We have found, Senator, that the requirements, the aspirations, the deep feeling with regard to housing which exists in the poorest sections of our population and the most disadvantaged are just as strong if not stronger than the aspiration of our middle class and higher income families.

We have found that it is much easier to place middle income and higher income families into the large cliff dwellings; that is, the large high-rise units. These units are more familiar in New York and in Chicago and Los Angeles. But the low-income families in other parts of the country will accept that kind of housing far less graciously, and will not accept that kind of housing. In Watts, in Los Angeles, the desire for housing there was expressed in terms of single-family housing, rather than the high-rise units.

MARKET DEMANDS FOR SMALL UNITS MUST BE MET

Now, I think, Senator, while the desire is there, and I think you have expressed it well in terms of the urgent needs, that the approach is going to be not in that direction, but in the direction of providing incentives, providing programs, in order to mobilize the literally hundreds of thousands of small entrepreneurs to get down to the job of meeting those market needs so that we turn out a Georgetown instead of a sterile repetitive regimented community about which they will have national anthems and not just "ticky-tacky" songs.

Senator RIBICOFF. What you say is correct. A great hope of people in the ghetto is for decent housing. I think most of them would like single one-family or attached two-family housing. I think their hopes and ambitions are the same as the middle class.

How do we satisfy and fulfill this need at a price they can afford to pay? The situation we find ourselves in at the present time is that the lower income groups pay a larger percent of their income toward rent and housing than the middle income and the higher income group.

PROVIDE HOMEOWNERSHIP FOR LOWER INCOME PEOPLE

Now how do we work this out so that the proportion of their income that they spend for housing is the same as that of the middle class? We may not be able to give them the same type of housing. but they ought to be able pay the same percentage of their income. How are we going to do this?

Mr. WEINER. Senator, I believe I would like to call your attention to one bill which you may be familiar with, S. 1434, which you have introduced and which you have discussed in your speeches, which I think is designed to reach some of the low and moderate income families. I would call your attention to the 221 (d) (3) program.

Senator RIBICOFF. Are you people behind that bill?

Mr. WEINER. Oh, completely. I think our testimony says that we certainly endorse the proposal embodied in your bill.

Senator RIBICOFF. You really are achieving two things. You make it possible for the man with a $5,000, $6,000 or $7,000 income to buy and own a house. And as he moves out of his housing unit, people with lower incomes can move in.

Mr. WEINER. That is right, absolutely.

Mr. ROGG. We are not talking about subsidy to the industry. We are talking about subsidy to the lower income family.

Senator RIBICOFF. I know that. When I talk about subsidy, I don't want to give you gentlemen a subsidy.

Mr. WEINER. We don't want anything, sir.

PROPER INCENTIVES CAN LEAD TO SOLUTIONS OF HOUSING PROBLEMS

Senator RIBICOFF. That is right. I am talking about the overall cost factors that would make it possible for the poor and the lower income groups to own their own houses, either on the basis of single-home ownership or cooperative or condominium or what have you. I think that if everybody had an interest of one sort or another in a home of their own, you would help eliminate slums much faster than you will with our present methods.

Mr. WEINER. That is right, and similarly as you can stimulate the individual family to own its own home, similarly if you will stimulate the small entrepreneurs who exist in our Nation to bend their backs because of the kind of economically feasible programs to which they will lend their talents, I think we can find the same kind of massive solutions we did in finding housing for the American people after World War II.

HOUSING INDUSTRY INITIATIVES DISCUSSED

Senator RIBICOFF. What are you doing as an industry to come up with constructive suggestions and initiate ideas of your own, instead of reacting to an administration proposal or a congressional initiative? You people have knowledge. You say you represent 70 percent of the homebuilders of the United States. You are in business to make a profit, and you should be. I think you are never going to get housing built in America on a nonprofit basis. The American system requires that people make a profit.

I will place in the record at this point a study made by the Legislative Reference Service of the Library of Congress showing the proportion of family income spent for housing. The study relates to the point we were just discussing.

(The study referred to follows:)

EXHIBIT 233

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE

Washington, D.C. 20540, April 12, 1967

THE PROPORTION OF FAMILY INCOME SPENT FOR HOUSING

The accompanying table provides information on the proportion of family income spent for housing by all urban and rural families of two or more persons. This data must be interpreted with care, however, as its usefulness for many purposes is subject to certain limitations.

One of the most significant of these limitations is that payments on principal by homeowners with mortgaged property has been omitted (see note at end of table). Because of this, the two-way classification of payments for shelter between renters and homeowners may be subject to serious distortion. The combined average expenditures of all homeowners, for example, will depend heavily on the relative proportion of mortgaged and unmortgaged property in each income group.

THE LIBRARY OF CONGRESS, LEGISLATIVE REFERENCE SERVICE, ECONOMICS DIVISION-ANNUAL EXPENDITURES OF FAMILIES OF 2 OR MORE PERSONS FOR HOUSING: 1960-61

Senator RIBICOFF. My feeling is that you can build houses cheaper and sell them cheaper, and still make a profit, than government can build houses without a profit, or nonprofit organizations can. What are you doing concerning plans and ideas to build houses at a lower cost so that the people in the slums can either rent or own better housing?

INDUSTRY BILL WOULD CREATE CENTRAL MORTGAGE FACILITY

Mr. WEINER. All right, I am glad you asked that question, Senator. We have introduced a bill known as S. 1492, incidentally a very auspicious number we hope, to deal with one of the real housing impediments, which is the bill on a central mortgage facility.

We have called it a central mortgage facility, designed to make FNMA effective in dealing with conventional mortgages, more effective in dealing with one of the biggest impediments to housing in low income families that took place most recently in 1966, the financial tight money crisis.

We produced 300,000 less units from the previous year and what was realistically expected in 1966, and as you can imagine, Senator, those 300,000 units were the lowest priced and the lowest cost units that we were planning to produce, because those prople were least able to meet the market demands and requirements of the mortgage lenders and everyone else involved.

INNOVATIONS NEEDED TO STABILIZE FINANCIAL MARKETS

Now we said that this industry needs some stability in the financial markets, stability in the programs of 221(d) (3) and FNMA assistance, because even FNMA was at one point almost squeezed completely out of the secondary market until, finally, later in the summer the Congress appropriated and the President assigned some additional funds. So in the whole area of financing, we have addressed ourselves toward some innovations and some new concepts that we feel are going to bring about some stability.

In addition, we support the principles of the kind of legislation that you talk about vigorously, because we have been talking about this with some of our people for some time, that in order to provide homeownership, we are going to have to have the support of the belowmarket interest rate to achieve this for families with $4,000, $4,500, and $5,000 income levels.

BUILDING AND ZONING CODES MUST BE MODERNIZED

In addition to this, some of the major impediments to reducing the cost of housing lie in the antiquated building codes, in the backward and primitive zoning codes which are designed to keep poor people out, both downtown and in the suburbs as well.

Senator RIBICOFF. What are you doing as an organization to change building codes and make them more realistic across the Nation?

Mr. WEINER. We have met with the four largest national model building codes in the country. We set forth with them the objective of developing a standardized residential code that they would advance, which we could then really get behind and introduce in all of the building code areas in the country.

We are in the midst of developing this as a proposal. We have supported Senator Douglas, and the National Commission on Urban Problems, and, incidentally, one of our executive committee members, Mr. Alex Feinberg of New Jersey, is serving on that Commission, and we have been working very closely with them to delve into the problem, so that we can get some national proposals coming through a Federal agency as well as our independent private efforts on this. I will stop now.

Senator RIBICOFF. Have you and idea what antiquated building codes add to the cost of a housing unit?

ANTIQUATED BUILDING CODES ADD TO CONSTRUCTION COSTS

Mr. WEINER. I can tell you that in one place specifically that I know of. I know of almost $1,100 of actual construction cost on a total of a $9,000 structure.

Senator RIBICOFF. You have an additional cost of 12 or 13 percent because of antiquated building codes?

Mr. WEINER. That is right.

Senator RIBICOFF. Could you give us a list of some of those antiquated provisions of the building code that would add an additional $1,100 cost to a $9,000 unit?

Mr. WEINER. Sure.

Mr. ROGG. We will supply them for the record, Senator.

Senator RIBICOFF. Can you provide any example now, and then give us additional information for record?

EXAMPLES OF OUT-OF-DATE REQUIREMENTS

Mr. WEINER. Right. No. 1, the requirements for a 4-hour fire rating as opposed to the fire rating requirement which exists in the outlying areas in the suburbs. The 4-hour fire rating is a requirement that goes back to of course obviously the fire marshal reqiurements and so on, the cost meaning the difference that only 8 or 6 inches of concrete and masonry have to be used as opposed to the ability to use other materials that will not produce a 4-hour fire rating.

The plumbing requirements in most or in many cities, and particularly in the one that I am talking about, are antiquated with the requirements for cast iron being used for a complete system rather than permission to use other materials such as the plastics and others that are permitted out in some of the outlying areas.

In the area of drywall or wall construction, this code requires that only plaster will be permitted instead of the nature of the drywall construction. I can continue with a whole series of items.

details

Some are $100 and some are $200 and so on. We can give you on it, but these are characteristic of the kinds of requirements that will raise the price of that house by about 12 or 15 percent.

BUILDING CODES VARY GREATLY ACROSS THE COUNTRY

Senator RIBICOFF. How widespread in the United States are these antiquated building codes that increase the costs per unit some 12 to 15 percent?