Although the cost of new housing is climbing twice as fast as the consumer price index and consumer income, the housing industry refuses to accept the blame and intends to fight back.
For the housing industry has been marshalling its facts. Studies have been made by research centers at Rutgers, Harvard and Rice Universities and the Massachusetts Institute of Technology, among others. Major conferences have been held by the Federal Home Loan Bank of San Francisco and the National Association of Home Builders. And, this fall HUD Secretary Patricia Roberts Harris appointed a special task force on housing costs to make recommendations within nine months.
To date, the concensus is that hard-cost items such as labor and materials are not the prime contributions to the increase in building costs. The major cause is local government.
Excessive fees, duplicate reviews, unnecessary regulations and inspections plus prescriptive building codes are cited as adding to costs but not value. The study by Rutgers, reported earlier in these pages, indicates that 20 per cent or $10,000 on a typical $50,000 house is attributable to excessive local rules, regulations and fees.
The big jump in local fees and regulation followed in the wake of federal and state environmental laws passed in the late 1960s and early 1970s.
A study by the Rice University Center for Community Design & Research concluded, "Although the benefits of environmental and land use regulations have received wide recognition, costs likely to result from government regulation of housing development have not been equally identified. Adequate housing for all Americans is an important objective and one that has been largely overlooked in the fight to preserve the environment."
A Western builder put it another way, "In the 1950s, we used to sell a house and a lot, and the buyer paid for it over a 20-year period. In the 1960s, we sold a house and a lot, plus community facilities such as a swimming pool, and the buyer paid for it over a 25-year period. Now, we sell a house and a lot, plus the cost of the county government and ask him to pay for it over a 30-year period - at an interest that's 50 per cent higher than it was ten years ago and 100 per higher than 20 years ago."
A good example of how local fees boost housing costs is offered by a Washington-based national building company.
"We ask $5,000 more for the houses we build in Fairfax than identical models in Maryland. The main reason is the difference in county fees, permits and inspections."
In August, 1977, Fairfax County raised water hook-up rates from $1,125 for a single-family house to $2000. Sewer hook-ups which cost $300 in 1972 now run from $1300 to $1600, depending upon the front footage.
What does "out of signt" mean in dollars and cents? An answer was offered by local builder Edward Carr at a recent NAHB conference. According to Carr's figures, in 1969 a quarter-acre developed lot in Northern Virginia cost about $7,500. Today it would be close to $23,000.
Solutions to the problem will not be easy. Most home builders feel the biggest problem is the complacency of existing homeowners and the county fears of upsetting that constituency.
To counter that complacency, the National Association of Home Builders is planning to enlist its 650 local chapers with their 94,000 members to build grassroots support for reform.
An NAHB spokesman said, "What most homeowners forget is that they will most likely be back in the housing market again and have to pay the penalties on their next house . . . but, equally important, they are letting their children be priced out of the housing markets."
Because the housing cost problem has become a local problem, there is no single solution. However, the builders' conferencee did yield a number of recommendations. Some of those with wide application included:
All municipalities or local governing bodies should adopt one of the four model building codes and keep changes, if any, to the minimum.
Various levels of government should coordinate subdivision processing procedures to eliminate delay and duplication. The various analyses should be combined into a single joint review, or provide for reciprocity of approvals from one agency to another.
Give special tax breaks to new home buyers if they are asked to bear the burden of capital improvement costs and fees.
Establish special tax districts to distribute the costs to all homeowners who benefit from new municipal services such as sewage treatment facilities, rather than charging it up front to the new buyer.