Ask the Scholar

{
    "localId": "1133463",
    "label": "5/3/76 - Time, Inc.",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/1133463"
}

{
    "id": "1133463",
    "sourceUrl": "https://catalog.archives.gov/id/1133463",
    "contentType": "document",
    "title": "5/3/76 - Time, Inc.",
    "description": "This file contains material relating to Regulation Q.",
    "citationUrl": "https://catalog.archives.gov/id/1133463",
    "collections": [
        "Carla A. Hills Speeches",
        "Speeches"
    ],
    "subjects": [
        "Banks and banking",
        "Capitalism",
        "Construction industry",
        "Credit",
        "Economics",
        "Federal aid",
        "Fiscal policy",
        "Housing",
        "Legislation",
        "Rent subsidies"
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0305/656148/1133463.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0305/656148/1133463.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0305/656148/1133463.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/1133463",
    "naId": 1133463,
    "coverageEndDate": {
        "day": 3,
        "logicalDate": "1976-05-03",
        "month": 5,
        "year": 1976
    },
    "coverageStartDate": {
        "day": 3,
        "logicalDate": "1976-05-03",
        "month": 5,
        "year": 1976
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0305/656148/1133463.pdf",
    "mediaId": "5ddce30114d48f9f",
    "ocrText": "The original documents are located in Box 2, folder \"5/3/76 - Time, Inc.\" of the Carla A.\nHills Speeches at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 2 of the Carla A. Hills Speeches at the Gerald R. Ford Presidential Library\nFINAL\nTIME, INC.\nMAY 3, 1976\nIN THIS BICENTENNIAL YEAR WHEN AMERICA HAS ONE FOOT\nIN HER PAST, WE CAN SEE BY HINDSIGHT, THAT BY TODAY'S\nSTANDARDS, MUCH OF YESTERDAY'S HOUSING POLICY WAS WELL-\nINTENTIONED -- BUT WRONG.\nRATHER THAN DWELLING ON HOW WE WOULD HAVE CHANGED\nYESTERDAY, IT IS FAR MORE USEFUL TO CONCENTRATE ON WHAT\nWE HAVE TO DEAL WITH TODAY.\nSo, THAT'S WHERE I'D LIKE TO START.\nTHE ERA OF HISTORY WE ARE NOW MAKING, BEGAN IN JANUARY\n1975, AS THE WORLD ENTERED THE FOURTH QUARTER OF THE 21st\nCENTURY.\nLET US REMINISCE NO FURTHER BACK THAN THAT, BECAUSE,\nFOR OUR PURPOSES, THE PAST YEAR PROVIDES US WITH THE BASIC\nECONOMIC INFORMATION AND EXPERIENCE NEEDED TO CHART AN\nINTELLIGENT COURSE TO THE FUTURE.\nGENATO FORD LIDRARY\n-2-\nIT SEEMS TO ME THAT, FOR THE FIRST TIME, THE NATION\nITSELF BEGAN TO UNDERSTAND, AS A PEOPLE, THE DISTINCTION\nBETWEEN THE TWO BASIC FACTORS THAT SHAPE OUR NATIONAL\nHOUSING POLICIES,\nON ONE HAND: OUR CONCERN WITH THE ESSENTIAL ECONOMICS\nOF THE INDUSTRY, AS TRANSLATED INTO LEVELS OF HOUSING\nPRODUCTION. FOR, \"PRODUCTION\" PER SE, IS THE PRINCIPAL\nINDICIA OF THE INDUSTRY'S HEALTH IN ALL ITS PARTS -- MONEY\nFLOW, MORTGAGE RATES; SALES, AND MARKET MOVEMENT,\nOF EQUAL CONCERN, TO ALL AMERICANS -- AND HUD AS THEIR\nPRINCIPAL AGENT -- IS THE ESSENTIAL SOCIAL FACTOR OF PROVIDING\nHOUSING ASSISTANCE FOR THE POOR.\nAND, WHETHER SUCH ASSISTANCE INVOLVES NEW CONSTRUCTION,\nUPGRADING OF EXISTING STOCK, OR SIMPLY SUBSIDIZING RENT so\nTHE POOR CAN PAY FOR OTHER NECESSITIES THE SUCCESS OF OUR\nSOCIAL MANDATE, UNDER THE AMERICAN SYSTEM OF FREE ENTERPRISE,\nIS RELATED DIRECTLY TO THE STATE OF OUR HOUSING ECONOMY,\nIN 1975, THE RELATIONSHIP OF THE TWO WAS CLEARLY EVIDENT.\n-3-\nOUR HOUSING ECONOMY ENTERED 1975 WITH A STAGGERING SET\nOF PRODUCTION LIABILITIES.\nCLOSE OF BUSINESS, AT THE END OF THIS CENTURY'S THIRD\nQUARTER, SHOWED US WITH ANNUAL HOUSING STARTS AT THE RATE\nOF 880,000; PERMITS INTO THE FUTURE AT THE RATE OF 837,000;\nNET SAVINGS INFLOWS OF $600 MILLION AND AN INTEREST RATE OF\n9.37 PERCENT.\nSALES OF SINGLE-FAMILY HOMES HAD REACHED THE LOW RATE\nOF 501,000.\nTHE STARTLING EFFECT OF THESE DISCOURAGING STATISTICS\nWERE EXCEEDED ONLY BY THE NUMBER OF CURATIVES OFFERED ON\nCAPITOL HILL TO OFFSET THEM.\nTHE \"CURES\" RANGED FROM A 5 PERCENT HOME BUYER TAX CREDIT\nTO AN OUTRIGHT DOWN PAYMENT GRANT OF $1,000 -- TO SUBSIDIZING\nMORTGAGES DOWN TO 6 PERCENT FOR SIX YEARS, OR 7 PERCENT FOR\nLIFE.\nAs YOU KNOW, SOME OF THESE PROPOSALS BECAME LAW --\nSOME, FORTUNATELY, DID NOT.\n-4-\nA QUICK EVALUATION OF ONE THAT DID -- GIVES US A\nPERSPECTIVE ON THE WISDOM OF TAMPERING WITH THE FREE MARKET.\nIN MARCH, 1975, CONGRESS PASSED LEGISLATION ALLOWING A TAX\nCREDIT OF 5 PERCENT -- UP TO $2,000 -- ON THE PURCHASE PRICE\nOF A NEW HOUSE,\nHUD's STUDY FINDS THAT THIS \"STIMULATED\" A GRAND TOTAL\nOF 4,000 NET SALES -- BUT THE GOVERNMENT HAD TO GIVE UP\n$2,000 IN TAX REVENUES FOR EACH OF THE 160,000 HOME PURCHASES\nCOVERED TO GET THOSE .4,000 ADDITIONAL SALES, THE $320 MILLION\nCOST TO THE GOVERNMENT -- $80,000 PER INCREMENTAL SALE -\nIS QUITE A PRICE TAG FOR THE IMPACT MADE UPON THE MARKET.\nIN JUNE, CONGRESS PASSED LEGISLATION PROVIDING FOR\n6 PERCENT AND 7 PERCENT MORTGAGES AS WELL AS A SUBSIDY OF\n$1,000 FOR DOWN PAYMENTS, WHICH THE PRESIDENT HAD THE\nFORESIGHT AND THE COURAGE TO VETO,\nTHE GOOD INTENSIONS OF THE LEGISLATION WERE SIMPLY NOT\nBASED IN ECONOMIC REALITY. THE RESULTS the cose WOULD NOT JUSTIFY Even\nTHE COST WHICH THE PROPONENTS ESTIMATED AT $1.5 BILLION,\n^\nOUR BEST GUESS WAS THAT NEITHER PROPOSAL WOULD HAVE ANY\nSIGNIFICANT EFFECT ON NET SALES, BUT THAT EACH WOULD HAVE\nHAD A SUBSTANTIAL NEGATIVE EFFECT IN REQUIRING INCREASED\nFEDERAL BORROWING -- LEAVING THE GOVERNMENT WITH A LARGE BILL\nFOR SUPPORTING A MARKET THAT ALREADY EXISTED.\n-5-\nTHE PRESIDENT'S FAITH IN THE FREE ENTERPRISE SYSTEM\n-- AND HIS PROGRAM OF USING FEDERAL STIMULANTS ONLY WHERE\nABSOLUTELY NECESSARY -- WERE WELL REWARDED.\nTODAY, HOUSING STARTS HAVE JUMPED 64 PERCENT TO AN ANNUAL\nLEVEL OF NEARLY 1.5 MILLION AND PERMITS ARE UP 38 PERCENT\nTO AN ANNUAL LEVEL OF NEARLY 1.2 MILLION. NET SAVINGS INFLOWS\nHAVE SOARED 517 PERCENT TO $3.7 BILLION; SINGLE-FAMILY HOME\nSALES HAVE RISEN 29 PERCENT TO AN ANNUAL RATE OF 646,000; AND\nTHE INTEREST RATE IS DOWN TO 8.93 PERCENT AND FALLING.\nTo PARAPHRASE THE PRESIDENT'S RECENT COMMENT ON THE\nECONOMY: \"EVERYTHING THAT IS SUPPOSED TO BE GOING UP IS\nGOING UP, AND EVERYTHING THAT IS SUPPOSED TO BE GOING DOWN\nIS GOING DOWN.\"\nTHE BROAD LESSON WE LEARN FROM THIS NARROW SLICE OF\nTECHNICAL DATA IS THAT IN THE LONG RUN, THE ONLY GOVERNMENT\nPROGRAMS THAT REALLY WORK ARE THOSE THAT WORK WITH THE MARKET.\nBUT THE FACT THAT THE LEVEL OF HOUSING PRODUCTION IS\nDETERMINED BY BROADER ECONOMIC INDICES DOES NOT BY ANY MEANS\nELIMINATE THE GOVERNMENT'S ROLE IN HOUSING; IT ONLY SETS THE\nSTAGE FOR FEDERAL HOUSING POLICY,\n-6-\nAs I SEE IT, THE PRIMARY FEDERAL ROLE -- ASIDE FROM\nHOUSING THE POOR -- IS TO HELP ASSURE THAT THE MARKET IS\nWORKING.\nTHE \"CATCH 22\" IN DESIGNING THE PROPER FEDERAL ASSISTANCE\nIN THE SINGLE-FAMILY MARKET IS HOW TO MAKE SURE THAT GOVERNMENT\nINVOLVEMENT ACTUALLY HELPS INDUSTRY -- WITHOUT RETARDING ITS\nNORMAL PRODUCTION OF UNASSISTED HOUSING OR RUSHING IN TO ASSIST\nHOUSING THAT WOULD HAVE BEEN BUILT ANYWAY,\nA SUBSIDY, BY ITS NATURE, MEANS INCREASED FEDERAL\nBORROWING WHICH AUTOMATICALLY DECREASES THE AVAILABILITY\nOF PRIVATE MORTGAGE MONEY, AND IT IS ALL THE SAME, WHETHER\nWE'RE TALKING MORTGAGE PURCHASES, INTEREST SUBSIDIES,\nDIRECT LOANS OR CASH GRANTS,\nAND, ALMOST INVARIABLY, THE RESULT IS HIGHER INTEREST\nRATES WHICH RETARD NORMAL, UNASSISTED PRODUCTION, FOLLOW-UP\nSTUDIES OF PRACTICALLY EVERY PAST SUBSIDY TO STIMULATE\nSINGLE-FAMILY PRODUCTION SHOW A LEVEL OF PRODUCTION THAT\nWOULD HAVE OCCURRED WITHOUT THE SUBSIDY.\nTHE BETTER ALTERNATIVE TO FEDERAL SUBSIDIES IS FEDERAL\nHELP CREATE A MARKET ENVIRONMENT THAT IS SUPPORTIVE OF\nBUILDING SINGLE-FAMILY HOMES.\n-7-\nONE ESSENTIAL, IS FINANCIAL REFORM THAT WILL MAINTAIN\nA STEADY FLOW OF MORTGAGE MONEY AND THAT WILL REDUCE CYCLICAL\nJOLTS IN PRODUCTION THAT SHOCK THE HOUSING INDUSTRY AND HURT\nTHE CONSTRUCTION WORKER.\nBOTH THE HOUSE AND SENATE ARE CURRENTLY WRESTLING WITH\nTHIS PROBLEM.\nTHE ADMINISTRATION IS SPONSORING LEGISLATION THAT WOULD\nCUT THROUGH SOME OF THE OLD BARRIERS -- EXPANDING THE POWERS\nOF FINANCIAL INSTITUTIONS; ENCOURAGING GREATER COMPETITION;\nAND EVENTUALLY PHASING OUT REGULATION Q WHICH LIMITS THE\nINTEREST PAID BY SAVINGS INSTITUTIONS ON DEPOSITS,\nTHE ACTUAL EFFECTS OF REGULATION Q ARE IRONIC, BECAUSE\nIT WAS ESTABLISHED INITIALLY TO MAKE SURE HOUSING FUNDS\nWERE AVAILABLE. INSTEAD, IT HAS RESULTED IN MORE EXTREME\nFLUCTUATIONS, PARALYZED BY ESTABLISHED INTEREST CEILINGS,\nTHRIFT INSTITUTIONS HAVE NO CAPACITY TO RESPOND WHEN GENERAL\nRATE INCREASES INDUCE SAVERS TO MOVE THEIR DEPOSITS TO OTHER\nMORE PROFITABLE INVESTMENTS.\nTHE ADMINISTRATION HAS PROPOSED -- AND THE SENATE HAS\nPASSED -- A MORTGAGE INTEREST TAX CREDIT FOR LENDERS TO\nPROMOTE INVESTMENT IN HOUSING,\n-8-\nTHE CREDIT WOULD BE AVAILABLE TO ALL LENDERS BASED ON\nTHE PROPORTION OF THEIR PORTFOLIOS IN HOME MORTGAGES. ITS\nOBJECT IS TO BROADEN THE HOUSING FINANCE BASE THROUGH\nINCENTIVE -- PARTICULARLY TO COMMERCIAL BANKS.\nWE ARE STUDYING CALIFORNIA'S EXPERIENCE WITH VARIABLE\nINTEREST RATE MORTGAGES, WHICH WOULD PERMIT LENDERS TO RAISE\nRATES ON EXISTING MORTGAGES WHEN THE MARKET RATE RISES.\nAND, WE ARE STUDYING THE EFFECTS OF OTHER INNOVATIVE DEBT\nINSTRUMENTS IN A SEARCH FOR MEANS TO STABILIZE THE SINGLE-\nFAMILY MORTGAGE MARKETS.\nTHE PROBLEMS OF RECOVERY IN THE MULTI-FAMILY MARKET\nSECTOR ARE SOMEWHAT DIFFERENT.\nTHOSE DIFFERENCES CAUSED HUD TO RECOMMEND IN JANUARY\nTHE RELEASE OF A SHORT-TERM STIMULUS WHEREBY WE WILL PURCHASE\n$3 BILLION OF MULTI-FAMILY MORTGAGES BEARING AN INTEREST RATE\nOF 7-1/2 PERCENT WHICH WILL ASSIST ABOUT 120,000 UNITS.\nALTHOUGH THE DRAMATIC JUMP IN MARCH IN MULTI-FAMILY\nSTARTS WAS VERY GOOD NEWS, THE MULTI-FAMILY MARKET IS STILL\nIN TROUBLE BY ANY HISTORIC STANDARD.\n-9-\nTHE COMBINATION OF LAGGING PRODUCTION, IDLE RESOURCES,\nAND AN UNMET DEMAND FOR APARTMENTS MAKES IT CLEAR THAT\nTHESE FUNDS WILL NOT DRAW MONEY AWAY FROM NORMAL PRODUCTION\nAND WILL NOT SUBSIDIZE APARTMENTS THAT WOULD HAVE BEEN BUILT\nANYWAY.\nONE OF THE MULTI-FAMILY PROBLEMS, AS YOU KNOW, IS\nSIMPLY THE NATURAL MARKET RESPONSE TO OVER-PRODUCTION OF\nTHE EARLY 1970's.\nVACANCY RATES ARE HIGH IN MANY MARKETS -- 15 PERCENT\nON THE GULF COAST, FOR EXAMPLE, UTILITIES, TAXES, AND\nINTEREST RATES HAVE OUTSTRIPPED THE RELATIVELY LOW RENT\nLEVELS. IN THE PAST 15 MONTHS, OPERATING COSTS HAVE RISEN\nTWICE AS FAST AS RENTAL INCOME -- AND DEVELOPERS ARE LOOKING\nELSEWHERE FOR MORE ATTRACTIVE VENTURES.\nMEANWHILE, SOME RENTAL MARKETS ARE BECOMING TIGHT,\nBUT OVERALL RENTS ARE STILL TOO LOW TO PROVIDE ANY STRONG\nPRODUCTION INCENTIVE.\n-10-\nWE BELIEVE THAT IN THOSE MARKETS OUR MULTI-FAMILY\nSUBSIDY IS TIMELY AND WILL HAVE AN INCREMENTAL EFFECT.\nFOR BY THE TIME RENTS RISE ENOUGH TO INDUCE CONSTRUCTION\nIN THOSE MARKETS, IT WILL TAKE ANOTHER TWO YEARS FOR THE\nRESULTANT UNITS TO BE READY FOR OCCUPANCY. IN THE INTERIM,\nTHE MARKET SUFFERS A SEVERE SHORTAGE OF AVAILABLE APARTMENTS.\nHUD's MORTGAGE INTEREST SUBSIDY HELPS TO FILL THE\nPRODUCTION LAG BY STIMULATING MULTI-FAMILY STARTS IN MARKETS\nWHICH ARE RELATIVELY TIGHT BEFORE THE APARTMENT SHORTAGE\nDRIVES RENTS TO SUFFICIENTLY HIGH INCENTIVE LEVELS TO CAUSE\nDEVELOPERS TO BUILD. AND, SINCE IT IS SHORT-TERM, IT WILL\nSPUR THE MARKET, BUT NOT SUBSTITUTE FOR IT -- BECAUSE FUNDS\nWON'T BE WASTED ON UNITS THAT WOULD HAVE BEEN BUILT ANYWAY\nIN THAT PERIOD OF TIME,\nHUD's PROGRAMS TO PROVIDE HOUSING FOR THE POOR ARE\nALSO CONSTRUCTED WITH A VIEW TOWARD THE REALITIES OF THE\nMARKETPLACE, THE PROBLEM IN THE PAST WAS NOT A LACK OF\nDEDICATION TO THE RIGHT CAUSE, BUT IN THE SUPERIMPOSITION\nOF SYSTEMS THAT WERE ALIEN TO THE WAY THE MARKET WORKS.\nHUD's CURRENT PROGRAMS TO HOUSE THE POOR ARE BASED\nON TWO BASICS OF THE AMERICAN MARKET: COMPETITION AND\nFREEDOM-OF-CHOICE.\n-11-\nOUR NEW SECTION 8 RENTAL ASSISTANCE PROGRAM IS DESIGNED\nTO HELP PEOPLE -- NOT STRUCTURES. FEDERAL RENT PAYMENTS\nAMOUNT TO THE DIFFERENCE BETWEEN LOCAL RENT LEVELS AND\n25 PERCENT OF THE RECIPIENT'S EARNINGS,\nTHIS, IN EFFECT, PUTS LOW-INCOME FAMILIES ON A PAR WITH\nHIGHER-INCOME RENTORS AND MAKES THEM PARTICIPATING MARKET\nCOMPETITORS FOR THE APARTMENT SUPPLY -- RATHER THAN CONSIGNEES\nTO \"PROJECT\" STRUCTURES.\nHAVING THE \"WHEREWITHAL\" TO SHOP FOR A MODEST BUT DECENT\nUNIT, THESE FAMILIES CAN USE THE SUBSIDY FOR NEW OR SUBSTANTIALLY\nREHABILITATED HOUSING IN THE NEIGHBORHOOD OF THEIR CHOICE.\nTHE SUBSIDY WORKS WITH THE MARKET, AND NOT AGAINST IT,\nBECAUSE IT INCREASES DEMAND, WHICH IN TURN INDUCES INCREASED\nSUPPLY AS NEEDED, AND IT UTILIZES COMPETITION TO DISCIPLINE\nCOSTS,\nSIMILARLY, OUR SECTION 235 HOMEOWNERSHIP ASSISTANCE\nPROGRAM, WHICH WAS REVISED AND REISSUED IN SUBSTANTIALLY\nNEW FORM IN JANUARY, WAS STRUCTURED TO WORK WITH THE MARKET.\n-12-\nWE DID THIS IN TWO WAYS: FIRST, BY GEARING IT TO THE\nMARGINAL LOWER INCOME FAMILIES, CURRENTLY PRICED OUT OF\nTHE HOUSING MARKET; AND SECOND, BY SCALING THE SUBSIDY TO\nAUTOMATIC PHASE-OUT AS THE FAMILY'S INCOME INCREASES, WE\nSOUGHT TO REACH INCREMENTAL PURCHASERS IN THE MARKET.\nTHE PRINCIPAL SAFEGUARD OF THE TAXPAYER'S MONEY IS A\nBUYER DOWN PAYMENT OF ABOUT $1200, PROVIDING A PERSONAL\nINVESTMENT INCENTIVE FOR NOT DEFAULTING ON THE MORTGAGE.\nTHE SHALLOW SUBSIDY DOWN TO 5 PERCENT INTEREST BRINGS THE\nPAYMENT WITHIN THE FAMILY'S REACH.\nIT ALSO CREATES AN INCENTIVE FOR MORE OF THE AVAILABLE\nMORTGAGE CAPITAL TO BE INVESTED IN LOWER-COST HOMES.\nIN AGGREGATE THE PROGRAM SHOULD STIMULATE THE PRODUCTION\nOF 250,000 HOMES -- NEW OR SUBSTANTIALLY REHABILITATED -- AND\nCREATE 500,000 CONSTRUCTION JOBS,\nBUT NOW THAT THE FEDERAL GOVERNMENT is MAKING ITS\nHOUSING PROGRAMS -- ALL OF WHICH ARE STILL IN START-UP STAGE\n-- MOVE WITH THE MARKET, CONGRESS SEEMS ABOUT TO ENACT\nMASSIVE CHANGES WHICH, IN MY ESTIMATION, WILL SET HUD RIGHT\nBACK TO THE ERA WE HAD FINALLY PASSED,\n-13-\nLAST WEEK THE SENATE PASSSED A BILL WHICH WOULD COMPLETELY\nSABOTAGE OUR RENTAL SUBSIDY PROGRAM BY REACTIVATING THE\nCONVENTIONAL PUBLIC HOUSING PROGRAM AT THE HIGHEST LEVEL OF\nACTIVITY IN 40 YEARS.\nYET, ONLY TWO YEARS AGO, CONGRESS ITSELF, HAD DECIDED\n-- ON THE FACE OF IRREFUTABLE EVIDENCE -- THAT IT WAS PAST\nTIME FOR THE GOVERNMENT TO STOP BUILDING PROJECTS THAT\nCONCENTRATED OUR ECONOMICALLY DISADVANTAGED IN SINGLE BUILDINGS.\nTRUE TO YESTERDAY'S THINKING RATHER THAN TODAY'S REALITIES,\nTHE BILL TURNS ITS BACK ON THE PRIVATE MARKET AND PROPOSES A\nPROGRAM OF FEDERALLY GUARANTEED AND SUBSIDIZED PUBLIC BOND\nFINANCING.\nONE OF ITS MOST SERIOUS FLAWS IS THE TIME IT WILL TAKE\nAFTER THE BILL IS PASSED TO ACTUALLY HOUSE THE PEOPLE IT IS\nSUPPOSED TO HELP. OUR EXPERIENCE TELLS US THAT OCCUPANCY OF\nNEW CONVENTIONAL PUBLIC HOUSING TAKES TWICE AS LONG AS NEW\nCONSTRUCTION ASSISTED BY RENTAL SUBSIDIES,\nBUT, IN THE FINAL ANALYSIS, THE BILL REPRESENTS THINKING\nAND PLANNING THAT FAILS TO RELATE TO URBAN NEEDS OF 1976.\n-14-\nTODAY, WE HAVE NO CHOICE BUT TO USE EVERY MEANS AT OUR\nDISPOSAL TO REBUILD OUR CITIES -- AND WE MUST DO so WITH EVER-\nDIMINISHING RESOURCES. GOVERNMENT CANNOT DO IT ALONE,\nCERTAINLY, IT CANNOT BE DONE WITH CONVENTIONAL PUBLIC HOUSING\nPROJECTS,\nWE CANNOT SUBSTITUTE MANDATED FEDERAL CONSTRUCTION PROGRAMS\n-- AS THIS BILL WOULD HAVE US DO -- FOR THE MARKET DISCIPLINE\nOF PROGRAMS THAT MAKE ALL OF OUR PEOPLE COMPETITIVE PARTICIPANTS\nIN THE ECONOMIC LIFE OF OUR CITIES.\nTHE BILL WILL THWART THE THRUST OF OUR RENTAL SUBSIDY\nPROGRAM, WHICH NOT ONLY HELPS TO PREVENT THE DECLINE OF OUR\nHOUSING STOCK -- THAT NOW REMAINS AS ONE OF THE CITIES MOST\nVALUABLE ASSETS -- BUT ALSO ADAPTS DIRECTLY TO THE NEEDS,\nTHE SUPPLY, AND THE DEMAND OF PARTICULAR NEIGHBORHOODS.\nSo, I DON'T THINK IT IS NECESSARY TO TELL YOU WHAT MY\nRECOMMENDATION WILL BE IF THIS BILL REACHES THE PRESIDENT'S\nDESK IN ITS PRESENT FORM.\nAND THAT BRINGS ME FULL CIRCLE ON OUR HISTORY TO DATE\n-- AS I SEE IT -- IN THIS NEW ERA OF HOUSING:\n-15-\n-- WHERE WE WERE AS IT OPENED 15 MONTHS AGO.\n-- WHAT WE HAVE TRIED TO DO.\n-- WHERE WE STAND NOW -- INCLUDING THE VERY REAL\nDANGER OF NEW LEGISLATION THAT COULD CANCEL\nOUT OUR PROGRESS.\nI WOULD LIKE TO CLOSE BY STEPPING BACK FOR A MOMENT TO\nLOOK AT THE THICKER SLICE OF TIME IN THIS NEW ERA: THE FUTURE.\nWE HEAR so OFTEN THAT AMERICAN FAMILIES HAVE BEEN PRICED\nOUT OF HOMEOWNERSHIP.\nLAST MONTH'S FORTUNE PURSUED THIS THOUGHT IN SOME DEPTH\n-- POINTING OUT THAT THE AVERAGE MORTGAGE PAYMENT IN 1975\nWAS $269, AS COMPARED TO $42 IN 1950.\nTHE ARTICLE CORRECTLY NOTED THAT THERE WAS A GREAT DEAL\nOF DIFFERENCE IN THE AVERAGE HOUSE OF-THOSE TWO PERIODS,\nABOUT HALF OF THE PRICE INCREASE IN THE 1975 HOUSE CAN BE\nATTRIBUTED TO THE FACT THAT IT IS 75 PERCENT LARGER -- AND\nTHAT IT HAS INNUMERABLE APPLIANCE \"EXTRAS\" THAT WERE NOT\nINCLUDED IN THE 1950 HOME.\n-16-\nTHE OTHER HALF OF THE PRICE INCREASE IS DIVIDED BETWEEN\nHIGHER INTEREST RATES AND INFLATED COSTS OF BUILDING AND LAND.\nTHE FACT IS THAT IF THE TYPICAL 1950 HOUSE WERE BUILT\nAND SOLD IN 1975 -- SIZE, AMENITIES AND PROPERTY DIMENSIONS\n-- ALMOST 80 PERCENT OF AMERICAN FAMILIES COULD AFFORD IT,\nNONETHELESS, THE FORTUNE ARTICLE ENDED WITH A GLOOMY\nPROGNOSIS FOR THE REST OF THIS CENTURY -- PHENOMENALLY RISING\nPRICES FOR 15 YEARS, ASTRONOMICAL DEMAND AND PRODUCTION, THEN\nAN ABRUPT DECLINE IN DEMAND WHICH HUD, FORTUNE PROPHESIED,\nWOULD MEET WITH SUBSIDIZED HOUSING DEMOLITION. IT SEEMS\nAPPROPRIATE, PARTICULARLY AT THIS CONFERENCE, TO DECLARE THAT\nHUD's FORECASTS ARE MUCH MORE OPTIMISTIC.\nWE SEE LACKING IN THAT UNHAPPY PROPHESY ANY ALLOWANCE\nFOR INCOME INCREASES TO MATCH THE PREDICTED ZOOM IN PRICES\n--- YET, HISTORICALLY, INCOME INCREASES HAVE OUTSTRIPPED\nHOUSING PRICES EVEN DURING PERIODS OF INFLATION. TRUE, THE\nRECESSION YEAR OF 1974 WAS AN EXCEPTION, BUT IN 1975 WE WENT\nBACK TO THE NORMAL PATTERN AND WE EXPECT INCOME INCREASES TO\nCONTINUE AHEAD OF HOUSING PRICES,\n-17-\nSECOND, WE SEE HOMEOWNERSHIP INCREASING AS THE TREND\nOF THE PAST 25 YEARS IS AGAIN RESUMED. TODAY, ALMOST\nTWO-THIRDS OF AMERICAN FAMILIES OWN THEIR OWN HOMES --\nWHICH IS 16 PERCENT MORE THAN IN 1950. BUT, WE SHOULD ALSO\nKEEP IN MIND THAT THIS NATION HAD 65 MILLION FEWER PEOPLE\nIN 1950, so THAT THE 16-POINT JUMP IN 1976 MULTIPLIES INTO\nEVEN MORE IMPRESSIVE OWNERSHIP GAINS.\nTHIRD, WE SEE IMPROVED TECHNOLOGY AS AMERICAN INDUSTRY\nREACTS TO THE PROBLEMS' OF RESOURCE SHORTAGES AND ENERGY\nCOSTS. WE ARE ALREADY ACTIVE IN SOLAR ENERGY DEMONSTRATIONS.\nTHERE IS MUCH INDUSTRY ACTIVITY IN THE TECHNOLOGY OF MANUFACTURED\nHOMES. UNLESS AMERICAN INGENUITY IS A THING OF THE PAST, WHICH\nWE DO NOT BELIEVE, THERE WILL BE NEW CONCEPTS TO COME, IN THE\nNEXT QUARTER, THAT ARE NOT NOW EVEN IN THE THINKING STAGE.\nAND I MIGHT ADD THAT ALTHOUGH WE TALK A LOT AT HUD ABOUT\nFUTURE TRENDS -- MASSIVE DEMOLITION IS CERTAINLY NOT ONE OF THEM.\nSURELY, WE CANNOT PREDICT PRECISELY HOW THIS NEW QUARTER\nOF A CENTURY WILL END ON THE BASIS OF WHERE WE ARE TODAY. BUT\nWE DO KNOW THAT WE HAVE SAFELY TURNED ONE OF THE MOST DANGEROUS\nCORNERS IN OUR ECONOMIC HISTORY ON THE WAY TO THE YEAR 2,000.\n-18-\nIF WE HAVE THE FORESIGHT, IF WE HAVE THE GOOD SENSE TO\nCONTINUE ON THE STEADY COURSE WE HAVE SET IN THE FIRST 15\nMONTHS OF THIS NEW ERA -- I THINK WE CAN LOOK TO THE BEST\n25 YEARS IN THE HISTORY OF HOUSING.\nIF WE DO NOT, WE'LL ALWAYS HAVE HINDSIGHT TO REMIND\nUS OF WHERE WE WENT WRONG."
}