream of girls and boys runs through Ella McCall's door each afternoon.
They hop off the school bus and head for her office to show off their "A"
papers. They cry and tell her about the kids who taunt them and shout, "Dirty
babies!" because they are homeless.
McCall, a social worker at Capitol City Inn, a Northeast Washington shelter
for homeless families, draws each child onto her lap, wipes away all tears, and
whispers, "Love ya, baby. Love ya."
McCall understands the children, residents say. Maybe that is because she is
a mother of eight and grandmother of 12. or because she is a confident,
compassionate woman who has a master's degree in social work from Catholic
University. Or perhaps because Ella McCall was once homeless herself.
For the children, McCall's office is a haven from their make-believe
playground -- a discarded mattress lying next to a garbage dumpster outside the
motel they call home. For teen-agers and parents, mostly women, McCall's office
is a warm respite from their dim, narrow rooms.
"Some people say they are going to help us, but she does," said Joyce
Stoddard, who lives at the shelter with her three children. "Whatever we need,
if she doesn't have it today, she'll have it tomorrow - even if she has to beg
for it. They moved her from here one time and it was like taking away the
sunshine from this place."
"Because of Ella's earlier years, she has a full understanding of what
happens when people need an extra hug, an extra boost," said Andree Gandy,
executive director of People Involvement Corporation, where McCall once worked.
"She has made some people care for themselves, probably for the first time ever.
When they achieve a goal you wonder whether they did it for themselves, or if
they did it for her because she expected it from them."
McCall, who gives her age as "the very late forties," chooses her anecdotes
carefully, mindful not to embarrass or hurt her own eight children.
She had her first child at age 14, when she was in the seventh grade at Shaw
Junior High School in the District. She dropped out after one day of high
school.
"At that time people looked down on you if you had a child," she said. "I was
a baby raising a baby." She got jobs washing dishes and baby-sitting. When her
spirits were low, she looked to her mother for inspiration. Her parents had
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(c) 1988 The Washington Post, November 26, 1988
divorced when McCall was young, and although her mother remarried, McCall's
stepfather died when she was 9 years old. Her mother was left to bring up four
children alone.
"I remember my mother working in the cafeteria of a hotel for $ 13 a week,"
McCall said. "We were poor, but I didn't know it until I was about 14. We lived
in
a raggedy house, but with an extended family of aunts and uncles."
By the time she was 18, McCall had three children. Unable to find work in the
District, she went to New York, leaving the babies behind to be cared for by her
mother. In New York, she worked as a sleep-in domestic for a family on Long
Island. On off days, she caught a train to Washington to visit her children.
Later, she worked a string of factory jobs, living in an apartment with some
girlfriends. Her life went haywire for a while. "I didn't get involved in drugs,
but I got involved with someone who was abusive to me," McCall said. She started
working at bars, as a waitress and barmaid. She drank too much, too often, she
said. She got married and had two more children.
Finally, she left her husband and found herself homeless. She spent a night
riding one subway after another with her two small children. The next morning,
she went to a Harlem welfare office, sobbing. Welfare workers gave her a room in
a hotel that served as a group home for the homeless.
Later, she got a cold water flat and went on welfare. She dreaded visits by
social workers, who "investigated you, dropping by anytime, looking under your
bed for men," she said.
Soon she was leading and organizing welfare rights demonstrations, taking her
babies with her on marches through New York streets.
McCall and her husband reunited and moved into a housing project. She
enrolled in night school and got her high school equivalency diploma. The couple
moved to the District, then separated again and eventually divorced, but not
before having twins.
Back in Washington in 1968, McCall got a job as a counselor. Her supervisor,
Gandy, encouraged her to enter a free college program. "Ella was a person filled
to the brim with unrealized dreams," Gandy recalled. "But she found her niche -
her ability to be in a giving capacity to people evicted, very ill, hungry, very
poor."
McCall graduated from American University with a degree in criminal justice.
She went on to earn a master's in social work from Catholic University, even
though "I hated social workers. I remembered they had given me the blues when I
was on welfare."
She has been a social worker for 11 years now, most of that time counseling
the homeless. McCall interviews new families and draws up a plan to move them
out of the shelter. In an average day, she may counsel married couples or knock
at a door to investigate reports that children are being left alone or abused.
There are 570 children at the shelter and they are all McCall's babies. "A
lot of them have not been touched," she said. "It's not that their parents don't
care, but they are going through 50 much."
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(c) 1988 The Washington Post, November 26, 1988
"It's like she's a doctor," said Susie Goldman, a board member of Voices from
the Street, an organization that has organized homeless people into a theater
group that performs its own works about homelessness. "Everyone who comes
through her door believes she can make it all better, no matter how bad it is."
McCall is the only member of the troupe who is not currently homeless. During
a recent performance at the National Home Builders Association Conference in
the District, she spoke about "the most endangered children in the world," those
at her shelter. Her voice rose with emotion as she interjected her own words
into the script.
She repeated her street mantra, "Love ya, baby." She screamed "Save the
babies! Save the babies!" Strangers walked over to her afterward, offering hugs,
handshakes and compliments.
Alice Avery, who lives in the Capitol City Inn, said that after one of her
many sessions with McCall, she was inspired to write a poem. It ends: "When they
teach a course in good social work, the students one and all will have at the
desk, the best of the rest, the master -- Ella McCall."
"I have tried to follow the adage that charity begins at home by teaching my
children to care," said McCall, who has remarried and helped raise a stepson.
Her younger children have collected clothes and donated them to the shelter. A
daughter who is a nurse organized coworkers to put on a fair for children at the
shelter. All of McCall's family members visit the shelter from time to time.
Voices from the Street has performed for members of Congress and for the cast
of "Les Miserables." With the money she earns from performances, McCall has
started the "Love ya baby fund" to buy diapers, take children to dinner or help
buy school supplies and shoes.
"If I had money I'd like to build housing for homeless families," McCall
said. "These children have a right to housing and a decent place to stay. We're
losing our children. Everything I do is to help save the babies."
GRAPHIC: PHOTO, "IF I HAD MONEY I'D LIKE TO BUILD HOUSING FOR HOMELESS
FAMILIES," SAYS SOCIAL WORKER ELLA MCCALL, WHO WORKS AT THE CAPITOL CITY INN IN
NORTHEAST WASHINGTON. DUDLEY M. BROOKS
TYPE: DC NEWS, BIOGRAPHY
SUBJECT: DISTRICT OF COLUMBIA; HOMELESS; SOCIAL SERVICES
NAMED-PERSONS: ELLA MCCALL
ENHANCEMENT: AGE
LEXIS® NEXIS® LEXIS® NEXIS
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33
HOME
274
HOME
There cannot be named a pursuit or
The strength of a nation, especially of
A dining
enterprise of human beings, in which
a republican nation, is in the intelligent
there is so little possibility of failure,
eager, hun
and well-ordered homes of the people.
be a mere
as praying for sanctification.-J. W.
-Lydia H. Sigourney.
Alexander.
comes an
Six things are requisite to create a
If this w
HOME.-To Adam paradise was home.
"happy home." Integrity must be the
is to be f
-To the good among his descendants,
architect, and tidiness the upholsterer.
and confide
home is paradise.-Hare.
It must be warmed by affection, lighted
where the
Without hearts there is no home.-
up with cheerfulness; and industry must
out severe
Byron.
be the ventilator, renewing the atmos-
only after
Our home joys are the most delightful
phere and bringing in fresh salubrity day
considered.
earth affords, and the joy of parents in
by day; while over all, as a protecting
Just a V
canopy and glory, nothing will suffice
their children is the most holy joy of
love and
except the blessing of God.-Hamilton.
humanity. It makes their hearts pure
James Wh
and good, it lifts men up to their Father
The paternal hearth, that rallying
We have
in heaven.-Pestalozzi.
place of the affections.-Washington Irv-
consider lu
ing.
The first indication of domestic hap-
ment for u
piness is the love of one's home.-Mont-
There is a magic in that little word,
wealth and
losier.
home; it is a mystic circle that sur-
peace of m
rounds comforts and virtues never known
the sage 1
A hundred men may make an encamp-
beyond its hallowed limits.-Southey.
Collins.
ment, but it takes a woman to make a
home.-Chinese Proverb.
Be it ever so humble, there's no place
Every ho
like home.-John Howard Payne.
friendship i
It was the policy of the good old
Home is the seminary of all other in-
home, swee
gentleman to make his children feel that
stitutions.-E. H. Chapin.
can rest.-}
home was the happiest place in the
world; and I value this delicious home-
Eighty per cent of our criminals come
Hard ind
feeling as one of the choicest gifts a
from unsympathetic homes. - Hans
come to fe
Christian Andersen.
to have an
parent can bestow.-Washington Irving.
He is the happiest, be he king or peas-
America's future will be determined
home with,
by the home and the school. The child
you might
ant, who finds peace in his home.-
Goethe.
becomes largely what it is taught, hence
Fullerton G
we must watch what we teach it, and
A man is
When home is ruled according to
how we live before it.-Jane Addams.
when at hor
God's word, angels might be asked to
stay with us, and they would not find
There is no happiness in life, and
away.-J. G
themselves out of their element.-Spur-
there is no misery, like that growing out
Home, th
of the dispositions which consecrate or
blest, a dea
geon.
desecrate a home.-E. H. Chapin.
rest.-Robe
Households there may be, well-ordered
The most essential element in any
Stint you
and abounding in comfort-families
home is God.-Frank Crane.
other things
there may be, whose various members
in brighteni
live in harmony and love-but homes, in
The family circle is the supreme con-
a brilliant
their true sense, there cannot be where
ductor of Christianity.-Henry Drum-
day, and ma
there is not one whom manly choice has
mond.
To most
made a wife and infant lips have learned
Many a man who pays rent all his
more than
to honor with the name of mother.-
life owns his own home; and many a
years. The
Dudley A. Tyng.
family has successfully saved for a
There's no
Home is the resort of love, of joy, of
home only to find itself at last with
and one's e
peace, and plenty, where supporting and
nothing but a house.-Bruce Barton.
the good sid
supported, polished friends and dearest
Christianity begins at home. We build
A good
relatives mingle into bliss.-Thomson.
our characters there, and what we be-
which is als
It is indeed at home that every man
come in after years is largely determined
true culture
must be known by those who would
by our training and home environment.
there can b
make a just estimate either of his virtue
-Tillman Hobson.
speak it rev
or felicity; for smiles and embroidery
Men are free when they are in a liv-
for mind and
are alike occasional, and the mind is
ing homeland, not when they are stray-
healthy to g
often dressed for show in painted honor
ing and breaking away.-D. H. Law-
This fond
and fictitious benevolence.-Johnson.
rence.
known place
NATIONAL ASSOCIATION
OF HOME BUILDERS
BACKGROUNDER HOUSING
THE PUBLIC AFFAIRS DIVISION
(202) 822-0406
Table of Contents
Housing Market Indicators
Housing Update
Housing's Direct Economic Impact
Interest Rates
Homeownership Rates: National and by Region
Homeownership Rates by Household Age
Housing Starts, Permits, Sales Prices, Sales Volume
Housing Starts Review
Top 20 Metro Areas for Residential Building Permits in 1987
Top 20 Metro Areas for Residential Building Permits: First Nine Months of 1988
National Residential Building Permit Activity: First Nine Months of 1988
New Home Prices
Existing Home Prices
Home Prices by City
Volume of New and Existing Home Sales
Buyers and Their Homes
New Home Size
Characteristics of New Single-Family Homes
Cost Components of a New Single-Family Home
Affordability: Trends in Homeownership and Rental Housing
Itemized Cost Breakdown of a New House
Materials Used in Constructing a Single-Family Home
Construction Trades and Crafts
Building Codes
Rental Housing
Rental Vacancy Rates
Median Asking Rents
Types of Housing
Townhouse Construction
Multifamily Housing
Second Homes
Pre-Fabricated Housing Systems
Mobile or Manufactured Homes
General Remodeling Market
Home Finance
The Mortgage Market
FHA & VA
Affordability of Housing
Mortgage Payment Tables
Mortgage Revenue Bonds
Mortgage Delinquency
The Mortgage Interest Deduction
Secondary Mortgage Market
Demographic Trends
Historical Perspective
Housing Today
Profile of the National Association of Home Builders
Housing Update
Forecast
The events of the year in housing were framed against a backdrop of a slowing
expansion coming in for a "soft landing," a period in which growth slows to a crawl but
a recession is averted.
Mortgage interest rates, a key determinant of housing sales and starts, peaked in the
first quarter at more than 11 percent after hovering in the 10 1/2 percent range for most
of 1988. By the end of 1989, after several ups and downs, effective interest rates (including
points) were about 10 percent for fixed-rate mortgages.
The Federal Reserve Board, walking a narrow line between inflation and recession,
kept tight reins on monetary policy throughout much of the year. NAHB was in close
contact with the Federal Reserve Board during the year, and its senior officers met with
Alan Greenspan, the board's chairman, several times to urge an easing of monetary policy
to lower mortgage interest rates.
It was the Federal Reserve Board's gradual easing of monetary policy that resulted,
during 1989's last quarter, in the lowest mortgage interest rates in more than a year.
The housing industry finished 1989 with 1.4 million housing starts, a 5.9 percent
decrease from 1988. There were just over 1 million single-family starts, but multifamily
housing continued the downward spiral caused by the Tax Reform Act of 1986 with only
382,000 starts.
NAHB projects about 1.4 million housing starts in 1990, about the same number of
starts as in 1989.
Mortgage Interest Rates
Mortgage commitment rates went as high as 11.14 percent in 1989. Rates are expected
to decline slightly to the 9 1/2 percent range during the first half of 1990 and increase
slightly during the second half of the year.
Each one percent increase in the interest rate changes the home buying decisions of
about 450,000 households during the course of a year and a one percent interest rate
increase reduces by more than two million the total number of households with incomes
high enough to qualify to purchase a median priced new home.
Housing Affordability
The nation's homeownership rate peaked in 1980 and has been dropping since then.
The decline has been most pronounced among young households. The homeownership
rate for households in the 24-29 age group fell from 43.3 percent in 1980 to 36.4 percent
in 1987 and 35.9 percent in the third quarter of 1988. For households in the 30-34 age
group, the rate fell from 61.1 percent to 53.5 percent in 1987. It dropped slightly during
the first half of 1988, but in the third quarter increased to 54.2 percent.
Just as first-time buyers are having more difficulty finding affordable housing, renters
are faced with an affordability crisis as well. Many households pay 30, 40 or even 50
percent of their incomes for rent and the rent burden has become particularly onerous
for young single-parent families whose rents have increased from 34.9 percent of their
incomes in 1974 to 58.4 percent in 1987.
Homes and Buyers
The median price of a new home sold during the third quarter of 1988 was $116,900,
up from the median of $104,500 recorded in 1987.
About two-thirds of all new homes built today are larger "trade-up" homes with a full
array of amenities. However, the first-time buyer market remains strong and an estimated
8.5 million young families will purchase their first homes during the next four years.
Housing's Direct Economic Impact
Residential construction stimulates the economy directly by generating jobs, wages
and tax revenues and indirectly as the demand for goods and services created by the
construction of new homes "ripples" through the economy.
Although it's difficult to gauge the indirect impact, the direct impact of residential
construction on the economy is profound.
Five-Year Impact
From 1983 to 1987, the nation's home builders constructed 8.6 million new houses
and apartment units, creating 2.5 million full-time jobs and generating $55 billion in wages
each year. Local, state and federal tax revenues generated by the new construction totaled
$113 billion over the five-year period. In addition, property taxes generated another $12
billion for local governments each year.
One-Year Impact
The construction of 1,000 single-family homes generates 1,800 worker-years of employ-
ment in construction and construction-related industries; $39.3 million in wages; $16.1
million in combined federal, state and local tax revenues; $1.6 million in local property
taxes during the first year and $19 million in local property taxes over 20 years assuming
a five percent annual increase in property values.
The construction of 1,000 multifamily units generates 882 worker-years of employment
in construction and construction-related industries; $19 million in wages; $7.8 million in
combined federal, state and local tax revenues; $900,000 in local property taxes during
the first year; and $11.4 million in local property taxes over 20 years assuming a five
percent annual rise in property values
Employment and Wage Impacts of Constructing 1,000 Housing Units in 1986
Single-Family
Multifamily
Additional
Additional
Additional
Additional
Employment
Wages
Employment
Wages
(Man-Years)
($ Million)
(Man-Years)
($Million)
All Industries
1,800
$39.3
882
$19.1
Construction
750
18.2
376
9.1
On-Site
653
15.8
335
8.1
Off-Site
97
2.4
41
1.0
Land Development
235
5.7
65
1.6
Other Industries
815
15.4
441
8.4
Manufacturing
390
8.0
227
4.7
Trade, Transport. & Services 333
5.3
165
2.6
Mining & Other
93
2.1
49
1.1
The employment estimates are based on unpublished data from the Bureau of Labor Statistics, U.S. Department of Labor, of the employment requirements
for building housing during 1981; NAHB assumes these employment requirements also apply to housing constructed in 1986. Average wages for each type of in-
dustry in 1986 are used to convert man-years into equivalent wages.
Tax Revenue Generated from the Construction of 1,000 Housing Units in 1986
(In Millions of Dollars)
Single-Family
Multifamily
Income-Based Tax Revenues. Total
$16.1
$7.8
Federal Taxes
14.0
6.8
Personal Income Tax
4.7
2.3
Social Security Tax
5.2
2.5
Corporate Income Tax (Builders & Suppliers)
4.1
2.0
State Personal Income Tax
0.7
0.3
State and Local Sales Taxes
1.4
0.7
Local Real Property Taxes
Revenue in First Year
1.6
0.9
Present Value Over 20 Years
19.0
11.4
The personal income taxes and Social Security tax use wage income as shown in the previous table. The corporate income tax and the real property
tax are based on the average sales price of a new home in 1986. Other needed data, such as tax rates, are the most recent available.
Interest Rates
Mortgage interest rates are a crucial element in the homeownership affordability
equation.
On a $100,000 mortgage, a two percent interest rate increase adds about $150 to the
monthly mortgage payment.
Each one percent hike in the interest rate prices more than 200,000 potential buyers
of a median priced home out of the new and existing housing market during the course
of a year.
Mortgage Interest Rates - 1988, 1989 by Month
Month
Fixed(1)
Adjustable(2)
ARM Share(3)
1988
January
10.97%
8.98%
65%
February
10.48
8.72
64
March
10.33
8.64
54
April
10.48
8.61
49
May
10.65
8.63
53
June
10.78
8.80
54
July
10.73
8.86
59
August
10.84
9.04
61
September
10.95
9.19
63
October
10.82
9.13
63
November
10.70
9.26
60
December
10.87
9.34
55
1989
January
11.21
9.56
55
February
11.11
9.60
57
March
11.37
9.77
55
April
11.59
10.15
55
May
11.49
10.28
53
June
11.00
10.05
47
July
10.60
9.73
31
August
10.40
9.55
24
September
10.58
9.48
25
October
10.08
9.37
25
(1) Office of Thrift Supervision (formerly Federal Home Loan Bank Board) survey of major lenders' commitment rates for fixed-rate 75% loan-to-value mortgages
(includes amortized value of points).
(2) Effective commitment rate for Adjustable Rate Mortgages with limited rate changes; 75% loan-to-value ratio (includes amortized value of points), reported
by the Office of Thrift Supervision.
(3) Share of all loans closed by all major lenders that are Adjustable Rate Mortgages.
Mortgage Interest Rates
1977-1988
Federal Home Loan Mortgage Corporation survey of major lenders contract rates
On commitments for fixed-rate, 80% loan-to-price ratio mortgages.
20
18
16.64
16.09
16
13.77
13.87
14
13.23
12.42
12
11.19
Interest Rate
10.2
10.33
10
9.64
10.18
8.84
8
6
4
2
O
1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Market Share of
Adjustable Rate Mortgages
October 1988 - September 1989
100
90
80
70
63
60
60
57
55
53
Percent
50
55
55
55
47
40
31
30
25
20
24
10
a
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
Homeownership Rates: National and by Region
For the first time since the 1930s, the nation's homeownership rate has turned
significantly downward, according to the U.S. Census Bureau. After climbing steadily from
a rate of 43.6 percent in 1940, 55 percent in 1950, 61.9 percent in 1960 and 62.9 percent
in 1970, to a peak rate of 65.8 percent in the third quarter of 1980, the homeownership
rate started declining. Since 1986, when homeownership rates dropped to 63.8 percent,
rates have ranged from 63.7 to 64.0 percent.
Homeownership Rates: National and by Region, 1974-1989
Year
National
Northeast
Midwest
South
West
1974
64.6%
59.3%
69.2%
66.7%
61.1%
1975
64.6
59.5
69.4
66.4
61.1
1976
64.7
59.7
69.3
66.4
61.3
1977
64.8
59.3
69.3
66.8
61.4
1978
65.0
59.9
70.2
67.3
60.8
1979
65.2
59.9
70.3
68.2
60.5
1980
65.6
60.7
70.1
68.3
60.4
1981
65.4
61.3
70.2
67.4
59.8
1982
64.8
61.1
69.4
66.7
59.4
1983
64.7
60.4
69.1
67.4
59.0
1984
64.4
61.2
68.4
67.0
58.5
1985
63.9
60.8
66.9
66.4
59.0
1986
63.8
61.4
66.9
66.1
58.4
1987
64.0
61.7
67.3
66.3
58.5
1988
63.8
61.3
67.5
65.8
58.5
1989 Q1
63.9
61.5
67.2
65.5
58.7
1989 Q2
63.9
62.0
67.8
65.9
57.7
1989 Q3
64.0
62.2
67.9
66.0
58.0
Homeownership Rates by Household Age
The recent trend toward declining homeownership rates has been concentrated among
young households.
Homeownership Rates by Household Age, 1974-1989
(In percentages)
Year
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75 & up
1974
42.9
61.7
69.6
73.5
76.5
76.3
77.3
75.2
73.1
69.7
66.8
1975
43.1
62.2
69.0
73.9
77.1
77.2
77.7
76.3
73.6
69.4
67.3
1976
43.2
62.4
68.9
74.0
77.1
77.7
78.0
76.2
73.6
71.5
67.2
1977
42.6
62.3
69.1
73.8
76.8
78.5
76.9
77.4
74.0
71.1
67.2
1978
43.9
62.6
69.8
74.5
77.0
77.6
77.9
77.7
74.7
71.3
67.9
1979
44.0
61.7
70.4
74.9
76.9
78.3
78.6
77.8
75.8
72.5
67.4
1980
43.3
61.1
70.9
74.2
76.8
78.5
79.6
78.8
77.3
72.7
67.8
1981
41.3
58.8
68.6
73.6
76.1
78.0
79.7
79.7
77.5
75.2
70.0
1982
38.3
56.8
67.3
72.7
75.7
78.6
79.9
79.9
77.8
75.1
70.9
1983
38.0
55.1
66.2
72.6
75.1
78.7
80.0
79.7
78.6
75.3
71.9
1984
38.3
54.4
65.8
72.0
74.4
78.1
79.9
79.8
79.1
75.4
71.4
1985
37.3
53.6
65.1
71.1
74.0
77.3
79.0
79.7
79.3
76.7
69.7
1986
36.7
53.6
64.8
70.5
74.1
78.1
80.0
79.8
79.4
77.2
70.0
1987
36.4
53.5
64.1
70.8
74.6
77.8
80.0
80.4
79.5
77.7
70.8
1988
35.9
53.2
63.6
70.7
74.4
77.1
79.3
79.8
80.0
77.7
70.8
1989Q1 35.7
53.4
63.2
71.3
74.3
76.9
79.8
79.8
80.2
77.2
70.8
1989Q2 35.4
53.7
63.7
70.0
74.3
77.5
78.6
79.9
80.1
77.1
70.8
Housing Starts Review
Housing Starts: 1978 . 1990
Single-
Multi-
Year
Family
Family
Total
1978
1,433,000
587,000
2,020,000
1979
1,194,000
551,000
1,745,000
1980
852,000
440,000
1,292,000
1981
705,000
379,000
1,084,000
1982
663,000
400,000
1,062,000
1983
1,067,000
635,000
1,703,000
1984
1,084,000
665,000
1,749,000
1985
1,072,000
669,000
1,742,000
1986
1,180,000
625,000
1,806,000
1987
1,146,000
474,000
1,621,000
1988
1,080,000
407,000
1,488,000
1989
1,019,000
381,000
1,400,000
1990*
1,020,000
350,000
1,370,000
Source: U.S. Bureau of the Census
*NAHB forecast (Does not include public housing starts.)
New Housing Units Started
January 1989 - November 1989
(Thousands of Units)
2000
1800
Single-family
1600
Multifamily
1400
1199
1200
1029
1029
1041
1027
979
990
1000
981
1015
977
961
800
600
479
436
428
440
389
393
400
332
338
346
314
307
200
o
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
Top 20 Metro Areas for Residential Building Permits:
First 10 Months of 1989
Single-Family
1. Riverside-San Bernardino
33,460
2. Los Angeles-Long Beach
20,970
3. Washington, D.C. MSA
19,140
4. Atlanta
19,000
5. Sacramento
13,810
6. Philadelphia PMSA
12,360
7. Orlando
11,900
8. Detroit
11,660
9. Baltimore MSA
11,390
10. Chicago
11,180
11. Minneapolis-St. Paul
10,850
12. Seattle
10,750
13. Phoenix
10,210
14. Las Vegas
10,160
15. Tampa-St. Petersburg
9,500
16. San Diego
9,430
17. West Palm Beach-Boca Raton
9,130
18. Dallas
7,870
19. Oakland, Calif.
7,650
20. St. Louis
7,540
Multifamily
1. Los Angeles-Long Beach
20,700
2. Seattle
12,460
3. Las Vegas
9,910
4. Miami-Hialeah
9,820
5. Atlanta
9,390
6. Washington, D.C. MSA
8,760
7. New York PMSA
8,620
8. Portland, Oregon
7,900
9. Chicago
7,370
10. Anaheim-Santa Ana
7,330
11. Orlando
6,860
12. Riverside-San Bernardino
6,800
13. Fort Lauderdale-Hollywood
6,740
14. West Palm Beach-Boca Raton
5,790
15. Detroit
5,640
16. San Diego
5,220
17. Minneapolis-St. Paul
4,750
18. Charlotte-Gastonia
4,330
19. Oakland, Calif.
4,110
20. Milwaukee
4,010
National Residential Building Permit Activity: First 10 Months of 1989
SINGLE FAMILY
MULTIFAMILY
TOTAL UNITS
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
1989
1988
CHG
1988
1989
1988
CHG
1988
1989
1988
CHG
1988
UNITED STATES
812
865
-6.2%
994
341
382
-10.7%
462
1,153
1,248
-7.6%
1,456
ALABAMA
6.98
8.16
-14.5%
9,67
2.92
2.27
28.7%
3.11
9.90
10.43
-5.1%
12.77
Birmingham
2.05
2.30
-11.2%
2.67
0.35
0.40
-12.3%
0.49
2.40
2.70
-11.3%
3.16
Mobile
0.46
0.43
7.9%
0.68
0.06
0.09
-36.2%
0.20
0.52
0.52
0.0%
0.88
ALASKA
0.40
0.45
-10.9%
0.49
0.19
0.29
-34.7%
0.32
0.59
0.74
-20.2%
0.80
ARIZONA
17.32
20.23
-14.4%
23.37
3.00
8.40
-64.3%
9.51
20.32
28.63
-29.0%
32.88
Phoenix
10.21
13.00
-21.4%
14.91
1.67
5.83
-71.4%
6.53
11.88
18.83
-36.9%
21.43
Tucson
2.20
2.69
-18.4%
3.05
0.33
1.91
-83.0%
1.94
2.52
4.60
-45.2%
5.00
ARKANSAS
3.90
3.98
-2.0%
4.70
1.44
1.38
4.2%
1.54
5.34
5.36
-0.4%
6.23
Little Rock-N.L.R.
1.11
1.24
-10.6%
1.43
0.31
0.08
291.3%
0.10
1.42
1.32
7.7%
1.54
CALIFORNIA
139.29
135.72
2.6%
160.74
60.69
77.11
-21.3%
92.63
199.98
212.82
-6.0%
253.37
Anaheim-Santa Ana
6.88
9.49
-27.5%
11.51
7.33
10.27
-28.6%
11.94
14.21
19.76
-28.1%
23.46
Bakersfield
3.30
2.45
34.5%
2.86
0.35
0.28
26.2%
0.29
3.65
2.73
33.7%
3.16
Los Angeles-Lng Bch
20.97
14.53
44.3%
17.68
20.70
26.63
-22.3%
32.61
41:67
41.16
1.2%
50.29
Oakland
7.65
8.44
-9.4%
9.67
4.11
3.29
24.8%
4.90
11.76
11.73
0.2%
14.57
Oxnard-Ventura
3.16
3.12
1.2%
3.68
1.56
1.11
40.0%
1.48
4.72
4.23
11.4%
5.15
Riverside-San Bern
33.46
37.21
-10.1%
43.20
6.80
7.72
-11.9%
9.92
40.26
44.93
-10.4%
53.12
Sacramento
13.81
11.41
21.0%
14.07
2.61
4.61
-43.5%
4.60
16.42
16.02
2.5%
18.68
San Diego
9.43
12.33
-23.5%
14.75
5.22
11.72
-55.5%
13.80
14.65
24.05
-39.1%
28.55
San Francisco
1.91
2.03
-6.0%
2.59
3.06
2.38
28.4%
3.14
4.97
4.41
12.6%
5.73
San Jose
2.26
3.00
-24.7%
3.69
1.89
2.37
-20.2%
2.79
4.15
5.37
-22.7%
6.49
Vallejo-Fairfld-Napa
4.94
4.59
7.6%
5.28
0.77
0.83
-7.2%
0.85
5.71
5.42
5.3%
6.13
COLORADO
7.89
8.40
-6.1%
9.74
1.81
2.52
-28.4%
3.12
9.70
10.93
-11.2%
12.86
Boulder-Longmont
0.78
0.78
-0.8%
0.91
0.20
0.07
164.9%
0.08
0.97
0.86
13.6%
0.99
Denver
3.28
3.45
-5.0%
4.01
0.93
1.78
-48.0%
2.07
4.21
5.23
-19.6%
6.08
CONNECTICUT
6.88
11.74
-41.5%
12.76
3.50
5.23
-33.0%
6.11
10.38
16.97
-38.9%
18.87
Hartford
1.37
2.69
-49.0%
2.95
1.69
1.10
54.0%
1.19
3.06
3.78
-19.1%
4.14
New Haven-Meriden
1.03
1.76
-41.5%
2.02
0.42
0.70
-39.8%
0.80
1.45
2.46
-41.0%
2.82
DELAWARE
4.09
4.85
-15.7%
5.89
1.00
1.37
-27.1%
1.54
5.08
6.22
-18.2%
7.42
Wilmington
3.42
3.92
-12.9%
4.84
0.91
1.13
-20.2%
1.59
4.32
5.05
-14.5%
6.43
DISTRICT OF COLUMBIA
0.08
0.24
-66.3%
0.25
0.21
0.58
-63.7%
0.60
0.29
0.82
-64.4%
0.85
Washington MSA
19.14
24.69
-22.5%
30.35
8.76
8.86
-1.2%
11.69
27.90
33.55
-16.8%
42.05
FLORIDA
91.05
94.69
-3.8%
110.32
50.85
50.97
-0.2%
60.28
141.90
145.65
-2.6%
170.60
Ft Lauder-Hollywood
5.80
5.88
-1.4%
6.86
6.74
6.93
-2.8%
8.07
12.54
12.81
-2.1%
14.93
Jacksonville
5.75
6.22
-7.6%
7.24
1.55
2.22
-30.0%
2.78
7.30
8.43
-13.5%
10.02
Miami-Hialeah
7.32
7.12
2.7%
8.23
9.82
7.60
29.3%
9.07
17.14
14.72
16.4%
17.30
Naples
1.80
1.83
-1.8%
-2.15
3.67
3.39
8.3%
4.20
5.47
5.22
4.7%
6.35
Orlando
11.90
11.65
2.1%
13.35
6.86
6.53
5.1%
8.22
18.76
18.18
3.2%
21.57
Tampa-St Petersburg
9.50
10.68
-11.1%
12.40
3.56
6.44
-44.7%
7.48
13.05
17.12
-23.7%
19.88
W Palm-Boca Raton
9.13
9.51
-4.1%
11.49
5.79
4.98
16.2%
6.56
14.92
14.50
2.9%
18.05
GEORGIA
31.40
38.00
-17.4%
42.56
12.94
16.23
-20.3%
20.46
44.34
54.24
-18.2%
63.02
Atlanta
19.00
24.76
-23.2%
28.47
9.39
12.52
-25.0%
15.97
28.40
37.28
-23.8%
44.44
HAWAII
5.40
4.87
11.0%
5.74
3.18
1.74
83.0%
2.71
8.59
6.61
30.0%
8.45
Honolulu
1.50
1.78
-16.0%
1.95
1.64
1.18
39.6%
1.34
3.14
2.96
6.1%
3.29
IDAHO
3.08
2.49
23.8%
2.81
0.93
0.38
141.1%
0.41
4.01
2.87
39.5%
3.21
Boise City
1.30
1.02
27.4%
1.20
0.44
0.22
98.7%
0.22
1.74
1.24
40.1%
1.42
ILLINOIS
26.13
28.70
-9.0%
33.94
10.67
10.18
4.8%
15.21
36.80
38.88
-5.4%
49.15
Chicago
11.18
13.85
-19.3%
16.32
7.37
6.72
9.7%
10.31
18.55
20.57
-9.8%
26.64
Lake County
3.32
3.72
-10.8%
4.22
0.59
0.65
-9.1%
0.94
3.91
4.37
-10.6%
5.16
INDIANA
17.00
17.08
-0.5%
19.22
6.61
4.30
53.8%
6.03
23.62
21.38
10.5%
25.25
Ft. Wayne
1.18
1.31
-10.0%
1.71
0.29
0.19
52.4%
0.35
1.47
1.50
-2.1%
2.05
Gary-Hammond
1.81
1.47
23.2%
1.69
0.56
0.25
123.4%
0.29
2.37
1.72
37.9%
1.98
Indianapolis
5.29
5.48
-3.6%
6.58
2.50
1.45
72.5%
2.38
7.78
6.93
12.3%
8.97
IOWA
4.39
4.00
9.6%
4.41
2.12
1.65
28.4%
2.37
6.50
5.65
15.1%
6.79
Des Moines
1.36
1.31
3.7%
1.61
0.38
0.71
-46.8%
1.26
1.74
2.03
-14.1%
2.88
KANSAS
5.70
6.17
-7.6%
7.29
1.47
2.09
-29.9%
2.40
7.16
8.26
-13.2%
9.68
Wichita
1.48
1.49
-0.9%
1.75
0.17
0.24
-26.0%
0.23
1.65
1.73
-4.3%
1.98
SINGLE FAMILY
MULTIFAMILY
TOTAL UNITS
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
1989
1988
CHG
1988
1989
1988
CHG
1988
1989
1988
CHG
1988
KENTUCKY
7.81
7.78
0.4%
8.96
4.03
4.10
-1.8%
4.41
11.84
11.89
-0.4%
13.36
Louisville
3.01
2.98
1.2%
3.38
1.15
0.92
25.5%
1.38
4.16
3.89
7.0%
4.76
LOUISIANA
4.28
4.45
-3.8%
5.43
0.86
1.14
-24.0%
1.85
5.15
5.59
-7.9%
7.27
Baton Rouge
0.75
0.71
6.5%
0.81
0.01
0.23
-96.5%
0.24
0.76
0.94
-18.5%
1.04
New Orleans
1.64
1.88
-13.0%
2.21
0.30
0.47
-35.9%
0.48
1.93
2.35
-17.6%
2.69
MAINE
4.35
5.55
-21.6%
6.84
0.97
1.95
-50.5%
1.96
5.31
7.50
-29.1%
8.80
Portland
0.82
1.20
-31.8%
1.63
0.27
0.47
-42.6%
0.31
1.09
1.67
-34.9%
1.94
MARYLAND
27.27
31.43
-13.2%
33.29
8.25
5.41
52.5%
6.27
35.52
36.83
-3.6%
39.57
Baltimore MSA
11.39
12.70
-10.3%
14.38
3.88
2.91
33.3%
3.66
15.26
15.61
-2.2%
18.03
MASSACHUSETTS
12.20
17.01
-28.3%
20.11
6.75
9.95
-32.2%
10.37
18.96
26.97
-29.7%
30.48
Boston
3.57
4.92
-27.3%
5.70
2.52
3.61
-30.2%
4.12
6.09
8.52
-28.5%
9.82
Springfield
1.02
1.69
-39.8%
1.88
0.60
1.05
-43.0%
1.25
1.61
2.73
-41.0%
3.12
MICHIGAN
28.44
27.09
5.0%
29.72
12.51
13.87
-9.8%
15.18
40.94
40.96
0.0%
44.91
Detroit
11.66
11.60
0.5%
12.92
5.64
6.62
-14.8%
7.75
17.30
18.22
-5.0%
20.67
Grand Rapids
3.02
2.73
10.6%
3.24
1.43
2.27
-37.1%
2.46
4.45
5.00
-11.1%
5.71
Lansing-E. Lansing
1.29
1.24
4.3%
1.43
0.47
0.60
-21.0%
0.63
1.76
1.84
-3.9%
2.06
MINNESOTA
16.46
17.61
-6.5%
19.24
6.07
7.46
-18.6%
9.14
22.54
25.07
-10.1%
28.38
Minneapolis-StP
10.85
12.08
-10.1%
13.76
4.75
5.85
-18.9%
6.98
15.60
17.93
-13.0%
20.73
MISSISSIPPI
3.84
3.93
-2.2%
4.92
1.41
2.01
-29.9%
2.48
5.25
5.93
-11.6%
7.40
Jackson
1.05
1.11
-5.4%
1.41
0.43
0.88
-51.0%
1.05
1.48
1.99
-25.7%
2.46
MISSOURI
12.50
14.52
-13.9%
16.10
4.53
7.09
-36.0%
7.38
17.04
21.60
-21.1%
23.47
Kansas City
5.64
6.38
-11.6%
7.39
0.76
2.78
-72.6%
3.21
6.40
9.16
-30.1%
10.60
St. Louis
7.54
9.11
-17.3%
8.35
1.76
2.60
-32.2%
3.18
9.30
11.70
-20.6%
11.53
MONTANA
0.46
0.49
-5.5%
0.56
0.11
0.19
-44.3%
0.23
0.57
0.68
-16.6%
0.79
NEBRASKA
3.32
2.91
14.0%
3.50
1.30
1.62
-19.8%
2.24
4.62
4.53
1.9%
5.74
Omaha
1.86
1.60
16.3%
1.95
0.53
0.85
-37.2%
1.13
2.39
2.44
-2.3%
3.08
NEVADA
13.11
10.16
29.0%
12.57
11.20
14.34
-21.9%
18.20
24.31
24.50
-0.8%
30.77
Las Vegas
10.16
7.57
34.2%
9.47
9.91
13.13
-24.5%
16.97
20.06
20.69
-3.0%
26.44
Reno
1.46
1.46
-0.5%
1.71
0.78
0.89
-12.2%
0.89
2.24
2.35
-4.9%
2.60
NEW HAMPSHIRE
4.55
6.32
-28.0%
7.71
1.31
3.52
-62.7%
3.98
5.86
9.84
-40.4%
11.69
Nashua
0.51
0.84
-39.2%
0.96
0.32
0.50
-35.7%
0.53
0.84
1.35
-37.9%
1.50
NEW JERSEY
21.46
28.67
-25.2%
28.45
8.35
11.40
-26.8%
12.46
29.81
40.07
-25.6%
40.91
Atlantic City
1.70
2.10
-18.9%
2.54
1.37
2.28
-39.9%
2.60
3.07
4.38
-29.9%
5.14
Bergen-Passaic
0.69
1.92
-64.2%
2.15
1.73
2.77
-37.8%
2.93
2.41
4.69
-48.6%
5.08
Middlesex-Somerset
3.90
4.32
-9.7%
4.77
1.19
1.70
-29.8%
1.52
5.09
6.01
-15.4%
6.28
Monmouth-Ocean
3.49
5.59
-37.5%
6.29
1.14
1.14
-0.3%
1.51
4.63
6.73
-31.2%
7.80
Newark
1.84
3.00
-38.8%
3.42
1.19
1.01
17.2%
1.15
3.02
4.01
-24.7%
4.57
NEW MEXICO
4.14
4.72
-12.2%
5.34
1.03
1.05
-2.5%
1.06
5.17
5.77
-10.4%
6.40
Albuquerque
1.53
2.01
-24.0%
2.30
0.44
0.34
31.1%
0.34
1.97
2.35
-16.1%
2.64
Las Cruces
0.56
0.65
-13.7%
0.72
0.18
0.17
6.5%
0.16
0.74
0.82
-9.5%
0.88
NEW YORK
26.88
31.72
-15.3%
37.50
13.72
13.08
4.9%
17.22
40.60
44.80
-9.4%
54.72
Albany-Schenectady
2.60
3.31
-21.3%
3.95
0.87
1.09
-20.2%
1.48
3.48
4.40
-21.0%
5.43
Buffalo
2.37
2.57
-7.8%
2.99
0.59
0.51
15.0%
0.57
2.96
3.09
-4.0%
3.56
Nassau-Suffolk
4.57
6.37
-28.2%
7.76
0.89
0.77
15.7%
1.17
5.47
7.14
-23.5%
8.93
New York PMSA
4.08
3.61
13.3%
4.27
8.62
7.89
9.2%
9.23
12.70
11.50
10.5%
13.50
Orange Co.
0.83
1.16
-28.4%
1.48
0.49
0.52
-6.1%
0.60
1.32
1.68
-21.5%
2.07
Poughkeepsie
0.38
0.34
10.9%
1.13
0.01
0.13
-95.3%
0.30
0.38
0.47
-18.2%
1.43
Rochester
3.25
3.58
-9.1%
4.10
0.41
0.29
44.2%
0.37
3.66
3.86
-5.1%
4.47
Syracuse
1.92
2.16
-10.8%
2.52
0.33
0.26
24.7%
0.36
2.25
2.42
-7.0%
2.87
NORTH CAROLINA
30.25
33.74
-10.4%
39.47
9.25
9.25
0.0%
10.85
39.49
42.99
-8.1%
50.32
Charlotte-Gastonia
6.86
7.18
-4.5%
8.42
4.33
4.19
3.3%
4.43
11.19
11.37
-1.6%
12.85
Greensboro-Wnstn Sal
4.32
4.94
-12.4%
5.80
1.29
1.03
25.4%
1.14
5.62
5.97
-5.9%
6.94
Raleigh-Durham
5.02
5.63
-10.9%
6.62
1.06
1.02
4.8%
1.20
6.08
6.65
-8.5%
7.82
NORTH DAKOTA
0.66
0.75
-12.1%
0.85
1.38
0.86
60.4%
0.97
2.03
1.60
26.7%
1.82
Fargo-Moorehead
0.34
0.36
-5.8%
0.46
1.05
0.55
91.0%
0.63
1.39
0.91
52.4%
1.08
OHIO
24.27
24.54
-1.1%
27.63
11.93
14.49
-17.6%
17.47
36.21
39.04
-7.2%
45.11
Akron
1.78
1.78
0.1%
2.05
0.74
1.15
-36.1%
1.30
2.52
2.93
-14.1%
3.35
Cincinnati
4.62
4.78
-3.3%
5.60
1.92
3.15
-38.9%
3.83
6.55
7.93
-17.5%
9.43
Cleveland
3.56
3.46
2.9%
3.99
2.48
1.69
46.6%
1.83
6.04
5.15
17.3%
5.81
Columbus
5.47
5.49
-0.5%
6.40
3.76
4.91
-23.3%
5.61
9.23
10.40
-11.2%
12.01
Dayton-Springfield
2.04
2.26
-9.8%
2.50
0.49
1.23
-60.2%
1.85
2.52
3.48
-27.5%
4.35
Toledo
1.10
1.22
-9.5%
1.39
1.08
1.48
-27.0%
1.56
2.18
2.70
-19.1%
2.95
SINGLE FAMILY
MULTIFAMILY
TOTAL UNITS
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
YTD
YTD
YTD
YEAR
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
OCT
OCT
PCT
TOTAL
1989
1988
CHG
1988
1989
1988
CHG
1988
1989
1988
CHG
1988
OKLAHOMA
3.77
3.49
8.0%
4.33
0.75
0.37
102.7%
0.72
4.52
3.87
17.1%
5.05
Oklahoma City
1.73
1.64
5.7%
1.89
0.51
0.12
320.8%
0.13
2.23
1.76
27.2%
2.02
Tulsa
1.55
1.23
25.8%
1.43
0.04
0.06
-27.6%
0.06
1.59
1.29
23.4%
1.49
OREGON
9.61
7.75
23.9%
9.16
9.73
4.17
133.1%
4.89
19.33
11.93
62.1%
14.05
Portland
4.69
4.09
14.9%
4.73
7.90
2.78
183.8%
3.36
12.59
6.87
83.3%
8.09
PENNSYLVANIA
34.75
40.86
-14.9%
45.29
6.16
7.25
-15.0%
8.54
40.91
48.11
-15.0%
53.83
Allentown-Bethlehem
2.07
3.50
-40.8%
3.92
0.59
0.26
125.8%
0.29
2.66
3.76
-29.2%
4.21
Harrisburg-Lebanon
1.58
1.90
-16.9%
2.95
0.36
0.35
3.4%
0.68
1.94
2.25
-13.7%
3.63
Philadelphia PMSA
12.36
16.22
-23.8%
19.25
2.28
3.69
-38.1%
3.99
14.64
19.92
-26.5%
23.24
Pittsburgh
3.28
3.23
1.4%
3.84
0.64
1.59
-59.9%
1.71
3.92
4.83
-18.9%
5.55
Scrantn-Wilkes-Barre
2.19
2.54
-13.7%
4.83
0.39
0.41
-4.1%
0.70
2.59
2.95
-12.4%
5.52
RHODE ISLAND
2.33
3.12
-25.4%
3.66
0.79
2.13
-63.1%
2.41
3.12
5.26
-40.7%
6.07
Providence
1.45
1.91
-24.3%
2.21
0.57
1.77
-68.1%
1.99
2.01
3.68
-45.3%
4.20
SOUTH CAROLINA
12.52
13.60
-7.9%
17.09
4.71
4.43
6.2%
6.01
17.23
18.03
-4.5%
23.10
Charleston
2.12
2.49
-15.1%
2.95
0.15
0.20
-23.9%
0.30
2.27
2.69
-15.7%
3.25
Columbia
1.60
1.89
-15.5%
2.23
0.56
0.37
51.5%
1.28
2.16
2.26
-4.5%
3.50
Greenville-Spartnbrg
2.40
2.47
-2.7%
2.91
0.99
1.12
-11.9%
1.24
3.39
3.59
-5.6%
4.15
SOUTH DAKOTA
0.97
0.93
4.3%
1.09
0.60
0.58
3.8%
0.83
1.57
1.51
4.1%
1.92
Sioux Falls
0.34
0.37
-6.6%
0.42
0.40
0.35
14.1%
0.53
0.74
0.71
3.5%
0.95
TENNESSEE
16.99
18.30
-7.2%
19.40
5.57
6.24
-10.7%
8.41
22.57
24.55
-8.1%
27.80
Knoxville
2.08
2.04
1.8%
2.31
0.69
0.24
184.4%
0.57
2.77
2.28
21.3%
2.88
Memphis
4.48
4.60
-2.6%
5.33
2.50
2.12
18.3%
2.34
6.98
6.72
4.0%
7.67
Nashville
4.98
5.83
-14.6%
6.70
0.89
2.42
-63.3%
2.97
5.87
8.25
-28.9%
9.67
TEXAS
31.78
30.59
3.9%
35.88
3.41
4.06
-16.0%
4.60
35.19
34.65
1.6%
40.48
Austin
1.64
1.76
-6.4%
2.02
0.02
0.32
-93.7%
0.33
1.66
2.08
-19.8%
2.35
Dallas
7.87
7.89
-0.3%
9.02
0.13
1.20
-89.6%
1.47
7.99
9.09
-12.1%
10.48
Ft Worth-Arlington
4.36
4.29
1.6%
5.02
0.11
0.17
-35.1%
0.22
4.47
4.46
0.2%
5.24
Houston
7.22
5.63
28.4%
6.78
1.14
0.77
49.0%
1.06
8.37
6.39
30.8%
7.84
San Antonio
1.39
1.57
-11.0%
1.80
0.05
0.18
-70.5%
0.24
1.45
1.75
-17.2%
2.04
UTAH
4.87
4.87
-0.1%
5.86
0.40
0.38
3.7%
0.41
5.26
5.25
0.2%
6.27
Salt Lake-Ogden
2.78
3.01
-7.6%
3.39
0.11
0.13
-14.3%
0.15
2.90
3.14
-7.9%
3.55
VERMONT
2.68
3.23
-16.8%
3.70
0.62
1.37
-55.2%
1.11
3.30
4.60
-28.3%
4.81
Burlington
0.46
0.54
-14.6%
0.65
0.30
0.26
15.2%
0.29
0.76
0.80
-5.0%
0.94
VIRGINIA
37.29
42.31
-11.9%
48.20
12.29
14.61
-15.9%
18.28
49.57
56.92
-12.9%
66.49
Norfolk-Va. Beach
6.77
8.03
-15.6%
9.48
2.22
3.02
-26.4%
4.09
8.99
11.04
-18.6%
13.57
Richmond-Petersbrg
6.03
6.83
-11.7%
7.99
1.17
2.48
-52.8%
2.52
7.20
9.31
-22.6%
10.52
WASHINGTON
22.23
18.51
20.1%
21.48
17.95
18.97
-5.4%
23.57
40.18
37.48
7.2%
45.06
Seattle
10.75
9.21
16.7%
11.01
12.46
13.64
-8.6%
15.78
23.20
22.84
1.6%
26.79
WEST VIRGINIA
1.16
1.07
8.8%
1.30
0.19
0.36
-48.2%
0.48
1.35
1.43
-5.6%
1.78
Charleston
0.10
0.13
-25.8%
0.16
0.02
0.03
-25.8%
0.04
0.12
0.16
-25.8%
0.20
WISCONSIN
13.10
13.00
0.8%
14.77
9.66
7.71
25.4%
9.35
22.76
20.71
9.9%
24.12
Green Bay
0.41
0.39
6.2%
0.70
0.47
0.47
0.4%
0.72
0.88
0.86
3.0%
1.42
Madison
1.31
1.34
-2.3%
1.56
1.07
1.12
-4.5%
1.35
2.39
2.47
-3.3%
2.91
Milwaukee
3.01
2.92
2.9%
3.43
4.01
2.73
46.9%
3.54
7.01
5.65
24.1%
6.97
WYOMING
0.50
0.47
6.6%
0.50
0.03
0.18
-81.5%
0.21
0.53
0.65
-18.3%
0.71
SOURCE: Bureau of Census data from WEFA Group data base
Annual Data are based on annual survey and include revisions as well as data for additional localities.
New Home Prices
New Home Prices 1978 - 1989
Quality
Year
Median
Average
Adjusted*
1978
$ 55,700
$ 62,500
$ 69,500
1979
62,900
71,800
79,500
1980
64,600
76,400
88,400
1981
68,900
83,000
96,700
1982
69,300
83,900
100,000
1983
75,300
89,800
103,000
1984
79,900
97,600
106,800
1985
84,300
100,800
110,000
1986
92,000
111,900
113,600
1987
104,500
127,200
116,800
1988
112,500
138,200
117,000
1988
Jan
119,000
144,400
Feb
110,900
137,600
117,200(QI)
Mar
108,900
133,200
Apr
111,000
135,000
May
110,000
133,500
116,800(Q2)
Jun
111,500
136,500
Jul
118,000
141,300
Aug
110,000
140,600
116,700(Q3)
Sep
116,000
142,700
Oct
112,900
137,300
Nov
110,400
137,300
116,400(Q4)
Dec
121,000
147,700
1989
Jan
113,000
138,600
Feb
118,000
145,300
120,600(Q1)
Mar
123,000
149,000
Apr
116,700
144,700
May
119,000
145,100
119,000(Q2)
Jun
122,800
153,600
Jul
116,000
140,300
Aug
122,700
159,000
120,400(Q3)
Sep
121,500
151,900
Oct
127,900
151,900
Source: U.S. Bureau of the Census
*The quality adjusted index measures changes in the sales price of new homes based on 10 important characteristics of the houses sold:
floor area, number of stories, number of bedrooms, air conditioning, type of parking, type of foundation, geographic division, metropolitan
area, fireplace and lot size. 1982 = 100.
Existing Home Prices
Existing Home Prices, 1978 - 1989
Year
Median
Average
1978
$48,700
$ 55,500
1979
55,700
64,200
1980
62,200
72,800
1981
66,400
78,300
1982
67,800
80,500
1983
70,300
83,100
1984
72,400
86,000
1985
75,500
90,800
1986
80,300
98,500
1987
85,600
106,100
1988
89,300
112,800
1988
Jan
88,100
109,500
Feb
88,900
110,900
Mar
88,900
111,600
Apr
88,000
109,600
May
92,600
118,000
Jun
90,200
115,400
Jul
90,700
114,700
Aug
91,500
115,400
Sep
88,500
112,600
Oct
88,900
112,300
Nov
88,500
112,400
Dec
88,700
112,000
1989
Jan
89,700
113,000
Feb
91,900
117,800
Mar
92,000
116,100
Apr
92,900
118,000
May
92,600
118,000
Jun
93,400
118,800
Jul
96,700
122,100
Aug
94,800
120,800
Sep
94,300
118,400
Oct
92,100
116,500
Source: National Associaton of Realtors, Existing Home Sales.
Home Prices by City
San Francisco recorded the nation's highest average sales price for new and existing
homes during the first three quarters of 1989. An Office of Thrift Supervision (formerly
the Federal Home Loan Bank Board) survey of prices in 32 major metropolitan areas
shows that Louisville, Ky. had the lowest average during the first and third quarters and
Milwaukee recorded the lowest price during the second quarter. The national average was
$133,600 during the first quarter, $139,700 during the second quarter and $137,800 during
the third quarter. It was $129,400 in 1988.
Average Sales Price of New and Existing Homes
(In thousands)
City
1988
Q1-1989
Q2-1989
Q3-1989
Atlanta
$139.2
$149.2
$150.5
$154.3
Baltimore
139.0
158.1
149.2
156.4
Boston
190.3
184.2
182.2
170.2
Chicago
125.5
135.3
138.6
128.9
Cleveland
97.2
104.8
107.8
107.6
Columbus
101.4
126.9
115.2
115.2
Dallas-Ft. Worth
117.6
138.2
142.1
148.1
Denver
134.5
155.4
150.9
149.9
Detroit
98.2
100.0
109.5
116.1
Greensboro
107.5
100.9
92.6
113.2
Honolulu
167.2
186.8
206.1
205.0
Houston
117.0
120.1
128.3
105.4
Indianapolis
101.5
128.2
113.5
116.3
Kansas City
103.9
108.8
120.5
112.5
Los Angeles
190.9
196.2
202.4
206.7
Louisville
86.7
85.7
106.5
92.4
Miami
97.3
107.1
114.2
114.6
Milwaukee
97.0
111.9
88.6
127.5
Minneapolis
134.6
169.8
142.2
137.3
New York
195.1
193.5
202.6
190.0
Philadelphia
142.7
141.5
145.1
133.3
Phoenix
138.1
138.0
130.1
119.3
Pittsburgh
104.3
94.5
97.1
95.9
Portland
101.1
106.9
116.1
115.1
Rochester
99.1
92.3
109.6
108.0
St. Louis
100.8
96.1
107.6
101.4
Salt Lake City
111.4
123.8
145.3
105.8
San Diego
170.8
182.0
195.0
190.9
San Francisco
203.3
209.1
217.6
221.4
Seattle
135.6
147.0
138.2
153.9
Tampa
94.4
98.1
102.0
102.9
Washington, D.C.
197.5
185.3
204.4
193.2
Average
$129.4
$133.6
$139.7
$137.8
Source: Office of Thrift Supervision. Complied by NAHB.
Volume of New and Existing Home Sales
Volume of New Home Sales
Volume of Existing Home Sales
1976
646,000
1976
3,064,000
1977
819,000
1977
3,650,000
1978
817,000
1978
3,986,000
1979
709,000
1979
(
3,827,000
1980
545,000
1980
2,937,000
1981
436,000
1981
2,419,000
1982
412,000
1982
1,990,000
1983
623,000
1983
2,719,000
1984
639,000
1984
2,868,000
1985
687,000
1985
3,214,000
1986
750,000
1986
3,565,000
1987
671,000
1987
3,526,000
1988
676,000
1988
3,594,000
1989
1
653,000
1989²
3,407,000
1990¹
658,000
1990²
3,345,000
(1) National Association of Home Builders forecast.
(2) National Association of Realtors forecast.
Sources: U.S. Bureau of the Census, NAHB, National Assocation of Realtors.
New Home Size
New single-family homes and multifamily units built in 1988 were larger than those
constructed in 1987.
The median size single-family home had a total of 1,815 square feet in 1988, 60 square
feet more than the median size home in 1987. The median for new multifamily units
increased from 920 to 940 square feet from 1987 to 1988.
Median Size of New
Single-Family Homes
2000
1900
1815
1800
1755
Square Feet
1700
1665
1660
1605
1595
1600
1565
1605
1550
1500
1520
1400
1978
1980
1981
1982
1983
1984
1985
1986
1987
1988
Median Size of
New Multifamily Units
1000
950
940
930
925
915
920
900
893
882
Square Feet
876
871
850
863
800
750
700
1978
1980
1981
1982
1983
1984
1985
1986
1987
1988
Characteristics of New Single-Family Homes
Homes With:
1972
1977
1979
1981
1983
1985
1986
1987
1988
Central Air Conditioning
43%
54%
60%
65%
70%
70%
69%
71%
75%
Two or More Bathrooms
53
70
74
70
72
77
80
83
88
One or More Fireplaces
38
61
62
55
57
59
63
62
65
Full or Partial Basements
37
44
42
33
32
35
37
39
39
Garage or Carport
78
81
80
75
75
75
79
82
82
Electric Heat
36
50
51
50
49
49
44
40
37
1,600 or More Square Feet
38
51
53
47
48
50
53
59
63
Four or More Bedrooms
23
23
23
20
18
18
20
23
26
Source: U.S. Bureau of the Census
Cost Components of a New Single-Family Home
Recent technological advances in home building have significantly increased efficiency and
reduced the proportionate costs of labor and materials. In 1949, labor and materials comprised
69 percent of the cost of a new single-family home. By 1988, the total had dropped to 47 per-
cent. However, the drop was offset by a sharp increase in the cost of a developed lot.
Labor & materials
Labor & materials
55%
69%
11%
Finished lot
21%
17%
15%
Finished lot
Financing 5%
Overhead & profit
Overhead & profit
Financing 7%
1949 - Sales price $9,500
1969 - Sales price $26,000
Labor & materials
47%
20%
27%
Overhead & profit
Finished lot
Financing 6%
1988 - Sales price $112,500
Affordability: Trends in Homeownership and Rental Housing
Although the majority of U.S. households enjoy the highest housing standards in the
world, the number of Americans unable to find affordable housing is growing rapidly. And
the nation's homeownership rate among young families, which has been dropping since
the beginning of the 1980s, is expected to continue to decline in the 1990s, according
to a recent report by the Joint Center for Housing Studies at Harvard University.
Raising the cash necessary for a downpayment and closing costs is the largest obstacle
to homeownership for renters and the primary reason that homeownership rates continue
to drop among young households, reports "The State of the Nation's Housing - 1989,"
which examines America's housing affordability crisis in detail.
It notes that of the 11.1 million households aged 24 to 35 in 1986, 81 percent lacked
the accumulated wealth necessary to make the downpayment and cover closing costs and
64 percent did not have enough income to qualify for a loan on a typical starter home.
Contributing to the nation's housing affordability crisis, the report said, is another
trend that is likely to persist in the future -- rapid depletion of the nation's supply of
low-cost rental housing.
The primary victims of this long-term erosion of housing opportunities are young
families unable to purchase their first home, lower income families paying 50 percent of
their incomes for rent and millions of others who live in substandard housing or at the
edge of homelessness, the study concluded.
And as long as these trends persist, the study notes, the gap between those who can
afford decent shelter and those who can't will continue to widen, further polarizing the
distribution of wealth and economic opportunity and blocking the upward mobility of
millions of families.
Major Findings of the Study:
-Cutting the downpayment requirement from 20 to 10 percent and cutting the mortgage
interest rate by 1 1/2 percent would bring the upfront and monthly costs of buying a
typical starter home within the reach of another 670,000 households in the 25 to 34 age
group.
-Inflation adjusted rents for poor households living in unsubsidized units increased 34
percent between 1974 and 1985.
-Seventy-one percent of all single-parent households pay more than half of their
incomes for rent.
-Although public attention tends to focus on the need to maintain the current stock
Monouls is 0°
of subsidized housing, curbing the loss of privately owned unsubsidized housing is also
essential.
not pener This given 6
on
Itemized Cost Breakdown of a New House
Although new home costs vary considerably throughout the nation, an itemized list of
costs for the various components of a new house in the Chicago area provides a detailed
picture of the many factors affecting the price of a new home today. The following is an
actual breakdown of costs for a new home constructed by Cambridge Homes in a suburb
of Chicago in the spring of 1989.
It is a two-story, four-bedroom house with a two-car garage.
Land and Lot Development Costs
Raw land
$17,000
Impact fees, school and other contributions
5,195
Mass earthwork
1,588
Engineering and soil testing
995
Sanitary and storm sewers, water mains
3,257
Streets, curbs and gutters
4,620
Overhead
750
Interest
4,500
Miscellaneous
752
Subtotal
$38,657
House Construction Costs
Excavation
$ 2,475
Foundation and flatwork
8,605
Steel
460
Carpentry, lumber and trusses
24,965
Windows and doors
2,573
Stairs
685
Roofing and siding
6,880
Gutters and downspouts
430
Plumbing
6,075
Electrical
4,418
Heating, ventilation and air conditioning
2,900
Insulation
1,255
Drywall and painting
8,000
Garage doors
415
Cabinets, counter tops and appliances
3,127
Tile and carpet
4,338
Trim material and hardware
2,618
Landscaping
2,440
Driveway
940
Village permit fees
6,884
Construction overhead
5,160
Interest
1.200
Subtotal
$96,843
Builder's Soft Costs
Sales commissions
$ 3,300
Closing costs
450
Advertising and marketing
4,200
General and administrative costs and profit
13,406
Warranty
1,000
Contingency
2,044
Subtotal
24,400
Total Price
$159,900
Materials Used in Constructing 1,700 Square Foot Single-Family Home
- 9,726 board-feet of lumber.
- 4,614 square feet of sheathing, including roof, wall and floor sheathing.
- 243 square feet of plywood for sheathing.
I
- 55 cubic yards of concrete -- three-fourths of which is poured concrete and the
remainder concrete block.
- 2,528 square feet of exterior finish -- either aluminum siding, brick or wood.
- 1,992 square feet of asphalt shingles for roofing.
- 2,500 square feet of insulation.
- 6,484 square feet of gypsum wall board.
- 90 linear feet of ducting.
- 55 gallons of paint.
- 302 pounds of nails.
- 750 feet of copper wiring.
- 280 linear feet of copper pipe (water supply pipe).
- 100 plumbing fittings for water supply pipe.
- 170 feet of plastic pipe for drain, waste and vent piping, plus 70 fittings.
- 12 windows.
- 10 interior doors; 4 exterior doors; 1 sliding glass door.
- 2 bathtubs or 1 tub and a shower stall.
- 2 toilets.
- 3 sinks.
- 15 kitchen cabinets.
- 1 range, 1 range hood, 1 refrigerator, 1 dishwasher, 1 garbage disposal, smoke
detectors.
Construction Trades and Crafts Required for Residential Building
It takes a multitude of trades and crafts to complete any residential building. Some
of those required for a typical home are:
Architect
Welder
Draftsman
Carpet installer
Surveyor
Flooring installer
Excavator
Locksmith
Cement mason
Wallcovering mechanic
Plumber
Trim Carpenter
Electrician
Asphalt installer
Rough and finish carpenter
Well driller
Roofer
Painter
Sheet metal mechanic
Gutter installer
Stone mason
Telephone technician
Brick mason
Supplier/vendor
Glazer
Insulation technician
Drywall hanger and finisher
Siding technician
Heating, ventilation and air conditioning mechanic
Building Codes
Construction in most jurisdictions throughout the U.S. is regulated at the local level
by building and related codes which set forth specific requirements for materials, fire
protection, structural design, light and ventilation, heating and cooling, sanitary facilities
and energy conservation.
A few municipalities (mostly major cities) write and revise their own codes. However,
most state, county or local jurisdictions adopt one or more of the major model codes,
sometimes with local amendments.
These are codes which are written, maintained, revised and distributed by three major
model code writing organizations. However, the jurisdiction has total authority for adoption
and enforcement. Some states also have mandatory statewide building codes.
The three major model code writing organizations are:
- The Building Officials & Code Administrators International (BOCA), which publish-
es the BOCA Basic/National Codes and is headquartered in Country Club Hills, Illinois.
- The International Conference of Building Officials (ICBO), which is headquartered
in Whittier, California, and publishes the Uniform Building Codes.
- The Southern Building Code Congress International (SBCCI), which publishes the
Standard/Southern Codes and is headquartered in Birmingham, Alabama.
All of these groups write, maintain, revise and distribute a building code, a plumbing
code, a mechanical code, a housing code, a fire prevention code and other documents.
Model codes are usually printed in new editions every three years with annual supplements
published in the interim.
The Council of American Building Officials (CABO), which is headquartered in Falls
Church, Virginia, was formed by the other three code groups to publish the CABO one
& Two Family Dwelling Code, which many jurisdictions have adopted for single-family
houses and duplex units. It also publishes the CABO Model Energy Code.
The approximate areas of model code usage are shown on the map below.
Basic Building
Code (BOCA)
Uniform Building
Code (ICBO)
Standard Building
Code (SBCCI)
Rental Housing
Rental Vacancy Rates
(Percent)
Year
Total
5+ Units
Northeast
Midwest
South
West
1977
5.2%
7.1%
5.1%
5.1%
5.6%
5.0%
1978
5.0
6.7
4.8
4.8
5.5
4.8
1979
5.4
6.6
4.5
5.7
6.1
5.3
1980
5.4
7.1
4.2
6.0
6.0
5.2
1981
5.0
6.4
3.7
5.9
5.4
5.1
1982
5.3
6.5
3.7
6.3
5.7
5.3
1983
5.6
7.1
4.0
6.2
6.8
5.2
1984
5.8
7.5
3.7
5.9
7.9
5.2
1985
6.5
8.8
3.5
5.8
9.2
6.2
1986
7.4
10.4
3.9
6.9
10.1
7.1
1987
7.7
11.2
4.2
6.8
10.9
7.3
1988
7.7
11.4
4.8
6.9
10.2
7.7
1989 Q1
7.3
10.6
4.7
7.0
9.4
6.9
1989 Q2
7.3
10.9
4.6
6.9
9.5
6.9
1989 Q3
7.3
10.5
4.8
6.9
9.2
7.3
Source: Bureau of the Census
Median Asking Rents by Number of Bedrooms
Year
No Bedroom
One Bedroom
Two Bedrooms
3+ Bedrooms
Total
1978
$207
$227
$274
$350
$251
1979
225
246
293
350
272
1980
252
282
333
413
308
1981
353
315
374
437
347
1982
331
356
416
450
385
1983
320
355
417
535
386
1984
315
360
437
508
393
1985
347
388
469
550
430
1986
372
407
492
550
456
1987
499
461
551
646
517
1988
NA
497
596
650+
564
Source: Bureau of the Census
Townhouse Construction
Townhouses accounted for 10 percent of the nation's single-family starts in 1988, 25
percent of which were developed in the Northeast. In 1988, the Northeast accounted for
only 17 percent of the nation's single-family starts but included 41 percent of national
single-family townhouse starts.
The concentration reflects high land costs, strong demand, land use regulations and
cultural traditions.
Between 1970 and 1985 the number of occupied, attached single-family homes in the
nation increased by 116 percent while the total year-round housing stock increased 43.
percent.
The majority of new townhouse single-family units in the Northeast are built for sale
as condominiums. In other parts of the country townhouses are most commonly sold on
a fee-simple basis.
In the West, especially California, land costs are as high as -- or higher than -- costs
in the Northeast. But the regulatory attitude is different, so single-family detached homes
are allowed to reach greater densities. Detached "patio homes" constructed at densities
of 10 per acre and separated from their neighbors by only inches are common there.
Rapidly increasing land costs will continue to dictate a large townhouse supply in the
Northeast. However, it may be partially offset by demand from trade-up buyers who
generally prefer detached homes.
California is likely to be dominated by patio homes but if prices continue to rise,
multifamily condominiums may become more prevalent there.
Many units that most people would consider to be single-family townhouses are
considered by the Census Bureau to be multifamily units. The Census Bureau's definition
of a single-family attached unit requires that it be separated from any adjoining unit by
a single unbroken wall from the bottom of the basement to the roof. If, for example, a
pipe goes from one unit through the wall to the next, the structure is considered to be
multifamily.
Away from the East and West Coasts where land costs tend to be lower, there are
fewer attached single-family homes.
Multifamily Housing
Due to a combination of factors, including the Tax Reform Act of 1986 and high
vacancy rates in some areas, multifamily housing production is expected to fall to about
380,000 units in 1989, similar to production figures at the depths of the 1980-1982 recession.
Multifamily housing starts have been on the decline since 1986 because the new tax
law eliminates incentives for construction. Some areas have continuing high rental vacancy
rates and have imposed restrictions on growth. There also has been a decrease in the
number of young adults, traditionally a major component of the rental market.
In 1980, there were 17.5 million persons aged 18 to 21, according to the U.S. Bureau
of the Census. By 1985, that number had dropped to 15.8 million. In 1983, there were
13.05 million persons aged 22 to 24, but by 1985, the number had dropped to 12.9 million.
Most of the nation's multifamily units are rental properties. In 1988, for example, about
24 percent of all multifamily units started were "for sale" units. The balance were rental
units.
Renters typically have lower incomes than home owners, and in recent years the gap
has widened. The median income for renters was 65 percent that of home owners in 1970;
it decreased to 56 percent in 1985.
Renters also have smaller average households than home owners. In 1985, 35 percent
of all renting households consisted of one person; 65 percent consisted of two or more
persons. By comparison, 17 percent of all home owner households consisted of only one
person; 83 percent were made up of two or more persons.
Second Homes
At present there are between 4 and 5 million second homes in the U.S., including
more than 500,000 mobile homes.
Ownership of second homes is concentrated among middle-aged, married couple
households and that pattern implies strong demand for second homes and increased
second home construction in coming years as the baby boomers reach middle age.
NAHB calculations indicate that second home construction has averaged 65,000 to
100,000 units annually thus far in the 1980s. However, given the size of the baby boom
and the pattern of second home ownership, NAHB predicts a construction rate of 100,000
to 125,000 new second homes annually for the next several years.
Pre-Fabricated Housing Systems
Pre-fabricated, or industrialized, homes or components are partially assembled in a
factory and then shipped to a building site where they are erected. Unlike "mobile homes"
or "manufactured housing," pre-fabricated homes are constructed to meet nationally
recognized model building codes.
There are several types of pre-fabricated or industrialized homes, including:
- The Pre-Cut Home -- All lumber and other materials for this type of home
are pre-cut in a factory and shipped to the building site unassembled.
- The Panelized Home -- This type of home package includes wall panels and
may include other items such as roof systems, floor systems and other
materials and equipment. The exterior wall panels usually include sheathing,
siding, windows and doors. Interior wall panels usually consist of 2-inch by
4-inch studs with rough frame openings for doors (called an open wall system).
When the manufacturer also installs electrical and plumbing systems, insulation
and wallboard, the product is called a closed wall panelized home.
- The Modular or Sectional Home -- The modular or sectional home is about
95 percent complete when it leaves the factory. Built to meet conventional
building codes, it includes all plumbing, electrical and mechanical systems.
The roof and exterior siding are installed in the factory. Interior trim, paint,
wall coverings, carpeting, tile, flooring, cabinets and fixtures are all installed
in the factory before the home is shipped to the building site, usually in two
or more halves or modules. At the site, the modules are placed on the
foundation. Modules can also be stacked to create apartments, condos, hotels
and motels.
Mobile or Manufactured Homes
The HUD Code (Mobile) or Manufactured Home -- the mobile or manufactured home
is manufactured to the HUD mobile home standard rather than a conventional building
code. These homes, which leave the factory 100 percent complete, generally come in two
sizes. Single-wide units are 12- to 14-feet-wide. Double-wide units are 28-feet-wide and
look similar to a ranch house.
General Remodeling Market
-
According to the U.S. Bureau of the Census, expenditures for residential remodeling in 1988
totaled $101.1 billion. This was a 7.4 percent increase over the 1987 total of $94.1 billion and
up 105 percent from the $49.3 billion spent in 1983.
Expenditures for Residential Remodeling and Repairs 1980 - 1988
(Billions of Dollars)
Total
Maintenance
Additions and
Major
Year
Expenditures
and Repairs
Alterations
Replacements
1988
$101.1
$40.9
$43.3
$16.9
1987
94.1
38.2
40.0
15.9
1986
91.2
36.0
38.6
16.7
1985
80.3
35.4
28.8
16.1
1984
69.8
28.9
27.8
13.1
1983
49.3
18.1
20.3
10.9
1982
45.3
16.8
18.8
9.7
1981
46.3
16.0
20.4
9.9
1980
46.3
15.2
21.3
9.8
The seasonally adjusted annual rate of remodeling expenditures for the second quarter of 1989
was $93.9 billion. NAHB predicts that 1989 residential remodeling expenditures will increase
slightly to approximately $102 billion. Based on an analysis of U.S. Bureau of the Census
figures, NAHB estimates that 75 percent of all remodeling/repairs are done by professional
remodelers, 25 percent are done by homeowners.
Seasonally Adjusted Annual Rates of
Seasonally Adjusted Annual Rates of
Remodeling Expenditures
Remodeling Expenditures
First Quarter 1986 - Second Quarter 1989
First Quarter and Second Quarters 1989
Billions of Dollars
$32
$30.3
Maint. & Repairs
$28.6
$28.7
Maint. Repairs
38%
827.7
40%
$28
$24.8
$24.3
Major Replacements
$23.8
$23.1
$23.6
20%
824
$22
$19.3
820
$17.5
$18
$18.5
Major Replacements
Additions & Altera.
17%
45%
$16
Additions & Altera.
40%
Second Quarter 1989
First Quarter 1989
$12
Total $93.9 billion
Total $98.5 billion
1
2
3
4
1
2
3
4
1
2
3
4
1
2
86
87
88
89
Quarters
(Source: U.S. Bureau of Census)
(Source: U.S. Bureau of Census)
Total Expenditures for Residential Remodeling
1974 - 1988 in Billions of Current Dollars and Billions of 1982 Constant Dollars
Billions of Dollars
$100
$80
$60
$40
$20
1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Year
Current Dollars
1982 Constnt Dollars
Source: U.S. Bureau of Census
When residential remodeling expenditures are calculated in terms of 1987 constant dollars (to
account for inflation) it becomes clear that the industry hovered around the $60 billion level
from 1974 until 1983. The industry's real, dramatic growth took place between 1983 and 1986
and has since leveled off.
According to an NAHB survey, the top income producing remodeling activities are room
additions, kitchen remodeling, and bathroom remodeling.
Remodeling Expenditures by Type of Work in 1987 and 1988
(Billions of Dollars)
1987
1988
Painting
$11.5
$12.5
Plumbing
$8.5
$8.6
Roofing
$6.0
$6.7
Heating and Central Air
Conditioning
$6.4
$7.5
Siding
$3.0
$4.1
Remodeling
$4.5
$4.4
Other
$54.1
$57.5
1988 Remodeling Expenditures for Owner-Occupied
One Unit Properties by Year Built
(Billions of Dollars)
1970 1979
$10.9 18%
1960 1969
$9.5 16%
1980 1988
$7.6 13%
Not Reported
$5 8%
Before 1960
$27.6 46%
-
Out of the $60.8 billion spent remodeling single-family homes in 1988, $27.6 billion of the work
was completed on homes built before 1960. Of that $27.6 billion, 55.8 percent was spent in
the Northeast and Midwest. Of the newer homes (built between 1980 and 1988) that were
remodeled, 56.1 percent were in the South and West.
Remodeling Activity for All Residential Properties
in 1986, 1987 and 1988 by Region
(Billions of Dollars)
1986
1987
1988
United States
$91.3
$94.1
$101.1
Northeast
$25.7
$25.7
$31.0
Midwest
$18.6
$21.2
$21.3
South
$29.2
$30.1
$27.1
West
$17.8
$17.1
$21.6
-
According to U.S. Department of Energy figures, there are 4,154,000 non-residential buildings in
the U.S. with 58.2 billion square feet of floorspace. Total remodeling expenditures for these
non-residential buildings is roughly estimated to be slightly more than residential; about $100
billion in 1987, almost all of which is professionally installed.
The Mortgage Market
Adjustable Rate Mortgages
Adjustable Rate Mortgages (ARMs) and Adjustable Mortgage Loans (AMLs) are catch-all
phrases for a variety of mortgages with changeable interest rates.
Interest rates may be pegged to any one of a number of indexes, including the interest
rates on three- or six-month Treasury bills; the yield on Treasury securities which mature
in one, two, three or five years; the cost of funds index for savings and loans; or the
Office of Thrift Supervision's national average contract mortgage rate for existing homes
purchased. Interest rate and payment adjustments occur at regular intervals ranging from
six months to five years, although one-year intervals are most common. The rate is usually
determined by adding a set margin to the index.
Often lenders will offer an initial interest rate on ARMs that is below what it would be
if the index rate were used. In these cases, the consumer should be aware that monthly
payments may rise even if the index does not.
Most ARMs now include caps on how much either the interest rate or payment may
change at any one adjustment date or over the life of the loan. Currently, the most popular
ARM features a two percent annual interest rate cap and a five to six percent cap over
the life of the loan. A few ARMs feature payment caps, which, unlike an interest rate cap,
do not limit increases in the interest rate, and any unpaid interest is added to the principal.
This is called negative amortization. Usually the borrower has the option of using the
payment cap or paying an amount that will amortize the loan. If a consumer makes
payments that are greater than those required to pay off the loan within the original term,
there will be a more rapid reduction of the principal called accelerated amortization.
Graduated Payment Mortgages
Graduated Payment Mortgages (GPMs) were developed in the late 1970s to help buyers,
particularly young, first-time buyers, qualify for mortgages in the face of rapidly rising
housing costs. The GPM allows buyers to make smaller monthly payments in the early
years of the loan when, theoretically, incomes are lower and monthly payments pose more
of a burden. With a basic GPM, payments increase each year until they reach a fixed
rate, usually after five to 10 years.
Because payments increase, these loans are suitable only for buyers who have good
reason to believe their incomes will increase with time. In the long run, GPMs cost a bit
more than fixed-payment loans because they usually involve negative amortization. Pay-
ments during the early years of the loan are not sufficient to cover all of the interest due
and the unpaid portion is added to the principal. Because of the negative amortization
feature, many lenders require a 10 percent downpayment with these loans. GPMs have
recently been combined with 15-year loans. This combination usually involves little or no
negative amortization.
A second type of GPM involves depositing a part of the downpayment in a pledged
account. During the early years of the loan the lender draws on this account to supplement
monthly payments so that the buyer's monthly payment will be lower than it would be
otherwise.
15-Year Mortgage
Mortgages amortized over 15 years require larger monthly payments than 30-year loans
and allow an individual to pay off a mortgage in half the time as well as save on interest
payments. For example, monthly payments on a $50,000 mortgage at 9.5 percent are
$420 when repaid over 30 years and $522 over 15 years. Fifteen-year mortgages may
carry interest rates slightly lower than those for 30-year loans.
Bi-Weekly Mortgages
Bi-weekly mortgages provide another means for paying off a mortgage more quickly.
With a bi-weekly mortgage, the borrower makes half the regular monthly payment every
two weeks. Because there are 26 two-week periods in the year, the borrower makes the
equivalent of 13 monthly payments each year. This reduces the term of a 30-year mortgage
to roughly 16 to 22 years. The lower the interest rate, the longer the term of the mortgage.
To reduce the paperwork associated with the extra payments, most lenders require that
payments be deducted automatically from a borrower's checking account. Bi-weekly
payments may be used with either 30-year or 15-year loans.
Growing Equity Mortgages
With a growing equity mortgage (GEM), payments start out the same as those for a
30-year loan, but monthly payments increase each year for a number of years or for the
term of the loan. Increases usually occur according to a fixed schedule say four percent
each year. Unlike increases with the adjustable rate mortgage, with a growing equity
mortgage all of the increase in payments goes toward reducing the mortgage principal.
Thus the buyer accumulates equity in the home at an increased rate while the accelerated
payment schedule gives the lender a certain degree of protection against inflation and
increases in interest rates. A very popular GEM program involves level payments for the
first six years with annual increases thereafter.
Buydowns
Some builders buy down interest rates for two or three years or for the term of the
mortgage to help their buyers qualify for mortgages during periods of especially high
interest rates.
Shared Equity Mortgages
Equity sharing treats the purchase of a home as an investment that can be shared
between a resident owner and an investment owner. The investment owner contributes a
share of the downpayment, the monthly payments, or both, and proportionately shares in
the ownership of the property. Both purchasers may also share the tax benefits, but the
type and amount of tax deduction would depend on the form of the agreement. Many
lenders now limit this type of arrangement to immediate family members.
Land Lease
With a land lease, a home buyer purchases the house but not the land it's built on.
Since only the house is financed, the required downpayment is less than if the total
land/home package were mortgaged together. In many cases, combined mortgage and
rental payments are lower than monthly mortgage payments would have been if both the
house and land were financed. Generally, the buyer has the option to purchase the land
at a later date.
Creative and Alternative Financing
In a typical creative financing arrangement for a resale unit, the buyer assumes an
existing mortgage, makes a large downpayment and repays the remaining difference on
the value, of the home with a second mortgage or deed of trust carried back by the
seller. Some second trust loans can be paid off in monthly installments over a few years
while others are balloon loans with monthly payments based on a 25- or 30-year amortization
schedule with the balance due after a few years.
In cases involving assumable loans, buyers may be able to arrange a wraparound or
all-inclusive deed of trust that packages the old mortgage financing with the new into
one lump-sum monthly payment. Wraparound financing may be arranged with a lender.
In a lease-purchase agreement, the buyer leases the home with an option to buy,
usually lasting 12 to 18 months. The buyer pays "option money" for a purchase agreement
stating the terms of the sale, except the effective date. That payment, and in some cases
a portion of the monthly rent, can later be applied to the downpayment.
There are many variations on the techniques cited above. Creative financing usually
requires outside legal assistance because of the many subtleties involved.
FHA & VA
Federal Housing Administration
Since its creation in 1934, the Federal Housing Administration (FHA) mortgage insurance
program has increased the availability of home mortgages, lowered the cost of loans,
pioneered new types of mortgage instruments with higher loan-to-value ratios and stimulated
the development of a secondary market in residential mortgages.
FHA operates several mortgage insurance programs for both single-family and multi-
family housing. The most frequently used FHA program is the self-supporting 203(b)
program which provides for low downpayment mortgages on one- to four-family residences.
The maximum loan amount for a one-family home ranges from $67,500 to $124,875
depending on local median prices.
FHA mortgage interest rates are no longer set by the Federal Housing Administration,
so they fluctuate with market conditions.
Since it was established, FHA has financed more than 15 million homes with almost
$300 billion in loans. Most FHA loans are sold on the secondary market to the Government
National Mortgage Association (GNMA).
Veterans Administration
The Veterans Administration (VA) Home Loan Guaranty allows eligible veterans to
obtain mortgage loans with little or no downpayment. The maximum loan amount without
a downpayment is generally $184,000.
The maximum interest rate on VA loans is set by the Veterans Administration and most
VA loans are sold on the secondary market to the Government National Mortgage
Association.
The VA has guaranteed more than 12.5 million home loans since the inception of its
loan guaranty program in 1944.
Affordability of Housing
Based on a 30 year mortgage of $76,500 ($85,000 purchase); fixed rate¹
(10% downpayment)
As the interest rate decreases, so do total monthly expenses and annual income requirements.
At the same time, the number of families able to afford the lower costs increases.
Assuming that expenses equal 28% of the income:
Annual Income
$52,222
17
17
$46,995
$41,726
13
13
$36,586
% Interest Rate
$31,744
9
9
5
5
% of Families with Income Needed to Purchase
40
40
35.2%
30
30
27.1%
Percent
20.5%
20
20
15.1%
11.4%
10
10
Monthly
Number of
Principal &
Property
Total
Annual Income
Families
Interest
Interest
Taxes &
Monthly
Needed to
w/Income
Rate
Payment
Insurance
Expenses
Afford
Needed
Percent
9%
$ 616
$125
$ 741
$31,744
21,833,000
35.2%
11
729
125
854
36,586
16,806,000
27.1
13
849
125
974
41,726
12,718,000
20.5
15
972
125
1097
46,995
9,354,000
15.1
17
1094
125
1219
52,222
7,074,000
11.4
continued
Affordability of Housing Continued
Based on a 30 year mortgage of $90,000 ($100,000 purchase); fixed rate'
(10% downpayment)
Annual Income
$61,347
17
17
$55,178
$49,009
13
13
$42,969
% Interest Rate
$37,271
9
9
5
5
% of Families with Income Needed to Purchase
30
30
26%
19.1%
20
20
13.4%
Percent
9.8%
10
10
6.9%
0
0
Monthly
Number of
Principal &
Property
Total
Annual Income
Families
Interest
Interest
Taxes &
Monthly
Needed to
w/Income
Rate
Payment
Insurance
Expenses
Afford
Needed
Percent
9%
$ 725
$145
$ 870
$37,271
16,136,000
26.0%
11
858
145
1003
42,969
11,828,000
19.1
13
999
145
1144
49,009
8,324,000
13.4
15
1143
145
1288
55,178
6,085,000
9.8
17
1287
145
1432
61,347
4,265,000
6.9
1
Figures are based on a current estimate of 62,000,000 families in the U.S. and the assumption that all families are in the
housing market. A 1983 family income distribution estimated by NAHB is applied.
Mortgage Payment Tables
Principal and Interest Payment for a Fixed-Rate 15-Year Loan
Interest Rate
Loan Amount
8%
8.5%
9%
9.5%
10%
10.5%
11%
11.5%
12%
$ 5,000
$ 48
$ 49
$ 51
$ 52
$ 54
$ 55
$ 57
$ 58
$ 60
10,000
96
98
101
104
107
111
114
117
120
15,000
143
148
152
157
161
166
171
175
180
20,000
191
197
203
209
215
221
227
234
240
25,000
239
246
254
261
269
276
284
292
300
30,000
287
295
304
313
322
332
341
350
360
35,000
334
345
355
365
376
387
398
409
420
40,000
382
394
406
418
430
442
455
467
480
45,000
430
443
456
470
484
497
511
526
540
50,000
478
492
507
522
537
553
568
584
600
55,000
526
542
558
574
591
608
625
643
660
60,000
573
591
609
627
645
663
682
701
720
65,000
621
640
659
679
698
719
739
759
780
70,000
669
689
710
731
752
774
796
818
840
75,000
717
739
761
783
806
829
852
876
900
80,000
765
788
811
835
860
884
909
935
960
85,000
812
837
862
888
913
940
966
993
1,020
90,000
860
886
913
940
967
995
1,023
1,051
1,080
95,000
908
936
964
992
1,021
1,050
1,080
1,110
1,140
100,000
956
985
1,014
1,044
1,075
1,105
1,137
1,168
1,200
Mortgage Payment Tables
Principal and Interest for a Fixed-Rate 30-Year Loan
Interest Rate
Loan Amount
8%
8.5%
9%
9.5%
10%
10.5%
11%
11.5%
12%
$ 5,000
$ 37
$ 38
$ 40
$ 42
$ 44
$ 46
$ 48
$ 50
$ 51
10,000
73
77
80
84
88
91
95
99
103
15,000
110
115
121
126
132
137
143
149
154
20,000
147
154
161
168
176
183
190
198
206
25,000
183
192
201
210
219
229
238
248
257
30,000
220
231
241
252
263
274
286
297
309
35,000
257
269
282
294
307
320
333
347
360
40,000
294
308
322
336
351
366
381
396
411
45,000
330
346
362
378
395
412
429
446
463
50,000
367
384
402
420
439
457
476
495
514
55,000
404
423
443
462
483
503
524
545
566
60,000
440
461
483
505
527
549
571
594
617
65,000
477
500
523
547
570
595
619
644
669
70,000
514
538
563
589
614
640
667
693
720
75,000
550
577
603
631
658
686
714
743
771
80,000
587
615
644
673
702
732
762
792
823
85,000
624
654
684
715
746
778
809
842
874
90,000
660
692
724
757
790
823
857
891
926
95,000
697
730
764
799
834
869
905
941
977
100,000
734
769
805
841
878
915
952
990
1,028
*For mortgages over $100,000 add the appropriate figures. For example, the principal and interest on a 30-year $100,000 mortgage at 10 percent
interest is $878 and the principal and interest on a 30-year $5,000 mortgage at 10 percent is $44. Thus the total principal and interest payment on
a $105,000 mortgage is $878 plus $44 or $922 per month.
Mortgage Revenue Bonds
Tax-exempt mortgage revenue bonds (MRBs) issued by state and local housing agencies
provide funds for home mortgages at rates about 2 percent below the market rate and
help alleviate the housing affordability problem. They are restricted to first-time buyers of
modestly priced homes. In 1985, states and localities issued $12 billion in mortgage
revenue bonds providing financing for an estimated 236,000 home purchases.
Uncertainty stemming from congressional efforts to revise the tax laws covering
tax-exempt bonds, along with lower interest rates, reduced the amount of mortgage revenue
bonds issued in 1986. States and localities issued only about $6 billion in mortgage
revenue bonds, providing financing for an estimated 117,000 home purchases.
In 1987 and 1988, the new tax law's lower home purchase price ceilings and new
borrower income limits restrained mortgage revenue bond activity, with roughly $7.5 billion
to $8 billion in bonds issued each year.
Although authority to issue mortgage revenue bonds was slated to expire at the end
of 1988, Congress extended it through 1989 with additional restrictions. Late in 1989,
Congress again extended authority to issue mortgage revenue bonds for an additional
nine months.
Since their inception, mortgage revenue bonds have funded the purchase of more
than one million homes by first-time buyers.
Mortgage Delinquency
Mortgage Delinquency
(Seasonally Adjusted Rate)
(30 or more days past due)
Year
Q1
Q2
Q3
Q4
1980
4.88
4.98
5.01
5.01
1981
5.23
5.23
5.33
5.21
1982
5.28
5.53
5.57
5.74
1983
5.69
5.61
5.37
5.69
1984
5.39
5.50
5.92
5.82
1985
6.06
5.82
5.75
5.72
1986
5.72
5.68
5.50
5.35
1987
5.18
5.02
4.75
4.94
1988
4.79
4.85
4.78
4.74
1989
4.61
4.53
NA
NA
Source: Mortgage Bankers Association, National Delinquency Survey.
Secondary Mortgage Market
Government National Mortgage Association
GNMA, or Ginnie Mae, was established as an arm of HUD in 1968 to provide support
for government-related housing programs. In the past, GNMA has bought mortgages
initiated through government subsidized programs. However, GNMA's chief operation is its
mortgage-backed security (MBS) program, begun soon after the agency opened.
Under the MBS program, lenders package FHA/VA mortgages into pools of loans with
the same interest rate and of the same type -- 203(b) loans in one pool, Section 245
GPMs in another. The lender then warrants to GNMA that the loans conform to GNMA's
standards and agrees to make timely monthly payments to investors, whether or not
individual home owners make their monthly payments.
GNMA does not issue the security, nor does it buy or hold the mortgages. The lender
issues the security and, along with the custodian, holds the mortgages. GNMA guarantees
that the registered securities holders will receive the timely payment of monthly principal
and interest as well as any early repayment of the loans. The GNMA guarantee carries
the full faith and credit of the U.S. Government. This successful market rate program has
been a model for conventional mortgage-backed securities.
Federal National Mortgage Association
FNMA, or Fannie Mae, the largest single investor in residential mortgages, was
established by Congress in 1938 to buy FHA-insured loans where credit was scarce. FNMA
became a private, for-profit corporation in 1968 and began buying conventional loans in
1970.
The functions FNMA had performed in support of government subsidized housing
programs were transferred to GNMA under HUD jurisdiction. FNMA continues to buy
FHA/VA loans.
FNMA buys mortgages from lenders and, until recently, held most of them in its
portfolio. FNMA finances its purchases through its mortgage portfolio income by issuing
short-term discount notes and intermediate-term debentures and by charging fees for the
service it offers. FNMA also has a $2.25 billion stand-by line of credit with the U.S.
Treasury that has yet to be used.
As a portfolio holder of loans, FNMA was caught in the same earnings squeeze that
has affected savings and loans. The income from its older loans was lower than its cost
of funds. In order to assure a closer match of its cost of funds over the long term with
the income from new loans, FNMA began packaging loans into mortgage-backed securities
during 1981. In recent years, Fannie Mae's mortgage-backed securities activity has far
exceeded its portfolio purchases.
In addition to conventional and FHA/VA fixed rate loans, Fannie Mae will purchase
adjustable mortgage loans, graduated payment mortgages, growing equity mortgages,
loans on land lease properties, loans involving buy-downs or refinancing, loans on
condominiums, loans on permanently sited mobile homes or manufactured housing, second
mortgages and home seller loans. A negotiated transactions desk will consider specially
designed programs that do not fit into any of the standard programs.
Federal Home Loan Mortgage Corporation
FHLMC, known as either Freddie Mac or The Mortgage Corporation, was established
in 1970 to provide a secondary market for conventional loans. Much of its business is
with savings and loan associations, but it also buys mortgages from commercial banks
and mortgage bankers.
FHLMC buys whole loans or participations in loans and takes title to them. Unlike
Fannie Mae, however, Freddie Mac does not hold large numbers of loans in portfolio.
Rather, it immediately packages the loans in large pools and sells participation certificates
to investors. Participation certificates, known as PCs, are a form of mortgage-backed
security.
Freddie Mac also operates a mortgage swap program, called the Guarantor program,
to help mortgage lenders increase their liquidity. The program permits mortgage lenders
to convert mortgages into more easily marketable participation certificates.
Freddie Mac will purchase 30-year and 15-year conventional fixed-rate loans, certain
adjustable rate mortgages, loans on condominiums and manufactured housing, second
mortgages, loans involving land leases and refinancing loans. It also operates a negotiated
transaction desk for loans that do not conform to standard Freddie Mac programs.
Demographic Trends
Population
The U.S. population is expected to grow by 2.1 million yearly between 1989 and 1992,
or .85 percent each year. Population growth will slow to .75 percent a year between 1992
and 1995.
Much more important to the building industry are changes in the population by age,
because each age group constitutes a different type of market. The nation experienced
a "baby bust" in the 1920s and 1930s followed by a "baby boom" from 1945 to 1962,
another "bust" from 1963 to 1973 and a "baby boomlet" after 1973.
Based on these patterns, the population is expected to change as follows between
1990 and 1992:
Age
Change
10-14
Change from decline to increase
15-24
Continued decline
25-29
Change from increase to decline
30-34
Growth will slow
35-54
Rapid growth
55-64
Continued decline
65-75
Growth will slow
75 +
Rapid growth
This pattern implies a significant decline in the young adult market, strong expansion
among those in the middle years (a higher income group in general), stability among
younger seniors and rapid expansion among older seniors. The period from 1992 to 1995
shows the same pattern.
Household Growth
The direct determinant of housing demand is not population growth but household
growth. It can vary radically with short-term economic conditions and is affected over
longer periods by social trends such as marriage and divorce rates as well as the tendency
for young adults to live with parents or roommates. The types of households being formed
also affect housing demand.
In 1990, the number of households is expected to grow by 1.4 million. After 1990,
there will be a steady decline in household growth as the "baby bust" generation of
1963-1973 moves through the primary household formation ages of 25 to 35.
Projected changes in the rate of growth of different age households, based on work
by the Joint Center for Housing Studies of Harvard University, are shown below.
Γ
PROJECTED CHANGE IN RATE OF GROWTH OF HOUSEHOLDS
1985-1990 & 1990-1995
(In percentages)
30
LEGEND
26
25
1985-1990
20
20
20
1990-1995
16
16
15
10
11
10
9
5
4
0
O
-2
-5
-4
-4
-10
-10
-15
-15
-20
-17
I
-25
-30
18-24 25-29 30-34 35-44 45-54 55-64 65-74 75+
AGE
The highest growth categories in 1990 will be:
- Singles, age 35 to 44
- Married couples, age 35 to 44
- Singles, age 75 +
The categories showing significant declines will be:
- Married couples, age 18 to 29
- Married couples, age 55 to 64
In general, married couple households will continue to decline in each age group.
This trend reflects the aging of the "baby boom" generation with its higher never-married
or divorce rates, as well as expectations of an even greater tendency to be single among
younger people than has appeared previously. If marriage at a younger age comes back
into fashion, these projected patterns would change.
Migration Patterns
In 1989 and 1990 the regional pattern of population growth will continue as in the
past with the Sunbelt showing more rapid growth than the Snowbelt. However, population
flows may slow. Some areas such as the Northeast that have traditionally experienced
outmigration now have low or declining unemployment rates while some of the usual
recipient areas are suffering high unemployment.
A continued decline in mobility rates -- resulting from an aging population, more
dual-earner households and other factors may also influence regional growth.
Another key factor affecting regional population growth will be regional differences in
the age structures of households. In general, areas that have experienced steady
in-migration now have relatively younger populations because migrants tend to be young.
Those areas with younger populations will experience more natural population increases
-- more births and fewer deaths. And they will also experience relatively stronger growth
(or less decline) in the demographic groups comprising the starter home markets.
Within regions and even states there has been significant variation in the growth rates
of non-metropolitan areas relative to metropolitan areas. In the 1980s there was a return
to the long-term expansion of métropolitan areas and shrinkage of the non-metro sector.
This was in large part because of continuing growth in the service sector and declines
in manufacturing, agriculture and mining.
Historical Perspective
Housing in 1940
In 1940, the U.S. Census Bureau's first housing census found that owner-occupied
homes had a median value of $2,938. The median gross rent was $27.28 per month.
The Census also found that about 64 percent of the nation's 37.3 million housing units
were single-family detached homes.
More than a million pre-Civil War housing units were still occupied in 1940.
In 1940, 31 percent of the nation's homes did not have running water and 45 percent
did not have complete private plumbing.
The 1940 housing census also found that about 14.3 million units -- or less than half
of all homes -- had central heat. Steam and hot water systems were more popular than
warm air furnaces. And of the 19.8 million housing units without central heating, almost
16 million relied on stoves for heat.
About 15 million homes in 1940 had mechanical refrigeration equipment while another
9.3 million relied on ice. About 9.9 million used other means of cooling such as spring
houses or had no means of protecting perishable foods.
Housing Today
The Nation's Housing Stock
68.1 percent of the nation's 84.6 million occupied housing units are one-unit homes;
11.9 percent are in buildings with two to four units. Another 15.3 percent are mobile
homes.
33 percent of the nation's housing units are in the South; 26 percent are in the
Midwest; 21 percent are in the Northeast and 20 percent are in the West.
97.6 percent of the nation's year-round units have complete plumbing facilities and
98.5 percent have private kitchens. Almost 52 percent are heated by warm-air furnaces,
16 percent by steam or hot water and 3 percent by heat pumps. Fifty-nine percent of
all occupied units are air conditioned.
American living space compares favorably with other countries. According to the
United Nations Yearbook, the number of residents per housing unit in capital cities ranges
from 8.66 in Seoul, Korea, to just 1.81 in West Berlin. Washington, D.C. has 2.4; Moscow,
4.1; London, 2.61; and Rome 2.96.
Throughout the nation, new housing construction in concentrated in metropolitan areas.
In 1987, about 88 percent of all residential units authorized by building permits were
located within metropolitan areas.
America's 100 Millionth Home
The nation's 100 millionth home, a three-bedroom ranch-style house in the Atlanta
suburb of Lawrenceville, Ga., was occupied in April of 1987.
The house was designated by NAHB following a determination by the U.S. Census
Bureau that America's 100 millionth home would be completed by the end of March. The
South was the likeliest location of the home because new construction in the South has
been twice that of any other region since 1980.
The 1,850-square-foot home sold for more than $98,000.
Profile of the National Association of Home Builders
A federation of more than 800 state and local associations nationwide, NAHB has
more than 157,000 members.
About one-third of all members are builders, the majority of whom construct fewer
than 25 units per year. The remainder of the membership consists of associates in allied
fields such as mortgage finance and building products and services.
The association was founded in 1943 and is headquartered in Washington, D.C. It
has an annual budget of more than 31 million.
As the "Voice of America's Housing Industry," NAHB is dedicated to serving the needs
of individual members and its state and local associations. It provides management services
to state and local associations and keeps members and associations informed about
changes in building techniques, marketing, financing, legislation, government regulations,
consumer attitudes and preferences, and specialized fields within the housing industry.
Councils addressing needs of specialized fields within the housing industry include
the Building Systems Council (pre-fabricated or industrialized housing), the National
Commercial Builders Council, the National Council of the Multifamily Housing Industry, the
NAHB Remodelors Council, the National Sales and Marketing Council, the Rural Housing
Council and the Seniors Housing Council. Four standing committees address the needs
of small volume, medium volume, large volume and custom single-family home builders.
NAHB's various divisions analyze housing policy issues, take the housing industry's
story to the public through the media, monitor and work toward improving the housing
finance system and analyze and forecast economic trends.
In addition, the association represents the industry's interests on Capitol Hill and
strives to ensure that housing remains a national priority when laws are made and policies
set.
Each year the association holds an annual convention and exposition. The convention,
which attracted more than 65,000 persons in 1989, features educational seminars and
exhibits of the latest in products and services for the housing industry. The NAHB Annual
Convention and Exposition will be held in Atlanta in 1990 and 1991.
NAHB has several close affiliates focusing on specialized aspects of the housing
industry. They include:
- HOW The Home Owners Warranty (HOW) program provides a 10-year new
home buyer protection plan. The plan is administered by the Home Owners
Warranty Corporation which began as an NAHB subsidiary and has since
become an independent mutual company.
- NAHB National Research Center, Inc. -- The NAHB National Research Center
develops, tests and evaluates new materials, methods, standards and equip-
ment to improve America's housing and to make it more affordable.
- Home Builders Institute -- NAHB's educational arm, the Home Builders
Institute develops and administers a wide range of educational and job training
programs. It is also responsible for developing the educational programs at
NAHB's annual convention and exposition, "The Builders' Show."
For more information about NAHB or a copy of the "Contact" brochure listing all NAHB
departments, staff contacts and telephone numbers, call the Public Affairs Division at (202)
822-0405.
THE WHITE HOUSE
WASHINGTON
SCHEDULE OF THE PRESIDENT
FOR
ATLANTA, GEORGIA
JANUARY 19, 1990
EVENTS:
Staff Photo with NAHB Executive Committee Members and Capitol
Club Members
Address National Association of Home Builders
DRESS:
Men
-Business Suit
Women
-Day Dress
CONTACTS:
Presidential Advance Office
John G. Keller, Jr.
- 202/456-7565
Trip Coordinator
Patricia L. Conrad
- 202/456-7565
Atlanta, Georgia Signal
- 202/395-1522
ADVANCE:
Rick Pharr
-LEAD
Kelley Gannon
-PRESS
Tony Germano
-USSS
Bill Hilton
-WHCA
Bruce Caughman
-MIL AIDE
Pat Stamper
-AFI
WEATHER:
Chance of Showers/High 60's
SCHEDULE OF THE PRESIDENT
FOR
ATLANTA, GEORGIA
FRIDAY, JANUARY 19, 1990
GUEST AND STAFF INSTRUCTIONS:
7:45 am
Vans depart West Basement
en route Andrews Air
Force Base.
8:15 am
Those Guests and Staff with
own transportation should
arrive Distinguished Visitor's
Lounge for check-in.
8:30 am
Guests and Staff manifested
on Marine One, proceed to
South Lawn for boarding.
8:45 am
THE PRESIDENT boards Marine One and departs White
(E.S.T.)
House en route Andrews Air Force Base.
MARINE ONE MANIFEST:
THE PRESIDENT
Mrs. Bush
A. Card
M. Fitzwater
T. McBride
D. Valdez
Doctor
Mil Aide
2 USSS
(Flying Time: 10 Minutes)
8:55 am
THE PRESIDENT arrives Andrews Air Force Base and
proceeds to board Air Force One.
9:00 am
THE PRESIDENT departs Andrews Air Force Base en
(E.S.T.)
route Atlanta, Georgia.
(Flying Time: 1 Hour 35 Minutes)
(Interchange: No)
(Time Change: None)
(Food Service: Breakfast)
10:35 am
THE PRESIDENT arrives Dobbins Air Force Base and
(E.S.T.)
proceeds to Motorcade.
Met by:
The Honorable Johnny Isakson
State Representative and House Minority Leader
The Honorable Harrill L. Dawkins
State Senator and Chairman, Senate Industry and
Labor Committee
The Honorable Maynard Jackson
Mayor of Atlanta
Miss Jackie Sue Gingrich
Daughter, Congressman Newt Gingrich
Mr. Fred Cooper
Former Georgia Chairman, Bush-Quayle '88
Mr. John Linder
Republican Candidate for Fourth Congressional
District
Dr. Philip Secrist
Chairman, Cobb County Board of Commissioners
Brigadier General Dale Baumler
14th Air Force Commander
Colonel Bill Haber, Commander
Dobbins Air Force Base
10:40 am
THE PRESIDENT boards Motorcade and departs Dobbins
Air Force Base en route Omni Coliseum.
Page Two
MOTORCADE ASSIGNMENTS:
Lead
R. Pharr
Spare
T. McBride
Doctor
LIMO
THE PRESIDENT
Sec. Kemp
Follow Up
Control
A. Card
S. Rogich
Mil Aide
Support
M. Fitzwater
J. Keller
Official Photographer
Medic
WHCA
Staff I
D. Demarest
J. Wray
Camera I
Camera II
G. Fendler
Wire I
Wire II
Guest I
Sec. Lujan
F. Bracken
Guest II
F. McClure
Sen. Fowler
Rep. Gingrich
Staff Van
All Remaining Staff
Guest Van
All Remaining Guests
Page Three
Press Van I
J. Herrick
Press Van II
Press Van III
(Drive Time: 20 Minutes)
GUEST AND STAFF INSTRUCTIONS:
Upon arrival at Omni Coliseum, Guests
and Staff will be escorted to Staff
Viewing Area or Holding Room.
Please board Motorcade no later than
12:00 pm for transport to Dobbins
Air Force Base.
11:00 am
THE PRESIDENT arrives Omni Coliseum and proceeds
to Hospitality Room.
Met by:
Ms. Shirley McVay Wiseman
President, NAHB
Mr. Martin Perlman
President Elect, NAHB
Mr. Mark E. Tipton
Vice President and Treasurer, NAHB
Mr. Robert J. Buchert
Vice President and Secretary, NAHB
Mr. Dale Stuard
Immediate Past President, NAHB
Mr. Kent W. Colton
Executive Vice President and CEO, NAHB
Ms. Patsy Garner
Chairman - Conventions Committee, NAHB
Page Four
EVENT:
STAFF PHOTO WITH NAHB EXECUTIVE COMMITTEE
MEMBERS AND CAPITOL CLUB MEMBERS
CLOSED PRESS
11:03 am
THE PRESIDENT arrives Hospitality Room and
begins participation in Staff Photo.
11:23 am
THE PRESIDENT concludes participation in Staff
Photo, departs Hospitality Room and proceeds
to Off-Stage Announcement Area, Main Hall.
11:24 am
THE PRESIDENT arrives Off-Stage Announcement Area
and holds briefly.
EVENT:
ADDRESS NATIONAL ASSOCIATION OF HOME BUILDERS
OPEN PRESS
RUFFLES AND FLOURISHES
OFF-STAGE ANNOUNCEMENT
HAIL TO THE CHIEF
REMARKS
TELEPROMPTER
11:25 am
THE PRESIDENT is announced onto Stage, proceeds
to Podium and assists in symbolically opening The
46th Annual Convention.
11:27 am
THE PRESIDENT concludes participation in opening
the Convention and proceeds to Seat.
11:29 am
THE PRESIDENT is introduced for Remarks by
Ms. Shirley McVay Wiseman, President , NAHB.
Page Five
11:30 am
THE PRESIDENT Remarks.
11:45 am
THE PRESIDENT concludes Remarks and, accompanied
by Secretary Kemp, departs Main Hall and proceeds
to Holding Room.
11:46 am
THE PRESIDENT, accompanied by Secretary Kemp,
arrives Holding Room.
12:03 pm
THE PRESIDENT departs Holding Room and proceeds to
Motorcade.
12:05 pm
THE PRESIDENT boards Motorcade and departs Omni
Coliseum en route Dobbins Air Force Base.
MOTORCADE ASSIGNMENTS:
Same as on Arrival.
(Drive Time: 20 Minutes)
12:25 pm
THE PRESIDENT arrives Dobbins Air Force Base and
proceeds to board Air Force One.
12:30 pm
THE PRESIDENT departs Atlanta, Georgia en route
(E.S.T.)
Miami, Florida.
(Flying Time: 1 Hour 45 Minutes)
(Interchange: Yes)
(Time Change: None)
(Food Service: Lunch)
Page Six
HOME BUILDERS ASSOC., OMNI, ATLANTA
11:00 A.M. FRIDAY, JAN. 19, 1990
((THANK YOU, SHIRLEY WISEMAN, MARTIN PERLMAN --
GOOD TO SEE A FELLOW HOUSTONIAN -- MARK TIPTON, JAY
BUCHERT, KENT COLTON AND BOB BANNISTER -- GREAT TO SEE
YOU. HASN'T BEEN SO LONG, HAS IT, SINCE OUR LAST
MEETING IN NOVEMBER? AND, OF COURSE, WE HAVE NEWT
GINGRICH, CHALMERS WYLIE AND STEVE BARTLETT.))
((AND IT'S GREAT TO BE BACK IN ATLANTA. IN FACT,
I BELIEVE THAT IT WAS IN THIS VERY HALL, ABOUT A YEAR
AND A HALF AGO, THAT THE DEMOCRATS HELD THEIR 1988
CONVENTION. OF COURSE, I HAVE FOND MEMORIES OF THAT
CONVENTION. IT GAVE ME AN EXCUSE TO GO FISHING IN
WYOMING. )\\\
((BUT FRANKLY, I NEVER THOUGHT MY SILVER FOOT
WOULD STAND ON THE SAME SPOT AS ANN RICHARDS.) 11111
IN ANY EVENT, IT'S GREAT TO BE BACK AMONG THE HOME
BUILDERS OF AMERICA. ((I JUST HOPE YOU APPRECIATE ONE
THING -- IT'S NOT EVERY DAY THAT THIS ASSOCIATION GETS
TO HEAR FROM SOMEONE WHO ACTUALLY LIVES IN PUBLIC
HOUSING.
- 2 -
BEFORE WE MOVED TO THE WHITE HOUSE, BARBARA AND I
WERE A HOME BUILDER'S AND A REALTOR'S DREAM. WE LIVED
IN 28 PLACES IN 45 YEARS. AND YET, IN A REAL SENSE,
WHEREVER WE LIVED -- WHETHER IT WAS IN HOUSTON,
WASHINGTON, NEW YORK OR BEIJING -- OUR FAMILY HAD ONE
TRUE HOME THAT WE TOOK WITH US WHEREVER WE WENT.
I REMEMBER THE FIRST PLACE BARBARA AND I LIVED IN,
WHEN GEORGE JUNIOR WAS JUST A BABY -- A TINY RAMSHACKLE
SHOTGUN HOUSE IN THE OIL TOWN OF ODESSA, TEXAS. IT HAD
A MAKESHIFT PARTITION DOWN THE MIDDLE THAT CUT THE
HOUSE INTO TWO APARTMENTS, LEAVING US WITH A SMALL
KITCHEN AND A SHARED BATHROOM. AN OLD WATER-DRIP
WINDOW UNIT THAT CRANKED UP LIKE A WEST TEXAS DUST
STORM STILL COULDN'T DROWN OUT THE NOISE OF THE
ALL-NIGHT PARTIES NEXT DOOR.
OF COURSE, THAT FIRST HOUSE BARBARA AND I LIVED IN
COULDN'T COMPARE TO THE NEW "SMART HOUSES" THAT YOU, IN
THE NAHB, ARE BUILDING. WE WERE FORTUNATE THAT THE
WIRING EVEN WORKED, WHILE TODAY YOU ARE PUTTING
TELEPHONE, TELEVISION AND POWER TOGETHER ON ONE MASTER
CABLE, LINKED TO A COMPUTER. IT'S REMARKABLE WHAT FREE
ENTERPRISE AND AMERICAN INGENUITY CAN DO.
- 3 -
YET DESPITE IT ALL, LORD BYRON WAS RIGHT -- A HOME
IS A PLACE IN THE HEART. I CAN'T SPEAK FOR OUR
NEIGHBORS, BUT FOR US, THAT LITTLE SHACK WAS HOME. AND
I HAVE TO WONDER, AND WORRY, HOW MANY FAMILIES BREAK
APART BECAUSE THEY CAN'T AFFORD TO BUY OR RENT A HOME
EVEN HALF AS DECENT AS OUR FIRST PLACE. 11
WE CANNOT ALLOW THE HIGH COSTS OF HOUSING TO
SUFFOCATE THE FINANCIAL LIFE OF AMERICA'S YOUNG PEOPLE.
WHEN IT COMES TO HOUSING, THIS MUST NOT BECOME A
SOCIETY OF "HAVES" AND "HAVE NOTS. "\\\
THE FACT IS THAT FOR THE LAST DECADE AND A HALF,
THE COST OF NEW HOMES -- THE COST OF THE AMERICAN DREAM
-- HAS BEEN ESCALATING. YOUNG COUPLES JUST STARTING
OUT, LOW AND MODERATE-INCOME AMERICANS, UNMARRIED
PEOPLE TRYING TO INVEST IN THE FUTURE -- MANY ARE
FINDING THEMSELVES PRICED OUT OF THE HOME MARKET,
ESPECIALLY NEW HOMES.
- 4 -
TO CREATE DECENT HOUSING THAT PEOPLE CAN AFFORD,
THE GOVERNMENT AND PRIVATE SECTOR MUST CUT SOME
REDTAPE. so I HAVE ASKED JACK KEMP TO CONVENE A BLUE
RIBBON COMMISSION TO IDENTIFY THESE BARRIERS TO
AFFORDABLE HOUSING CONSTRUCTION AND TO MAKE
RECOMMENDATIONS ON HOW TO ELIMINATE THEM.
(AND WHILE I'M AT IT, CAN I GET SOMETHING OFF MY
CHEST? AS YOU KNOW, AS I TRAVEL AROUND THIS COUNTRY, I
HAVE ENCOURAGED THE PLANTING OF TREES -- AND EVEN
PLANTED A FEW MYSELF. BUT IN THESE SAME TRAVELS, I SEE
so MANY NEW SUBURBS UTTERLY DENUDED OF TREES -- IRONIC,
SINCE THE NEW OWNERS' FIRST INSTINCT WILL BE TO PLANT
AS MANY TREES AS POSSIBLE; IRONIC ALSO BECAUSE TREES
CLEAN OUR AIR. SO I RESPECTFULLY SUGGEST, AS A FORMER
BUSINESSMAN, THAT LEAVING THE ORIGINAL TREES MIGHT BE A
SHREWD SALES STRATEGY. IT'S GOOD FOR BUSINESS, AND
IT'S GOOD FOR THE ENVIRONMENT.)
- 5 -
BUT THE TRUTH IS, THERE'S ONE HOUSING POLICY, AND
ONE SALES STRATEGY, THAT'S BETTER THAN ALL OTHERS
COMBINED -- A HEALTHY, GROWING ECONOMY WITH LOW,
LONG-TERM INTEREST RATES. THIS FIRST MONTH OF THE
1990S MARKS THE 86TH MONTH OF ECONOMIC GROWTH IN
AMERICA. AS SHIRLEY SAYS, IT WAS HOUSING THAT PAVED
THE WAY TO THE LONGEST PEACETIME RECOVERY IN MODERN
HISTORY. YOU BUILT NEARLY TEN MILLION SINGLE-FAMILY
HOMES IN THE '80S, AND NEARLY FIVE MILLION MULTI-FAMILY
UNITS. AND BY WORKING TOGETHER, THE HOUSING INDUSTRY
WILL HELP KEEP THIS COUNTRY GOING STRONG IN THE '90S.\\
THE ENGINE OF HOMEOWNERSHIP IN AMERICA IS THE
PRIVATE ENTERPRISE SYSTEM. AND BY HELPING THOSE
ENTREPRENEURS AND RISKTAKERS, MORE AMERICANS WILL HAVE
ACCESS TO THE DREAM OF HOMEOWNERSHIP AND DECENT
HOUSING.
- 6 -
BUT TO KEEP AMERICA MOVING, WE WILL NEED THE
COOPERATION OF CONGRESS. I CAN THINK OF ONE SIMPLE
ACTION CONGRESS CAN TAKE TO GIVE THE ECONOMIC EXPANSION
A BOOST. IT HAS ALREADY BEEN DEBATED. IT HAS ALREADY
WON THE SUPPORT OF THE MAJORITY OF MEMBERS. WHAT WE
NEED NOW IS A SIMPLE UP-OR-DOWN VOTE TO CUT THE TAX ON
CAPITAL GAINS.
SOME CALL A CAPITAL GAINS TAX CUT A FAVOR FOR THE
RICH. THEY SHOULD KNOW BETTER. THEY SHOULD KNOW WHAT
YOU KNOW - THAT A CAPITAL GAINS TAX CUT FAVORS
ECONOMIC GROWTH, JOBS AND OPPORTUNITY FOR WORKING
AMERICA. IT FAVORS EVERY AMERICAN WHO MAKES A LIVING,
DAY AFTER DAY, BRICK BY BRICK, HAMMER ON NAIL.
A CAPITAL GAINS TAX CUT WILL HELP EVERY AMERICAN
WHO HOLDS A JOB OR OWNS A HOME. so I CALL ON THE
DEMOCRAT LEADERS OF CONGRESS TO GIVE THE AMERICAN
PEOPLE A BREAK, AND TO LET THE HOUSE AND SENATE WORK
THEIR WILL BY HAVING AN UP AND DOWN VOTE ON THE CAPITAL
GAINS TAX CUT. 111
- 7 -
ALSO VITAL TO HOME BUYER AND HOME BUILDER ALIKE
ARE LOW AND STABLE RATES OF INTEREST. A ONE-PERCENT
INCREASE IN THE INTEREST RATE KNOCKS MILLIONS OF
FAMILIES OUT OF THE MARKET. IN THE LAST FEW YEARS,
MILLIONS OF FAMILIES COULD AFFORD A NEW HOME BECAUSE
MORTGAGE INTEREST RATES HAVE DROPPED FROM 18 PERCENT IN
THE EARLY 1980S TO LESS THAN 10 PERCENT TODAY. 11 AND I
WANT TO SEE THEM COME DOWN EVEN MORE.
THE 1990S MUST BE ANOTHER DECADE OF LOWER TAXES
AND LOWER INTEREST RATES. BUT TO HAVE A STABLE
ECONOMY, IT MUST ALSO BE A DECADE IN WHICH WASHINGTON,
AT LONG LAST, ADOPTS FISCAL POLICIES AS SOUND AS THOSE
OF THE AVERAGE AMERICAN HOUSEHOLD.
NONE OF US IS ALLOWED TO SPEND OUR BONUS BEFORE WE
EARN IT. NOR SHOULD CONGRESS START PLANNING WHERE TO
SPEND A POSSIBLE "PEACE DIVIDEND." TO THE EXTENT THAT
WORLD EVENTS ALLOW US TO CUT DEFENSE SPENDING, THEN WE
SHOULD RECOGNIZE THAT CUTTING THE FEDERAL BUDGET
DEFICIT WOULD BE A TRUE DIVIDEND FOR AMERICA'S
TAXPAYERS AND OUR CHILDREN'S FUTURE. WE MUST GET THE
DEFICIT DOWN.\\\
- 8 -
AND TOO OFTEN, CONGRESS FORGETS THAT EVERY HOUSE
IS THE HANDIWORK OF AN ARCHITECT, A SURVEYOR, A MASON,
A PLUMBER, A CARPENTER, A PAINTER AND DOZENS OF OTHER
WORKING MEN AND WOMEN. IF CONGRESS LEVIES NEW BURDENS
ON OUR ECONOMY, IT IS THESE VERY PEOPLE WHO WILL BE PUT
OUT OF WORK.
BUT, OF COURSE, EVEN IF WE DO CUT THE CAPITAL
GAINS TAX; EVEN IF WE DO KEEP INTEREST RATES LOW; EVEN
IF WE DO PROTECT THE ECONOMY -- THIS IS COLD COMFORT
FOR THOSE AMERICANS WHO LANGUISH IN THE PROJECTS, OR
THE THOUSANDS OF OTHERS WHO KNOW NO SHELTER AT ALL.
THESE AMERICANS NEED HELP. AND THEY NEED HOPE --
so THAT'S JUST WHAT I CALL OUR PROGRAM -- HOPE, WHICH
STANDS FOR HOME OWNERSHIP AND OPPORTUNITY FOR PEOPLE
EVERYWHERE.
OUR PROGRAM ADDRESSES THE FULL RANGE OF HOUSING
CONCERNS -- FROM SHELTER FOR THE HOMELESS, TO
AFFORDABLE HOUSING FOR LOW-INCOME FAMILIES, TO GREATER
ACCESS TO JOBS.
- 9 -
LET'S START WITH WHAT HOPE CAN DO FOR FIRST-TIME
HOME-BUYERS. IT'S TIME CONGRESS LET AMERICANS USE
THEIR IRA SAVINGS TO GET INTO THAT FIRST HOUSE. III
THEN THERE ARE THOSE WHO MUST LIVE IN THE POVERTY
AND FEAR OF PUBLIC HOUSING. THEY ARE
DISPROPORTIONATELY MINORITY AMERICANS. THEY SUFFER
ABUSE FROM DRUG-DEALING PREDATORS WITHIN AND THE
LAST THING THEY NEED IS ABUSE FROM WITHOUT. AND
CONCERNING THE LATTER, LET ME SAY JUST ONE THING:
ATLANTA IS A GREAT, CHEERFUL CITY THAT HAS PROUDLY
RISEN FROM THE ASHES OF A DISTANT PAST. AND so FOR
THOSE WHO PLAN TO REVEL IN A RALLY OF HATE HERE
TOMORROW, LET THEM KNOW THIS: ATLANTANS, LIKE ALL
AMERICANS, TURN THEIR BACKS ON BIGOTS. 11
TO ESCAPE VIOLENCE AND CRIME, TO LIVE IN DECENT
HOUSING - OUR PUBLIC-HOUSING TENANTS MUST FIRST BE
EMPOWERED. EMPOWERED TO CHOOSE WHERE THEY WANT TO
LIVE. EMPOWERED BY HOUSING VOUCHERS.
- 10 -
LOW-INCOME FAMILIES DON'T NEED US TO BUILD NEW
PUBLIC-HOUSING HORRORS. THEY NEED DECENT LOW-INCOME
HOUSING. AND THAT'S WHY I CALL ON CONGRESS TO EXTEND
THE LOW-INCOME HOUSING TAX CREDIT.
EARLIER, I DISCUSSED CAPITAL GAINS. BUT EVEN THIS
CUT WOULD NOT BE ENOUGH FOR AMERICA'S IMPOVERISHED
INNER-CITIES -- OFTEN AS DESOLATE AND SHATTERED AS A
WAR ZONE. NO, FOR THESE COMMUNITIES, WE'VE GOT TO GO
ONE STEP FURTHER AND ELIMINATE THE CAPITAL GAINS TAX
ALTOGETHER WITHIN ENTERPRISE ZONES.
THERE IS SOMETHING PERVERSE ABOUT DISCRIMINATORY
LENDING PRACTICES THAT HAVE KEPT THE FHA OUT OF THE
VERY PLACES THAT NEED THE MOST HELP. so MY
ADMINISTRATION WILL ENSURE THAT FHA IS TRUE TO ITS
FIRST MISSION -- TO MAKE HOUSING AFFORDABLE FOR LOW-
AND MODERATE-INCOME FAMILIES. IT'S WRONG TO DRAW A RED
LINE AROUND THE INNER CITY. IT'S NOT RIGHT OR FAIR.
AND WE'RE GOING TO REPLACE THE REDLINE WITH A GREENLINE
FOR OPPORTUNITY AND JOBS FOR THE FUTURE.
- 11 -
THE CENTERPIECE OF HOPE IS TO LET ALL AMERICANS
LIVE IN DIGNITY AND CONTROL THEIR DESTINY -- AND
DIGNITY IS EXACTLY WHAT RESIDENT MANAGEMENT PROJECTS
ALLOW. TENANT MANAGEMENT AND TENANT OWNERSHIP IS NOT
JUST AN EXPERIMENT -- IT'S THE FUTURE.\)
BUT EVEN MORE IS NEEDED. WE ARE ALL GOING TO HAVE
TO WORK IN A PARTNERSHIP TO SOLVE THE PROBLEMS OF THE
HELPLESS AND THE HOMELESS. MY ADMINISTRATION IS GOING
TO DO ITS PART BY EXPANDING HOMELESS ASSISTANCE. LATE
LAST YEAR, I SIGNED A BILL THAT BOOSTS FUNDING UNDER
THE MCKINNEY ACT TO REDUCE HOMELESSNESS. OUR HOPE
PROPOSAL WILL TIE SHELTER WITH BASIC SERVICES FOR THOSE
IN NEED. AND SECRETARY KEMP, I KNOW, WILL TELL YOU OF
OTHER STEPS WE ARE TAKING.
YOU'RE CERTAINLY DOING YOUR PART -- BUILDING AND
RENOVATING SHELTERS FOR THE HOMELESS; FOR BATTERED
WOMEN; FOR TROUBLED CHILDREN AND RETARDED ADULTS. AND
YOU'RE WORKING WITH THE JOB CORPS, TAKING THE
UNSKILLED, THE OUT-OF-WORK, AND TRAINING THEM FOR
LIFETIME CAREERS IN CONSTRUCTION AND MAINTENANCE, AND I
CONGRATULATE YOU ON YOUR COMMITMENT.
- 12 -
BUT OUR PARTNERSHIP NEEDS A THIRD ELEMENT -- THAT
CONSTELLATION OF VOLUNTEERS I CALL THE THOUSAND POINTS
OF LIGHT. I COULDN'T COME TO ATLANTA, WITHOUT TAKING
NOTE OF ONE SUCH POINT OF LIGHT, A PART-TIME CARPENTER
AND HIS WIFE WHO HAVE PROVIDED SHELTER FOR so MANY IN
THIS VERY CITY -- FORMER PRESIDENT JIMMY AND ROSALYNN
CARTER. THEY DESERVE OUR THANKS, AS DO ALL THE PEOPLE
BEHIND HABITAT FOR HUMANITY.
AND SO DOES A WOMAN NAMED ELLA MCCALL. ELLA WAS
ONCE A HOMELESS MOTHER. NOW SHE HAS HER MASTERS
DEGREE, AND SERVES THE HOMELESS AS A SOCIAL WORKER AT A
SHELTER IN WASHINGTON, D.C. WHEN A FAMILY STRIVES TO
MOVE OUT OF A SHELTER INTO A HOME, THEY NEED ELLA.
WHEN A HOMELESS MOTHER WANDERS LOST, WITH HER CHILDREN
IN TOW, SHE NEEDS ELLA. AND WHEN I LOOK OUT THE SOUTH
WINDOW OF THE WHITE HOUSE AT DUSK, AND SEE THE DISTANT
FIGURES OF RAGGED MEN BEDDING DOWN FOR THE NIGHT -- I
PRAY TO GOD THAT THIS COUNTRY FINDS MORE PEOPLE LIKE
ELLA MCCALL.
- 13 -
YOUR WORK IN JOB TRAINING, JACK KEMP'S WORK IN
TENANT MANAGEMENT AND OWNERSHIP, ELLA MCCALL'S WORK
WITH THE HOMELESS - -- ALL OF THIS ULTIMATELY SAVES THE
TAXPAYERS MONEY. BUT THIS ISN'T ABOUT MONEY. IT'S
ABOUT CARING.
AND IF IT TAKES LOVE TO MAKE A HOUSE A HOME, THEN
PERHAPS THE SAME COULD BE SAID OF A COUNTRY. FOR THE
POOREST AMONG US, AMERICA MUST NOT JUST BE A PLACE TO
LIVE IN, BUT A HOME FOR ALL.
THANK YOU, GOD BLESS YOU AND GOD BLESS AMERICA.
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