Three years ago the average price of new houses in this country was $42,600. Last May that figure had climbed to $63,000, a 50 percent increase that is much higher than the average rate of inflation across the nation.
Americans still are buying houses at record levels - and paying record prices. Washingtonians are paying higher prices than most Americans: only in three urban areas on California are housing costs greater.
Yet, some of the same people who say that housing prices are too high must be out there in the marketplace, often selling something more expensive. This market activity has made the average price of existing houses sold here slightly higher even than a new house.
Regardless of statistics, everyone knows that all housing prices are too high. But is anyone or any agency or any group doing anything about it?
A broadly constituted task force on housing costs, implemented by the Department of Housing and Urban Development, released a 106-page report in May that described most of the reasond for high housing costs. The familiar culprits were listed: over-regulation, exorbitant land prices and constantly rising costs of labor, materials and the money needed to build houses.
Housing magazine, a trade publication for builders, commented editorially: "There's heavy emphasis on the government's role in seeking less costly ways to build. Government has never contributed to the reduction of construction costs. . . That's the job of the private sector - the builder, the architect, the engineer and the building product manufacturer who, faced with the realities of the marketplace, develop new ways to build better for less."
Many builders have been doing that but their efforts have been overwhelmed by the increasing size of houses and the amenities put into them.
Four years ago, when the housing market was in a depressed state, some builders came up with smaller, basic, no-frill houses. They sold slowly.
And nationally, the reaction was the same. Most of the people who were buying wanted something bigger, better equipped - and more expensive.
For instance, volume builder David Fox churns out thousands of relatively low-cost houses in Texas every year.
But Fox has also learned that almost all of his young, low- to moderate-income buyers want fireplaces. And air conditioning. Garages, large closets, cathedral ceilings, extra bathrooms, foyers and appliances are also in demand. Many of those items were not standard in houses built in the 1950s and early 1980s, when housing prices were fairly stable and financing costs (to both the builder and the buyer) were half of what they are now.
Recently, leaders of the National Association of Home Builders mounted a second anti-inflation effort. (The first was aborted because of builder apathy. NAHB had asked members to hold the line on a price increases, except for pass-through cost increases, for six months.)
Now organized home builders are asked to hold down 1978 housing price increases to less than the annual average in 1976-77. But housing proces rose 12 per cent annually in that period.
That move was hailed by Robert Strauss, President Carter's anti-inflation man, as the "kind of step that will bring inflation under control." But can NAHB induce or cajole its members, some of whom are just now recovering from the housing doldrums and bankruptcies of 1974, into asking less than what they think is the most they can get for their houses?
Builders price their houses low enough to sell but high enough to make a maximum profit. Residential building is a seat-of-the-pants, entreprenerial, cyclical business. Builders say tha their colleagues who sell well but price their product too low are quickly gone from the scene.
Recently, the Senate Budget Committee held hearings on the high costs of housing.Chairman Edmund Muskie (D-Me.) noted that "housing-related costs are a leading component of consumers prices, accounting for 43.9 percent of the total consumer price index."
Sen. Lawton Chiles (D-Fla.) said that housing prices increased by 12.5 percent from 1972 to 1976 while the over-all consumer price index was rising 8 percent.
Chiles added: "The average American spends about 30 percent of his after-tax income for housing, more than any other item of expenditure. For first-time buyers of new homes, housing costs over 40 percent of disposable income. . . What I find especially disturbing is that for the person who does not want to spend that much, low-cost housing is just not available.
That's not altogether true, because many thousands of Americans have been settling for something less expensive than the conventional house. Some are buying small, new and converted condominium apartments. Others buy mobile homes, which are not mobile but which are usually priced around $20,000.
There was scant mention of mobile homes, America's only low-priced housing, at the Senate hearing. And you seldom hear them discussed when neighbors or friends gather for a picnic or a drink and get into the usual bemoanings on the high level of taxes and housing prices. All the while, they are smugly aware that their own house would bring more than double what they might have paid for them a decade ago.
Mobile houses are not perfect and they are not for everyone. But they do represent a nearly untapped potential for developers who can offer them on lots. With some adapatations and added creativeness in design, these non-mobile, factory built houses could provide a significant option for moderate-income Americans in the 1980s.
At the Senate hearing on housing prices, HUD Undersecretary Jay Junis, a former builder, concentrated his fire on site development costs, regulations, housing production cyclicality and indifference. On the latter point he struck a nerve. Too few persons, including buyers, have seemed to care about rising costs in recent years.
Builder Herman J. Smith of Fort Worth, Tex., testified at length, hitting all levels of government regulations. He did endorse the "one-stop shopping" concept of an office for all federally funded programs to deal with the duplicative nature of permit procedures. He said it would avoid buck-passing and undue delays.
Yet, it took a city councilwoman from Iowa City who is a member of the HUD housing cost task force to make a noteworthy statement on those costs to the Senate committee. Councilwoman Mary Neuhauser said:
"If by reducing the cost of building houses we come nearer making decent, safe and sanitary housing available to all, then lowering housing costs is a commendable goal. However, if the reduction of the cost of building houses simply results in large profits to developers without directly or indirectly benefiting people . . . then the housing costs task force will have labored in vain."
More competition is needed to hold the line on housing prices.