Sharply rising prices of new housing are now a major concern of the feral government and the private housing industry itself.
In all cases, the aims are laudable. But slowing the rate of inflation in housing costs may have to be the real aim, rather than actually reducing them. A new public awareness to the problem also may ease the spiral.
Both the Department of Housing and Urban Development and the National Association of Home Builders have appointed task forces to look into the problem. Jay Janis, a former builder-developer now serving as undersecretary of HUD, has told builders bluntly that the current, annual 12 per cent increase in housing prices "cannot continue."
Nathaniel H. Rogg, former NAHB executive vice president, points out that inflation hits home building harder than any other construction sector. Rogg, now a consultant, wrote in a newsletter published by Mortage Guarantee Insurance Corp., that other components of the cost-type problem include land, regulatory action, financing, labor, the production cycle, taxation and federal policy, building techonology and materials.
Recently, a Fairfax County cost study group headed by Dranesville Supervisor John Schacosis pointed out that delays in building because of slow government review can cost the builder-developer (and, eventually, the buyer) as much as $64 a week in the pre-construction stage; $130 a week in the construction stage and $160 a week after constrution while awaiting final inspections.
There are staggering figures. The committee report, written by Joanna Hirst, an urban planner and real estate professional acting as a representative of the Federal of Citizens Associations, noted that once a developer decides to build, it takes 2 1/2 years to complete an average house. The committee maintained that 200 days of government review time could be reasonably eliminated from the process "at a potentiakl dollar savinfs of $2,800."
That well might be one means of trimming the costs of new housing, if Fairfax County is motivated to meet the challenge.
It does not seem to be unreasonable to suggest that some of the processing delays might be attributable to inept or incomplete submissions by builder-developers. Builders might also have to pay more attention ot their paperwork and follow it up with requests or demands for action.
A Fairfax County staff official said this week that it is likely that all reviewing and regulating offices will attempt ot speed up their procedures.
He pointed out, for instance, that separate drywall inspections were eliminated recently by combining that procdure with other inspections at the building site.
However, the Northern Virginia Builders Association recently charged that new bonding regulations adopted by the Fairfax County Board of Supervisors will add "anywhere from $200 to $400 to the cost of each new home."
David H. Miller, current NVBA president and a partner in the Miller & Smith home building firm said the new policy places a permanent moratorium on personal surety bonding by builder-deveopers. As a result, he said, builders now have to either post a 100 per cent corporate surely bond or place 100 per cent cash in escrow, for the guarantee that improvements on public property will be made as promised.
Am official in the county bonding office said that the bonding policy amendment action was taken because of a number of defaults on improvements.
Miller said most of those defaults were in the lean building years and that the 1972 regulations to require a credit review and a minimum of 10 per cent in cash ecrow to guarantee the completion of public improvements had been adequate. The new procedure is costly because it ties up cash in escrow or requires paying for a letter of credit from a lender at a amoung each year.
"In all matters of bonding and approvals, we are forced to allocate more time of someone at the executives level ot make certain that we get legitimate releases from bonds and obtain approvals to which we feel entitled," Miller maintained.
The increased pace of area construction also has contributed to the price squeeze by reguiring more workers and materials than the unions and manufacturers had been accustomed to providing.
One builder said that he renegotiated a subcontract for drywall on the basis that the subcontractor said that the cost of the drywall itself had gone up. The builder said it was a matter of paying a higher price, despite a contract, or taking the chance that the drywaller would find it difficult to meet the construction schedule.
Also cited in the report of the Fairfax Committee to Reduce the Cost of Housing was the fact that the county's median house price went from $35,000 in 1970 to $64,600 in 1977 - an increase of 85 per cent. But it was added that the connection fees for sewer and water service increased during the same period from $550 to $1,625 - 195 per cent. And the cost of raw land for new houses went from an average of $3,000 a lot to $9,000 - up 200 per cent.
"Because of disproportionate increases in sewer and water costs and raw land costs, the (housing cost) committee proposed that the Fairfax Supervisors pay special attention to these factors in future policymaking," said committee member Hirst.
Other committee members include Burke Centre developer Milton Peterson, land engineer Orlo Paciulli, Fairfax inspection chief Claude Cooper, Fairfax design review, director Stuart Terrett, builder Richard Clement and Donald Strickhouse, acting director of environmental management for the county. CAPTION: Picture 1, While Fairfax County builders complain of delays in processing application for new development, work continues on 39 houses in the McLean Hunt Estates subdivision of the county, on Meadow Green Road off Lewinsville Road. Norvail Development Corp. has sold most of them - for about $125,000 each. By Ellsworth Davis - The Washington Post; Picture 2, These single-family houses are currently under construction in the Hampton Meadow section of Reston., By Ellsworth Davis - The Washington Post