Senator CLARK. The next witness is Mr. Martin L. Bartling, and with him is Mr. E. J. Burke, Jr., representing the National Association of Homebuilders.

STATEMENT OF MARTIN L. BARTLING, PRESIDENT; ACCOMPANIED BY NELS G. SEVERIN, PAST PRESIDENT, E. J. BURKE, JR., FIRST VICE PRESIDENT, AND HERBERT S. COLTON, GENERAL COUNSEL, NATIONAL ASSOCIATION OF HOMEBUILDERS

Mr. BARTLING. Mr. Chairman, I would like to introduce the gentlemen with me. On my right is Mr. Nels Severin, past president of the NAHB, from San Diego; Mr. Jim Burke, first vice president, from San Antonio; and Mr. Herbert Colton, on my left, our general counsel. Senator CLARK. The committee is very happy to welcome you gentlemen. We are glad to have you all here.

Mr. Bartling, I see that you have a pretty voluminous statement here, and it will be printed in the record. Proceed in your own way. Mr. BARTLING. I promise not to read it all unless you request it. My name is Martin L. Bartling, Jr., and I am a homebuilder in Knoxville, Tenn. I appear before you today as president of the National Association of Homebuilders, a trade association representing 44,000 members in 50 States and 342 local and State associations.

I appreciate this opportunity to express the views of the homebuilding industry on the current status of the industry and with respect to the many legislative proposals now pending before this subcommittee.

At the outset I should like to discuss very briefly with the subcommittee some of the fundamental problems facing the housing industry, the Government, and the American public today.

We look at the decade of the 1960's as being both a tremendous opportunity and a period which will require redoubled efforts on the part of all who are concerned with American housing to work out better solutions to a whole range of problems with which all of us are familiar.

During the decade of the 1950's we produced some 12 million housing units. During the same period our population increased by 25 million, and our gross national product increased by about 70 percent to $500 billion. During the sixties we are told that our population will increase by 34 million and our gross national product will increase another 50 percent to $750 billion.

Your own subcommittee has already completed an excellent study resulting in a report entitled, "A Study of Mortgage Credit," which concludes that during the 1960's we must produce at least 16 million houses if we are to keep pace with the needs of our expanding population and growing urban centers.

Senator CLARK. You have not seen the committee's study on mortgage credit needs, have you? It is just a coincidence I guess that your figure and ours are identical.

Mr. BARTLING. Yes, sir. We are referring at this point to the fact that we agree with your conclusions on this.

Senator CLARK. This pleases us very much, needless to say.

Mr. BARTLING. In other words, we heartily concur in the findings of your subcommittee and are as an association doing our best to meet the challenge of the 1960's.

Our present rate of production is only slightly more than 1,100,000 units per year. Even if we are successful in raising 1960 production to 1,200,000 units, it is obvious that we are falling substantially behind our minimum housing requirements.

I might depart from the statement at this moment and say that I view with considerable alarm the fact that, even though in 1959 our housing volume in terms of dollar volume was the highest ever on record, we actually built less housing units in 1959 than we did back in 1950, despite the 25 million population increase.

All of the problems which face the housing industry can be summarized very simply, it seems to me. Due to a whole complex of factors involving speculative land costs, increasing and expensive local and Federal requirements, increases in the cost of materials, increases in the costs of community facilities, outmoded codes, lack of technical research, and finally but by no means least chronic shortages in the supply of mortgage credit and excessive charges therefor have prevented us from making any substantial progress in meeting the housing needs of the people of moderate and lower income. The latest available figures indicate that 36 percent of the families in this country have annual incomes of less than $4,000. Despite the fact that these families represent such a high proportion of our total population, families in this income group represent less than 4 percent of the purchasers of FHA houses in 1958. Similar figures are not available on housing produced and sold with conventional financing, but it seems only reasonable to assume that the picture is certainly not better and may even be worse, since customarily we have looked to the FHA as the principal device available to the building industry to help in the production and financing of modest priced homes.

I might say, departing from the text again, that the fact that this vacuum exists in our housing field poses very serious political, economic, and sociological problems that are going to increase in the years ahead, and we must face up to them.

In a limited but nevertheless serious way we in NAHB are diverting a substantial share of our resources to attacking all of the problems which I have just enumerated. For example, we are now engaging in a special study on the economical utilization of land with the Urban Land Institute. We have established a modest research laboratory in which we are carrying on a series of tests and projects which we hope will result in cost-saving techniques. We have sponsored a series of research houses, striving in each case to improve construction techniques and to stimulate the utilization of new and economical products. We have a study with the Massachusetts Institute of Technology in use of component parts in construction. We have sponsored four research houses to date and starting on our fifth one this year, in each case trying to come forth with new and better ways technologically speaking to lower the cost of housing. We are undertaking special studies in the fields of mortgage financing and are attempting to develop newer, improved, and more acceptable means of housing the lowest income families in our society. We have initiated intensive work in the building code field.

I might depart from the text again and say we are spending for us a rather substantial sum of money in terms of trying to find alternatives to public housing, our feeling being that we cannot be negative in this approach but we must come up with some positive answers. This study will not be completed until later on this year, so I cannot say yet what conclusions will come out of it.

Senator CLARK. Let me interrupt just long enough to ask you whether you are far enough along in your study to have any more or less empirical view on how big a handicap obsolete building codes are?

Mr. BARTLING. I am glad you asked me that question, because one of the prime objectives of our National Association of Home Builders this year is to do something about the problem of obsolete building codes. On April 11, we held a meeting here in Washington in which manufacturers, trade associations, Government, and the press, radio, TV, and so on, were invited, and at this meeting we kicked off and asked for the cooperation of all groups in terms of No. 1 priority really to face up to our problems and to do something about this code situation and quit talking about it. We have just started on the

program.

Senator CLARK. I am delighted to hear that. Actually, the housing and building codes are much more of an impediment in the cities than they are in the suburbs, are they not?

Mr. BARTLING. In many communities of the country that have a multiplicity of building codes. For example, I understand that Metropolitan Chicago is made up of roughly 900 communities, and I am sure they represent at least 30 or 40 or 50 different codes. In other parts of the country the city has a code and the suburbs do not have a code. So there is no easy, straightforward solution to this. We are advocating the adoption of one of the four recognized general building codes rather than a specific national code as a means of doing it.

Senator CLARK. I suppose individual conditions would differ, would they not, depending on geography?

Mr. BARTLING. There are climatical and geographical differences that would be reflected in building codes.

Frankly, we are proud of these projects, but we would be less than realistic if we implied that through our efforts alone all of the solutions which this country needs could be found. The challenge which we face will demand the best efforts of all groups within the industry, the administrative agencies of Government and the Congress.

In general, 1960 has been a disappointing year for the homebuilding industry. As a result of combination of factors, in particular, the high price of and the general tightness of mortgage money in the late months of 1959 and the early months of 1960, housing starts have run considerably below the same month of the previous year. While it is true that money has been somewhat easier in recent months, though the price for that money is still extremely high, there is an unavoidable time lag between the availability of funds and improvement in the housing scene.

In the first 4 months of this year housing starts were nearly one-fifth lower than a year ago. At best, and this is a fairly optimistic best, we look for a volume of 1,200,000 this year which would be close to 200,000 below 1959's level. In the general state of sidewise drift in the overall economy, there is little likelihood that the volume will exceed the 1,200,000 level.

Senator SPARKMAN. I am not quite clear. You say, "We look for a volume of 1,200,000 this year, which would be close to 200,000 below 1959's level." Is that correct?

Mr. BARTLING. I might be a few thousand off, but I think close to that, Mr. Sparkman.

Senator SPARKMAN. You are close to that figure.

Mr. BARTLING. I would like to make it abundantly clear that we in the homebuilding industry regard a volume of this size as thoroughly inadequate and a poor showing for a vigorous and healthy economy such as we now have in the United States. While it does not portend immediate crisis, it certainly means that we will be doing less than is necessary to meet the housing requirements of the American people. This volume, if we do achieve it, will be fully 400,000 units less than the annual level your own subcommittee has indicated is necessary for the decade of the sixties.

One factor in the relationship of housing to America's growth that is of particular concern to us is the inescapable conclusion that homebuilding has been used as a balance wheel for the rest of the economy. In the material which we are submitting for the record, we supply some charts and some comments on the chart which clearly indicate the countercyclical experience which the homebuilding industry has had in the past decade. So long as it is considered acceptable that this be the general role of the homebuilding industry, we believe that the industry will encounter great, if not insuperable difficulties, in measuring up to the challenge of better housing for the American people which the Congress of the United States has posed as the objective for the years ahead.

Mr. Chairman, the statement we are submitting for the record goes into further detail on these matters. Appendix 1, with attachments A and B are here, which we would like to put in the record.

Senator SPARKMAN. They will be printed in the record.

PENDING LEGISLATIVE PROPOSALS

Mr. BARTLING. Mr. Chairman, I should like now to give you our views on those matters of main interest to our industry which are pending before you as legislative proposals. First, I should like to express our sincere appreciation to both you and Senator Capehart for joining in the introduction S. 3541, to provide additional financial facilities in the Federal National Mortgage Association and to establish a better central mortgage reserve facility.

We agree wholeheartedly with the statement of Senator Sparkman in the record at the time of introduction of S. 3541. We are hopeful that discussion of this legislation during these hearings will lead to a fuller understanding of the purposes of the bill and a deeper appreciation of the need for legislative action to provide a soundly funetioning mortgage reserve facility. In order to provide a complete explanation of the bill as we understand its provisions and to present in fuller detail the viewpoint of the home building industry, I have asked Mr. Nels Severin, who is here with me this morning, a former president of this association and well known to the subcommittee, following my statement, to give you separately, if time permits, our testimony directed solely to S. 3541. At this point, I will say that we unreservedly endorse this proposal and look forward to working with the committee in developing legislation which we hope will continue to receive bipartisan support and passage at the earliest possible date.

Mr. Chairman, we also would like to introduce into the testimony tomorrow or the next day written testimony on the central mortgage facilities, if we may, sir.

Senator SPARKMAN. We shall be very glad to have it at that time. Mr. BARTLING. Thank you.

As you will note, we have provided a succinct summary of our views on most of the major proposals now pending in Congress on housing as an appendix to this statement, appendix II. We support an increase in the FHA insurance authorization or elimination of the ceiling on this authorization as proposed in S. 3504 as well as continuation of the FHA title I program as proposed in S. 3500. We wish to make sure that the general operations of FHA will continue without interruption and we believe the title I program has proved its value to all homeowners and to the good maintenance of our housing inventory. We also support an entirely new proposal, S. 3502, which would authorize FHA to insure mortgages on apartments in multifamily structures in amounts and terms not different from those in the act for cooperative and rental programs. Experience to date, especially in Puerto Rico, has proved the soundness of this approach to homeownership, we believe, and we think the bill should be enacted at the earliest possible date.

May I now refer to the legislative proposals in S. 3379 which are designed to encourage construction research. Together with efforts to bring about more enlightened building codes throughout the country and to increase the productivity and lower the cost of onsite labor, we believe technological research holds great promise for new horizons in homebuilding. NAHB has been working in cooperation with materials and equipment manufacturers for several years in an effort to improve the quality and lower the cost of homes to the buyers.