Housing Policy Goals and Housing Market Behaviour: Experience in the United States

The material in this article provided the basis for a previous article published in the Journal of the American Institute of Planners, Vol. 31, No. 3, August 1965.

See, for example, English Housing Trends by J. B. Cullingworth (Bell, London, 1965) and Report of the Committee on Housius in Greater London (the Milner Holland Report), H.W.S.O., London , 1965.

Although clearly evident in many neighbourhoods in the City, this effect of rent control has never been adequately studied or quantified. For one thing, undermaintenance of the City's solid brick structures does not readily show up in Census statistics. Although innumerable cases of this phenomenon can be cited, the extent and effects of such undermaintenance have not yet been successfully measured.

For the first time in approximately 20 years, the City's available rental vacancy rate rose above two per cent in 1964 (2-3 per cent).

The Redevelopment Companies Law permits a housing company to obtain the benefits of the power of eminent domain to clear slums and construct new housing. It allows a municipality to grant up to 100 per cent real estate tax exemption on the value of the new housing for a period of 30 years in exchange for limits on rents and profits. Financing is obtained through the open market. Mitchell-Lama projects are those constructed under the State's Limited-profit Housing Companies Law. This permits the State or a municipality to make direct long-term loans (up to 50 years), at low-interest (about 4 1/4 per cent), up to 90 or 95 per cent of development costs, to a housing company for the purpose of producing moderate cost housing. Return on equity is limited to 6 per cent and the admission income of occupants is limited to either six or seven times gross rent. The municipality may permit tax abatement up to 50 per cent of the tax assessment on the project. The effect of these aids has been to reduce rents of Mitchell-Lama projects from the $45 per room per month that normally might be required down to $30. Both the State's Division of Housing and Community Renewal and the City's Housing and Redevelopment Board independently operate Mitchell-Lama programmes within City limits of roughly equal magnitudes, the one with State issued bonds and the other with City financed bond issues.

To cite a few: at the Federal level there is the Housing and Home Finance Administration and its constituent agencies, the Public Housing Administration, the Federal Housing Administration, the Urban Renewal Administration and the Community Facilities Administration. The State has the Division of Housing and Community Renewal. At the municipal level are the New York City Housing Authority, the Housing and Redevelopment Board, the City Rent and Rehabilitation Administration, the Department of City Planning, the Department of Buildings, the Deparment of Real Estate and the Department of Relocation.

This is the figure most likely to be an under-estimate. Many early new-law tenements exist with the bathtub in the kitchen. If the unit has hot running water, it would be classified as standard on the basis of Census criteria. The number of such units still in existence is not known. In addition, the Department of Buildings has a 1963 inventory of 43,500 old-law buildings containing 342,000 apartments. Although these are by definition obsolete, not all of them are classified by Census criteria as substandard. There is no estimate of how many of these buildings still exist in their original state or have been partially or completely renovated.

Although this standard is open to objection as arbitrary, it probably is a fair measure of the magnitude of undesirable crowding.

This explains the discrepancy between items 23A and 13B in Table I-those figures otherwise would be indentical.

The derivation of this figure is omitted from this paper. It is sufficient to say that it represents the three concepts listed in lines 11, 12, and 13 of Table I as estimated by the 1960 housing-unit concept rather than the 1950 dwelling-unit definition. The former is a much more comprehensive measure that incorporates most of the City's rooming-house type units as well as standard-type houses and apartments

The residual need is a practical recognition that, regardless of the diligence of public authorities, there always will exist a scattered number of housing units in the community that will be in unsatisfactory condition at any one point in time.

Building a Better New York, Final Report to Mayor Robert E. Wagner, Anthony Panuch, March 1060, p. 35. The 'housing-needs' concept used in this paper is identical to that labelled 'housing shortage' in the Panuch Report.

The Census Bureau's population counts were: 1950-7,891,957; 1960 — 7,781,984 ; 1950-60 decrease—109,973.

Although the 1960 Census of Housing indicated an increase of 325,000 housing units over 1950, it has been estimated that 75,000 units were a 'definitional increment'—1960 housing units which existed but were not enumerated as dwelling units in 1950. This subject is thoroughly explored in Appendix A, People, Housing and Rent, Control in New York City, New York City Rent and Rehabilitation Administration, June 1964.

Building Department records indicate that the number of units added by conversion numbered 56,000. It is further estimated that about 16,000 rooming-house units were added during the same period—most of them substandard units that actually added to the housing need.

The decline of substandard units by 91,000 over the period 1950-9 is based upon 1950-60 Census data adjusted for an omission of approximately 73,000 substandard units in 1950 which were included in the 1960 Census of Housing (see note 14). The estimate that 50,000 units were removed through demolitions is based upon data from the National Housing Inventory of 1956 and the Components of Inventory Change Survey of 1959 (HS (4), Part 1A-8, 1960 Census of Housing). The 41,000 units in item 17A—'Rehabilitation, conversions mergers and other negative changes' is a residual that encompasses all other changes in the existing inventory, including the deterioration of standard units to substandard status. Although there is no way to allocate this net figure among its components, there is little question that the influences tending to upgrade the existing housing stock were stronger than those leading to deterioration. This subject is discussed in detail in pp. 29-36 of the report People, Housing and Rent Control in New York City, op. cit.

Sites that are accessible by use of a single (15-cent) transit facility-bus or subway-are considered within the 'one-fare' zone. Housing built in the outer reaches of Queens, Brooklyn, The Bronx and Richmond boroughs that require use of a combination of subway and bus, or ferry and train or bus, are referred to as 'two-fare' zones. Land costs for such sites usually are substantially lower than for more conveniently located sites since travel time to Manhattan usually ranges from 60 to 90 minutes.

The high level of 49,000 new completions in 1951 reflected the heavy flow onto the market of housing production induced by incentives provided by the FHA Section 608 multi-family housing programme-a federally insured mortgage programme that permitted builders of rental housing to obtain 90 per cent mortgages on the value of new construction. In many cases, through very favourable interpretation of the regulations, builders were able to complete construction of this housing with little or no equity investment. The high production of the years 1962-4 also was caused by unusual circumstances-the desire of builders to undertake construction under the less stringent provisions of the old zoning ordinance which was being replaced in December 1961 by the new zoning resolution. Extensions in excess of three years provided builders with the chance to start construction under building plans filed before the December 1961 deadline. Plans were filed in 1961 for a total of 181,000 housing units, a figure equal to six years' new construction at the 1950-60 rate.

The 1950-60 decline of 110,000 persons in the City was noted earlier.

People, Housing and Rent Control in New York City, op. cit., p. 39.

There is evidence that the City's population decline has been checked; the household increase estimates in Table I are premised upon a population of 8,100,000 by 1970 and 8,500,000 by 1980 and a decline in household size from 2-87 persons per occupied unit in i960 to 2-69 persons in 1970 and 2-58 persons in 1980.

'FHA and VA insured' is shorthand terminology for Federal housing programmes that provide to mortgage lenders insurance or guarantees against loss on mortgages placed upon new or existing homes. Although the purchaser pays an annual premium of 1/2 per cent on the outstanding balance of the loan, this permits him to obtain more favourable mortgage terms from the lender that more than offset the insurance premium costs. Both the Federal Housing Administration (FHA) and Veterans Administration (VA) administer such programmes. The latter agency's activities is confined to persons who have served in the armed forces during the legally defined period for the second world war and the Korean war.

This thesis originally was developed by Louis Winnick in 1959 during his tenure with the Department of City Planning.

Furthermore, each subsidy dollar spent in land acquisitions will purchase sites for three or four housing units in these areas compared to one in Manhattan.

Louis Winnick , 'Facts and Fictions of Urban Renewal', Papers from the Philadelphia Housing Associations' 50th Anniversary Forum, Philadelphia, 1961, pages 42-43.

This is an administrative report of the Housing and Redevelopment Board entitled 'A Pilot Study of the Turnover of Housing'. It was part of an application to the Urban Renewal Administration for a Section 314 grant for a major survey of this type. The study was carried out by the staff of the Housing Board's Bureau of Planning and Programme Research. The application was rejected by the Urban Renewal Administration on the grounds that a study of this type in a rent-controlled City would be of no general interest or applicability.

Households who had not left a previous unit vacant either had been doubled-up or were newly formed households (a) whose previous residences in the City were still occupied by their families, or (b) who had moved to New York from outside.

It is an ironic footnote that the outcry against relocation and the wholesale demolition of slums reached the level of political effectiveness in the early 1960's —about the time that the crisis in housing had begun to subside. Since that time, the City's de-emphasis on the destruction of residential slums has forced it to shift to commercial and industrial 'slums', creating new problems because of the adverse effect upon employment. From the standpoint of accelerating the rate at which the housing needs problem can be met, it will become imperative to reverse this policy or ultimately to face a diminution of housing output as indicated above.