The nation's decimated housing industries got equal doses of two kinds of news in the administration's proposed fiscal 1983 budget: bad and worse.
The bad news was that the budget, announced this week, entails sharp cutbacks in federally subsidized housing and in housing credit programs.
But even worse for those wanting to buy, sell or build homes this year are in the parts of the budget that do not deal directly with housing, those that contain the deficit and federal borrowing figures.
Both are at all-time highs, putting a strain on the country's credit markets and likely to keep interest rates up. The housing industries have been hoping for a break in interest rates, considered essential to a true housing recovery.
The administration is trying to bring the deficit down -- but the grim irony here for housing is that in doing so the budget ax has slashed away at many of the programs that have aided that sector in the past.
The proposed end of virtually all federal programs for housing construction and a sharp reduction in government-backed housing credit has incurred the wrath of the formerly patient homebuilders, who last year endorsed the president's overall economic program in hopes that it would bring about a recovery and lower interest rates. This year the disillusioned industry has had a serious change of heart.
"The effect of the budget cuts is clear. The administration has abandoned the nation's longstanding commitment to decent, affordable shelter for all Americans," said Frederick Napolitano, new president of the National Association of Home Builders.
The main administration housing proposal is to stop construction of new rental apartments for low-income families--and to recapture money previously authorized for some 700,000 units that have not yet been started -- and replace this with a system of housing "vouchers" to go directly to individual families.
Under the voucher system, families would get a set grant for housing costs, and would have to pay all costs above the amount they receive. Currently, families in subsidized housing pay no more than 25 percent of their income, and the government pays the rest. The average grant under the new system would be $2,000 a year, but would vary with a families income and the median price of housing in the area.
The homebuilders' group argues that the voucher system will allow severe shortages of rental housing to continue. The administration argues that there is no overall shortage of rental housing in the country, only in pockets, but many housing groups believe shortages are a national problem. The poor will have to pay substantially more for their housing under the voucher system, and low-income housing groups say low-income families also will be forced into competition for the few low-rent apartments available.
Opposition to the proposals came immediately from a coalition of housing, labor and religious groups, including the AFL-CIO, National Low-Income Housing Coalition, National Council of Senior Citizens, and National Housing Conference among others.
"It would increase the doubling-up of families and the number of homeless people, causing hardship among low-income, minority and elderly households," the coalition said in a statement.
The first 106,000 vouchers the administration wants this year are supposed to go mainly to families currently involved in federal programs to be replaced or to a new plan for individuals to rehabilitate existing rental housing.
Credit programs that support the buying and building of homes also received deep cuts. The Government National Mortgage Association (Ginnie Mae) would be able to make commitments to back no more than $38.4 billion, down from $64 billion in 1981. Ginnie Mae backs FHA- and VA-insured housing aimed at first-time home buyers.
The homebuilders and mortgage bankers say the credit limits will make it more difficult for millions of potential homeowners to buy houses they can afford.
The administration appears to be "bending over backwards to hurt the housing industy," said Mark Riedy, executive vice president of the Mortgage Bankers Association, saying that 93 percent of potential homebuyers cannot purchase now because of high interest rates and costs.
The Ginnie Mae "tandem" program -- which has supported construction of low-income and subsidized housing by getting them credit at 7 1/2 percent interest rates -- would be scrapped entirely under the budget.
The only federally subsidized construction program left would be for 10,000 units for the elderly and handicapped, with more restrictions added to keep down costs. The proposals would prohibit "excessive amenities" such as dishwashers, balconies or swimming pools; would limit the number and size of bathrooms; and would prohibit two-bedroom units for the elderly.
Public housing operating subsidies would be cut drastically. Of the 3.4 million units of federally assisted housing for the poor, 1.3 million are public housing operated by local authorities but getting federal help for maintenance.
With last year's proposed budget cuts, public housing authorities from across the country said that their maintenance costs were rising rapidly, largely because of sharply increased utility charges. Large reductions in federal aid would mean the rapid deterioration of public housing, putting the health and safety of those living there at risk and encouraging urban unrest.