Housing became so affordable in the 1970s that it is not affordable for the first-time buyer of the 1980s.

That thesis may seem a bit farfetched for the house-seeker confronted:

Unprecedented high costs of mortgage financing, created because the funds are now competing in a national, possibly worldwide, market for yield-producing investments.

Increasingly expensive dwellings, the result of high demand, inflating material and labor costs, and what the building industry regards as overly stringent regulation.

But economist Anthony Downs has compiled evidence that the United States has been "investing more capital in the financing of housing than is good for us."

Now a senior fellow at the Brookings Institution, Downs formerly headed a national realty research firm. He contends that he doesn't necessarily accept his own proposition that house financing takes too much of the national investment nugget. But he does state his views with enough conviction to upset leaders of the building industry.

Downs brought his argument to a recent housing affordability seminar sponsored by the National Association of Home Builders -- and he caused a stir.

Downs is saying we are paying the piper for our colossal investments in homeownership during the past decade.

But, you say, homeownership is the bread and butter issue of home builders.

What Downs seems to be suggesting is that too much money had become too easy to borrow and too attractive because of income tax deductions for interest and taxes, thus locking up funds needed by other investments vehicles.

Downs also contends that home buying has become more an investment than a purchase of shelter. Wilmington, Del., builder-developer Leon Weiner disagreed at the seminar held earlier this week in Annapolis.

"People are essentially looking for a place in which to live," Weiner said.

He didn't discount the investment aspect of homeownership but called it "not overwhelming."

There is truth in both positions, but neither is an accurate portrayal of today's home buyer. It seems more reasonable to say almost all home buyers and owners fully support both the investment and place-to-live motivations.

Weiner also said he recalls that the basic, "stripped-down" house did not find a buyer market when the housing industry was pinched in the recession of 1974-75.

"I still have two of them to sell in the Willimgton area," he said. "But I do forsee that the first-time home buyers of the 1980s will accept what they can afford -- a smaller house with features that they want." He pointed out, for instance, that dens and music rooms are popular today.

Louis Nevins, representing the National Association of Mutual Savings Banks, said he perceives no high housing priority in the present or new Congress. "We need a major tax incentive for savers. But housing must first be regarded as a significant political issue," he commented.

Meanwhile, obituaries are being written for the traditional long-term, fixed-rate mortgage that enabled many millions of Americans to become both homeowners and shareholders in appreciating residential investments made since World War II.

Lawrence Simons, assistant Housing and Urban Development secretary for housing and Federal Housing Administration commissioner, pointed out that the rates for FHA and VA mortgages are not directly responsive to the total capital investment market because of the packages of mortgages sold to investors by the Government National Mortgage Association.

In effect, the Ginnie Mae auctions provide a day-to-day mortgage market rate known to anyone who wants to know, he added.

Those FHA and VA mortgages may soon be the only surviving long-term fixed-rate financing vehicles available to home buyers. Conventional lenders are turning increasingly to adjusted rate mortgages keyed to the ups and downs of the future demands for capital investments.

In the past year, however, the volatility of the mortgage market has found current FHA-VA rates below what investors were able to find elsewhere. f

As a result, the once sought-after federally guaranteed or insured home loans have been costly in terms of discount points that must be paid by sellers or builders to bring the yield up to market level. Simons even acknowledged "a threat" to the continuance of the long-term FHA-VA mortgage. a

Because conventional lenders and the Federal National Mortgage Association have been caught with portfolios bulging with mortgages yielding far below today's market rates, investors have become wary of committing their funds to long-term, fixed-rate mortgages.

Passbook savings have diminished sharply at savings and loan institutions, which now attract funds by paying higher rates for longer-term deposits.

Most S&Ls now make mortgage loans and then sell them in a secondary market to recapture funds for investments in what are likely to be higher rate mortgages or capital market investments. Today's savings and loan associations no longer hold their mortgages but more likely act as mortgage makers and servicers.

Investment sources represented by the mortgage banking industry also have dried up as the result of competing higher-yield alternative investments. Insurance companies no longer provide funds for home mortgages. Rather, they are investing in new office buildings and get higher yields from an ownership position. The same goes for pensions funds, which for years have been eyed as a source for home mortgages packaged as securities.

Mark Riedy, executive vice president of the Mortgage Bankers Association, said recently that his members are "fighting a losing battle" in trying to bridge the gap between borrowing home buyers and lending sources. Extreme volatility of rates from day to day and week to week has made it hazardous and costly to make and keep mortgage commitments for a fixed rate at a future closing date.

And Oakley Hunter, chairman of the Federal National Mortgage Association, has emphasized that capital formation (what most of us call savings) must be encouraged. That usually is seen as a new tax incentive for savers.

As evidence of the financial sophistication of home owners and buyers, Hunter said that the FNMA portfolio of mortgage loans now has an overall yield of only 9.08 percent, whereas current borrowing rates are at 13 percent. "In addition," Hunter told the housing seminar, "our normal rate of payoffs or curtailments of existing mortgage loans has decreased 50 percent in the past year."