Evening star., 1936-05-09
VALUES HELDSAFE
|NE.H.A.PROGRAM.
LoW-Cost Construction Will
Not Harm "Prepared Mar
ketS," Official Says.

The anticipated impetus to the con-
struction Of low-priced homes through
out the country during the coming
year under terms OF the Federal
Housing Administrations insured
single mortgage system will In no way
DESTROY prepared markets" for more
extensive homes or interfere with ex-
isting property values. w. D. Fland-
ers, deputy Federal housing admin
istrator. said today.
Mr.. Flanders pointed out that the
Federal Housing Administration has
a definite interest in the perpetuation
Of property and neighborhood values
and takes these factors into consider
alton before granting insurance on
mortgages. The fact that a large pro-
portion of business transacted by the
Federal Housing Administration In
wolves insurance on refinanced mort
cages places additional stress on the
maintenance of neighborhood ana
property standards.
The Federal Housing AdminiStra-
ton is particularly interested IN avoid
ing depreciation in property values,
as much so. if not more, than any
other agency or group of individuals
in the country. Because a consider
able portion of our business has been
the insurance of refinanced mortgages
We would, naturally, not foster any
movement to destroy existing values
in which we have very decided in
terest.
Another point to remember is that
one OF the first requirements that the
Housing Administration places upon a
home on which mortgage insurance
s desired is that it shall be in a pro-
tected neighborhood; that is, q neigh
borhood wherein houses must con-
form to such standard Of construc-
ton as not to detract from the value
Of neighboring structures.
Obviously, therefore, if we agreed
to insure a mortgage on a $4,000
house to be built in a $4,000 neigh
oorhood' we would not be protecting
property values. In gist, for mort
rage to obtain a high rating for Gov
crnment insurance, the house must
conform to size and type with those
adjacent to it. If it does not so con-
form it is rated down. Our underwrit.
ing procedure provides for such g
process and thus makes it virtually
impossible for low-priced homes to bt
constructed under our plan in local
ties where they would bring down the
value Of dwellings in the immediate
vicinity.
THE question of prepared markets
has been brought up. In this field
here is little likelihood of the low
priced home affecting the value oi
higher type dwellings as deed reStric'
lions generally provide adequate pro-
'ection for the so-called better neigh.
borhoodS.
1T is also possible that low-pricee
homes of today may be in every wa!
suitable to neighborhoods where ex'
isting homes were built at much
greater cost. A home built today witt
equal, if not greater comfort, beaut,
and efficiency. may possibly cost les
than a home built during 1929
Where this is the case, construction
of more reasonably priced homes viii
N no way detract from existing
values.
But, aside from all this, the yer!
limitations Of economics will preven
any serious difficulties arising from
the development of low priced con
struction. A man who can afford NJ
more than 81 400 to 1900 for a hom,
is not going to erect it on lot cost
ing very much more than S400 OF
$500, including utilities. Therefore
homes built at a greater cost. for {
prepared market undoubtedly vii
be safe from encroachment by more
modest types of dwellings, because o.
land costs, If for no other reason"