Mr. MULTER. Mr. Levitt is a reputable and fine builder and I will take his word as to what it costs to put up a building, what it will sell for, but when he speculates on whether he can get a 40-, 50-, or 60-year mortgage, I want to hear that from the men lending the money.

Mr. WALTEMADE. Mr. Levitt has never had any difficulty getting financing.

Mr. MULTER. But hasn't yet sought 40-year mortgage?

Mr. WALTEMADE. Because it wasn't available under this section. What makes you think that a 40-year guaranteed mortgage won't be acceptable when conventional loans are being taken for 20 and 30 years. Mr. MULTER. Maybe the bankers and insurance men are more farsighted on that subject than the men proposing this. Because whereever you get communism in a country it is because the Government is going to own the homes and buildings and one way to have that happen is to have a bad insurance program where the Government will have to step in and take over the homes and I don't want to see that happen. The insurance companies and the banks don't want to see it, because if that does happen, it is the end of our capitalistic system.

Mr. WALTEMADE. The greatest way to prevent communism in this country is to make a private home available to the greatest number possible.

Mr. MULTER. Right.

Mr. WALTEMADE. And just as soon as a man owns his own home he is certainly not going to be a Communist.

Mr. MULTER. But make it available to him so he is going to own it, and it is going to be his to keep, not to lose.

Mr. WALTEMADE. Under 221 he is building up an equity of $15 a month, a financial equity, besides the moral equity we have spoken of. Mr. MULTER. You are assuming he has got his 40-year mortgage and you are assuming you have got the builder who is going to put up the $7,000 house.

Mr. MCDONOUGH. Mr. Multer, you just made a very definite statement, that you were opposed to the Government owning the houses people live in. Still you are advocating public housing, more than 3,500 units.

Mr. MULTER. Yes, sir, because 16 percent of the population in this country are entitled to have decent housing and we have to house them. You have a choice, either you send them to a poorhouse or you givethem decent housing. I want to give them decent housing so they can bring up their kids to have a better opportunity than they had.

Mr. MCDONOUGH. Then you shouldn't oppose a possible $7,000 house where it can be built anywhere in the United States and financed. Mr. MULTER. I am not opposing that. I am asking you to produce a builder who will build it and a lending institution that will lend the money.

Mr. MCDONOUGH. The survey made by the Research Department of the Housing Administration showed that this type of house, across the country, varying from $8,800 in Baltimore, the same type of house could be built in California for $6,100.

Mr. MULTER. Are they building them?

Mr. MCDONOUGH. Oh, yes.

Mr. MULTER. And they are getting mortgage money?

Mr. MCDONOUGH. Oh, they must be selling them or they wouldn't build them. As far as the profit you are worrying about, it is a cinch that the man who builds a $7,000 house is going to build more of those houses than he would a $15,000 house.

Mr. MULTER. In precisely what area are these houses? $6,100 houses with FHA-guaranteed mortgages?

Mr. MCDONOUGH. I didn't say they are building $6,100 houses. I said they can be built, the standard house of the Research Department. Mr. MULTER. I agreed with you and I agreed with everybody who came in here and said you can build a house for $7,000. I wanted to see the builder who will come forward and say I will build it, and the lender who will lend on it.

Mr. MCDONOUGH. Mr. Burns told you that in last Sunday's Los Angeles papers several builders were offering houses at less than $8,000. Mr. BURNS. May I say this: That for your typical FHA transaction, for a new house, in 1952, the median mortgage insured was $8,273. Now, that isn't positive proof on this subject, but it shows that we have done a lot of building at an average that would indicate that many of these houses were insured for amounts in the neighborhood of $7,000.

But, if I might say, gentlemen, I think the tail was wagging the dog, because I don't believe that any appreciable dent on this entire problem is going to be made, either through the new housing contemplated by this section 221, or through new housing in general.

I think that these families that you are concerned about-and, believe me, they are the concern of all of us-these people today are living in rented-if we are talking about the lower 25 percent of our rental units, that lower 25 percent is from $35 on down.

Our only concern is the condition of those houses, and we believe that those houses, those dwelling units, can be restored to standard conditions, and I do not believe that you are going to have any great acceleration of rents. Now, that is a statement that probably calls for a little explanation, but, after all, we have got to realize that there are some economics to this picture, and rents are really the function of supply and demand, and whereas it might be of some disappointment to a landlord to think that maybe he is not going to recoup on an extensive scale for his investments, there are many landlords who, to protect their property, or even to continue getting the rents that they are getting today, have got to do somehing about bringing their houses up to standards.

There are also many tenants who are already paying rents that entitle them to a standard house. And if you visualize, theoretically, that as of today every dwelling unit in this Nation had an extra thousand dollars spent on it, it would not necessarily mean that you would have a great or even any acceleration in your rent levels.

Now, there will be different types of situations, and there will be instances where a house is completely renovated and the rent will increase. There will be other instances, as I say, where in the continued adding to our housing supply, and with supply being in balance with demand, you might find that many a landlord is concerned about being able to preserve his existing rents.

Mr. MUMMA. Mr. Multer, may I suggest that in this magazine of the Federal Housing Administration called Portfolio, on pages 15,

16, and 17, there are numbers of houses that have been built under $7,000, and it also gives the section and the people who took the mortgages.

Mr. SUMMER. I would like to say, too

Mr. MULTER. Does it say how many there were, and in what area? Mr. MUMMA. Here is one, 230; here is another one, 94, here is another one, 50.

Mr. MULTER. In what areas?

Mr. MUMMA. These were all in Detroit, but it is certainly a highcost district.

Mr. SUMMER. Mr. Chairman, specifically answering three of your questions, Mr. Multer, the life-insurance companies also opposed a hundred percent VA loans, but later on made them. They also opposed FHA when it was first created, and later on became a very vital part of the FHA program.

And as to what builders will do, the charts are available to show that family formations, due to the depression drop in margins, for the next few years, are taking a sharp drop, which means that builders, if they are to stay in business, must build where there is a demand, and clearing the slums is certainly a demand.

Now, I was told here, just a few minutes ago, by one of our men from Florida, that there were being advertised, in Jacksonville, in the newspapers, and we would be glad to send you copies of those ads, houses at $6,150, including the land. I was also advised

Mr. MULTER. Are they FHA insured?

Mr. SUMMER. I will have to ask Mr. Command to answer that. I am told that that is true.

And Mr. Albert of Grand Rapids, Mich., tells me that the National Homes are advertising prefabricated houses, including the lot, at $6,000 each.

Mr. MCDONOUGH. Where?

Mr. SUMMER. The sales price is $6,000, and this is in Michigan, but I understand they are available in other parts of the country.

Mr. MULTER. Those $6,000 and $6.100 houses, particularly those in Jacksonville, or near Jacksonville, they are not our urban houses. They are the rural and suburban houses. Am I not right?

Mr. SUMMER. Jacksonville is a city, sir.

Mr. MULTER. I know it is.

Mr. SUMMER. Jacksonville has a slum.

Mr. MULTER. But those houses are built under title I, with rural and suburban area standards. I am talking about urban standards as against rural and suburban standards. There is a big difference.

You are not going to get any of these housese to help you in your slum areas if you are going to build them in accordance with rural area standards. If you are going to change it and move these people out there, I am for it. I am for spreading the population. But this law is not going to do it.

Mr. SUMMER. I agree with you.

Section 221 in itself will not do it. It is a contribution to the solution.

Mr. Burns touched on another solution, namely, fixing up houses so that all people

Mr. MULTER. But it is not fair to tell us about $6,000 and $6,100 houses in suburban and rural areas when we are talking about urban

areas.

Mr. SUMMER. And title 220 provides financing for multifamily houses for rent in urban centers. So that your solution is in several directions.

No. 1, your rehabilitation; No. 2, section 221, where effective; and, thirdly, under section 220, which is both for sale and for rent, and provides adequate financing so that people can afford to build for rent, and they cannot build for rent for a market that does not exist. They must build in a price range, and the FHA will see to that, where there is a market. Otherwise, there is no justification for building them. And with the family formations going down rapidly until 1957, I can assure you the builders do not intend to get out of business. The CHAIRMAN. Are you through, Mr. Multer?

Mr. MULTER. Yes.

Mr. HIESTAND. Mr. Chairman.

The CHAIRMAN. Mr. Hiestand.

Mr. HIESTAND. I wanted a brief answer, if I might have it, from one of these gentlemen, and I might join my colleagues in my very high opinion of their total presentation, and the logic in the thinking, as well as the actual factual presentation.

I would like to know, from Mr. Burns, if you please, who is thoroughly sold on the fact that one of the biggest parts of our prolem is rehabilitation, this question:

Does this bill, in accordance with your remarks, now satisfy you that the fraternity, the profession, can go ahead and do this big job for our Nation under the provisions of this bill?

Mr. BURNS. Yes, Congressman Hiestand. I don't suppose there is any bill that is perfect. I think it takes a combination of things in order to make this so-called all-out attack on the 8 or 10 million houses that are in bad shape in this country.

Mr. HIESTAND. Well, this provides the mechanics or the means for it?

Mr. BURNS. Yes, this does provide the means for it, and I think will be a highly successful program. I think that the same acceleration of activity that has occurred on the outskirts of cities, or on the periphery, by virtue of FHA-insured loans, I think that same activity can be expected in the closer-in areas provided it is supported with a local law-enforcement program, which I understand will be made a condition precedent. It is touched on in the bill, and I mentioned it this morning, I believe, that it should be reemphasized or made stronger in the bill, that the cities do have to do something locally. In that manner you will give assurance to these people. You might say most of this work is going to be almost voluntary, or will be voluntary, providing the owners have the means of financing.

Then with respect to urban and renewal funds, now title IV, forerly title I, I think with that condition precedent in these cities, that they have to do everything that they can locally, that one of the big achievements of this program with respect to title IV will be to multiply the benefits to be derived from the expenditure of that money, so that you will not just simply have a comparatively small area completely rehabilitated-I mean completely rebuilt, but you will

have the work that city will do should generate maybe a hundred times as much expenditure as the amount of the Federal grant, which, incidentally, from the standpoint of national economics, should be a very interesting sidelight of this program which I don't think has been too much touched on today, the terrific expenditures that could be involved with an overall renovation program of our Nation as a whole. Mr. HIESTAND. Thank you very much.

Mr. Waltemade, down at the bottom of your testimony, on page 5, you have some remarks with regard to section 221, and some side remarks, where you indicated that there may possibly be a method of preventing the imposition of public housing into communities where it is not wanted by the people.

Would you kindly tell me, if you will, how a community can avoid an imposition of public housing upon them if they don't happen to want it?

Mr. WALTEMADE. Well, this one instance that I refer to is the Kingson Houses, which is in the area of the northeast Bronx; it was a 1- and 2-family home community. The people just got together, held a mass meeting in the local Catholic Church, and all the other churches cooperated, and there were seven or eight hundred that were just hanging from the rafters, objected to it.

In coming in they asked me to say a few words. I said to them, "If this group will keep together, and if you are honest in your objectives in wanting to oppose the public housing coming into this privatehome community, there is no political body that will override you," and the answer was that the public-housing authority withdrew the proposal of the housing in this area rather than go before the board of estimates with it.

I say the people, themselves, I think, in areas where they don't believe there should be public housing, they, themselves, can get together and object strenuously, and I say in this particular case it was done.

In the case of Castle Hill Houses, although the planning commission had 450 people and many witnesses opposing, with only 4 people in favor of it, and 4 hours of testimony, took 4 minutes to approve it, which shows that their decision was predetermined prior to any hearing, and I think the thing to do is have a referendum on these things. It should be submitted to the local communities, as to whether or not they want the public housing in that area. I think the people are entitled to vote upon it and a referendum would be the answer to that.

Mr. HIESTAND. Thank you very much.

There is one other angle to it, however: Supposing it has already been inflicted upon a community, and the community has voted and does not want it. How can it get rid of it?

Mr. WALTEMADE. I will ask Mr. Burns to answer that.

Mr. BURNS. As you know, Congressman, we had a situationMr. HIESTAND. I thought he might have a formula that we hadn't yet used.

Mr. BURNS. We were finally successful in Los Angeles in getting a substantial portion of the public housing program canceled, but there is no formula at the present time that permits that being done without the consent and agreement of the Public Housing Administration.