Evening star., 1938-01-02
IMPROVED BUYING FARMERS TIRE ATENED BY PRICE DRO
HIGH COSTS END
BUILDING BOOM
Outlook Good for Moderate
Advance in Housing
Construction.
BY Ca mbridge Associates.

BY CAMBRIDGE Associates.
Among the major disappointments
Of 1887 was the progress of residen-
tial building. High hopes have been
pinned on this division, not only, as
the President has so often said, be-
cause the Nation Is ill-housed, but
also because of the very definite
stimulus which normal building activ-
ity gives to employment IN many lines
of enterprise. Before the year was
half over, however, 1t was evident that
large stumbling block had been
placed in the way of further rise.
That stumbling block was high costs.
1t has often been remarked that
what the building industry needs Is
man with the genius which Henry
Ford displayed in the development
Of the mass production method in
automobile construction. There has
been no lack of attempts to increase
the value of the housing dollar. but
somehow all efforts have fallen short
Of the mark.
Perturbation at one time seemed
to hold the key to success in cost
reduction, but it was soon found that
the public was not willing to accept
modern house which had not all
Of the modern convenienceS, including
air conditioning, built-in refrigerators
and all that goes with it, And when
these things were included they drove
the cost up to levels which the av-
erage prospective builder could not
afford to pay.
Labor Costs Not Only Bar.
Labor costs are admittedly high,
yet it is not entirely the cost Of man
hours which makes construction ex-
orbitant as it is ineff1ciency in the use
Of those man-hours Because houses
are not standardized, cutting and
fitting Is a necessary process in con-
struction Because housing con-
tractors are generally small business
men, the advantages inherent in set
ting specifications and buying in large
quantities are not to be realized Be-
cause labor unions have established
rigid restrictions on the type of work
to be performed by certain artisans,
and the rate at which they are allowed
to work. much lost motion results.
Yet it has been found impossible to
conquer all these difficulties without
establishing Government control over
a wide field, which has not been
considered desirable
The sharp rise in material costs
probably had great deal to do with
the onset of the contraction in build
ing. Beginning in late summer, 1896,
many commodities rose unwarrantedly
as speculative buying became an i'm
portant factor. Copper and lumber
were two outstanding examples of
important material increases, the for
mer being additionally boosted by ex-
pected large takings for armament
purposes. While the cost of materials
and accessories could not in them.
selves have dampened building spirits,
they did contribute the flnal straw
Fortunately. the commodity defation
Of 1887 has tended to restore reason
able levels.
Financing Formula Needed.
For some reason the proper financ-
ing formula has not yet been evolved.
The 80 per cent twenty-year amor
| tized loan is a step in the right direc-
ton where it has been applied. and
the doubts of financial men as to the
wisdom of further reducing the down
payment are probably justified, the
| history OF real estate values in this
country being what it is. We may take
the course Of letting experience show
whether down payments and interest
| rates can be successfully lowered or
! We may, as the President suggests, take
the bull by the horns Immediately and
retrench afterward If necessary. II
there is real liquidation of real
estate such as that witnessed during
the last depression, however, mort
gage insurance will be . small mat
ter. and the Federal Government will
probably find it necessary to step in
with direct assistance.