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Mr. THOMPSON. Is there any doubt in my mind that it will outlast 60 years?
Mr. MULTER. Yes.
Mr. THOMPSON. No; I don't think it is going to collapse in 60 years, but I am wondering what its utility value will be at the end of 60 years and what rentals, if any, will be paid. I don't think anybody can predict that far ahead. Too many of us are without the gift of prophecy.
Mr. MULTER. You have seen the Bell Park project?
Mr. THOMPSON. Yes.
Mr. MULTER. You don't think that that would stand a 50-year mortgage?
Mr. KILBURN. Well, don't you think it is a good idea to have the borrower pay off his debt as fast as he can, instead of making it as slow as he can?
Mr. THOMPSON. I am in agreement with that statement, not only for the benefit of the mortgagee, but for the mortgagor.
Mr. KILBURN. Certainly. That is what I am talking about. A fellow wants to own his own home. I don't think anybody ought to try to own a home if they are going to take 50 years to pay for it. Mr. THOMPSON. Neither do I.
Mr. MULTER. Now, let's come back to my question, please. Do you think that the Bell Park project can carry a 50-year mortgage? Mr. THOMPSON. I think, frankly, any property can carry a 50-year mortgage, but in my opinion it is unsound and it is certainly untraditional based upon generations of mortgage experience to so extend the life of a mortgage.
Mr. MULTER. That is precisely what you and all the other lending institutions said when we came along with HOLC mortgages to be amortized over 12 to 15 years, because the tradition was to carry a 5-year mortgage and let it stand forever thereafter as an open mortgage. We are getting the same argument here. Here is a building that will certainly last for 75 to 100 years, carrying a 34-year mortgage that will be paid off in full in 34 years.
I say that kind of a project can easily carry a 50-year mortgage which will be paid off at the end of 50 years, and still have a useful life with a good rent roll at the end of the 50 years.
Mr. THOMPSON. That is a debatable point. You have that opinion; I don't.
I would like to go back, Mr. Chairman, to the prepared text. Dividends are limited to 6 percent under law on this 34-year-6-month mortgage. In the development of that property, the know-how of private builders, of the FHA and State inspectors insured the finest construction.
Four other projects are in the mill, 288 units by the Amalgamated Meat Cutters, AFF, Brooklyn; 750 units for the Amalgamated Clothing Workers Union, Bronx; another 850-unit veterans' cooperative: 2,000 units in Flushing for the International Brotherhood of Electrical Workers, AFL.
There are many other examples of operating cooperatives financed by private sources. There is absolutely no basis for the charge that private enterprise is opposed to cooperative housing. Our opposi
tion to this bill—this may sound repetitious-is because of the way it proposes financing.
Mr. MULTER. Mr. Lockwood came here and said this was socialistic. He is not talking of your group.
Mr. COLE. I beg your pardon. He did not say cooperative housing was socialistic.
Mr. MULTER. Collectivistic.
Mr. COLE. No; he said the method by which the Government seeks to finance it is socialistic, if you will check the record.
Mr. MULTER. The record, page 505, indicates I am quoting the witness correctly.
The CHAIRMAN. You may proceed.
Mr. THOMPSON. For 25 years the National Association of Real Estate Boards has conducted semiannual surveys of the market. We have just completed our fiftieth. Of a total of 428 cities reporting, I am pleased to report that in 90 percent of the cities new homes are being produced to sell at $8,000 and lower. Sixty-six percent of the cities report new homes to sell for $6,500 and less being built. In these 428 cities, a median of about 45 percent of the production of new homes was in these two price classes.
Mr. Chairman, I suggest that is a most significant indication of what is now being done to provide housing for the middle-income class of our citizens.
Mr. O'HARA. Mr. Chairman, may I ask a question at this point? The CHAIRMAN. You may.
Mr. O'HARA. I find, Mr. Thompson, on page 1 of your exhibit, entitled "Supplemental Statement of John C. Thompson," this: "Cities producing new houses for sale at $8,000 or under," and in the list I find the city of Chicago.
Upon what do you base this statement that in Chicago houses are now being produced to sell at $8,000 and under?
Mr. THOMPSON. On what do I base that statement?
Mr. O'HARA. Yes, sir.
Mr. THOMPSON. I will return to what I just said, sir. The figures in which I would like to have this committee accept as an exhibit were compiled from a survey just concluded by the National Association of Real Estate Boards. I cannot personally tell you that in the city of Chicago that there is a 20-percent medium from any actual survey that I have personally made. I am offering this to give some information to this committee, based upon current findings from reports received from Chicago and all of the other cities.
(The information referred to is as follows:)
Cities producing new houses for sale for $8,000 or less