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ports to treat of the entire housing problem of the Nation. The mobile-home industry has a claim to such recognition on at least two counts.
First, the mobile home represents the most satisfactory low-cost housing which private enterprise has been able to produce. The mobile home is a compact complete housing unit with an average total cost to the purchaser of from $4,000 to $5,000. It is a completely furnished 2-bedroom unit with all modern conveniences. This committee has already raised serious question as to the results, if any, of the proposed section 221 with its 100 percent 40-year loan for a $7,000 unfurnished house. There is considerable question, for example, whether such section will be able to produce housing in the urban areas where the need for relocating people from urban renewal areas would be the greatest. With the assistance of the amendments proposed by our association, many of these people will be able to obtain adequate mobile homes at monthly payments which they can afford. In this way the problem of relocating "displaced persons" from urban renewal areas will be solved and the greatest obstacle to urban redevelopment would be surmounted. For example, the application of the FHA mortgage insurance system, in the manner to be set forth later in this statement, would bring this low-cost housing within the reach of the lowest income group and certainly obviate the necessity for further public housing with the many disadvantages which are inherent in Government-owned shelter. Just think, the approximately 200,000 public-housing units in existence today will require an average annual subsidy from the American taxpayer or approximately $80 million per year for 40 years. Of course, we would not suggest it, but the subsidies for only 5 years would be enough to give 200,000 low-income families a completely furnished 2-bedroom mobile home without charge and without further cost to the Government. Think then of the tremendous savings which would inure to the already hard-pressed taxpayer by enabling these low-income people to purchase through FHA insurance this ideal low-cost mobile housing, thus giving them the opportunity to build up some equity in their own homes instead of paying rent to the Government.
Secondly, the mobile home industry production should be maintained at its present level of approximately 80,000 units per year not only to meet the demand for these units from low-income groups, retired people, migratory workers, servicemen, etc., but to be in a position to meet the temporary housing needs of an augmented Military Establishment and stepped-up defense production force in the event of a national emergency. The mobile home industry in 1950 was called upon to supply thousands of mobile homes as military housing; and more than 25 percent of its production for several years went to servicemen and their families desirous of living in the only type of housing which assured the family being together as the serviceman shifted from station to station. The approximately 125,000 servicemen's families living in mobile homes at the present time attests to the great contribution made by this industry and to its acceptance as adequate housing for servicemen.
However, there is one stumbling block to the continued stability of this industry and that is the inadequacy of existing financing facilities, the identical problem which, in the early thirties brought about the creation of the Federal Housing Administration. Present financing facilities for mobile homes, like conventional mortgage financing of the 1920's require too large a downpayment (about one-third of the retail price) and too short a maturity period (3 to 5 years). The result is to narrow the market thereby denying mobile homes to many people who need such housing because of their occupation, service, retired, or migratory status.
We strongly recommend that the mortgage insurance system under title I be amended so as to provide mortgage insurance for mobile homes up to 75 percent of the purchase price or $5,000 whichever is the lesser, and for a maturity period of 7 years and 32 days, the same maturity period that will apply to the proposed modernization loans under this title. The proposed mobile home mortgage insurance under this title is patterned after the mortgage insurance for modernization loans of $3,000 for 5 years and 32 days. Considering that the latter loans are unsecured and enjoy a dignified position among banking institutions it is certainly logical that mobile home financial paper will be readily acceptable by such institutions.
We also recommend that section 207 be amended so as to provide for mortgage insurance for mobile home parks or developments not to exceed $1,000 per space with an aggregate maximum for each park of $300,000. A mobile home park is improved real estate and with proper appraisal standards, to be promulgated by the Federal Housing Administration, would prove a worthy adjunct
to the mortgage insurance system and would be the means whereby the mobile home industry could satisfy the great demand for adequate mobile home parks. We are pleased to join the Mobile Homes Manufacturers Association and the Trailer Coach Association in recommending these proposed amendments. The amendments which we suggest are attached as part of this statement and we commend them to your favorable consideration.
PROPOSED AMENDMENTS TO INCLUDE MOBILE DWELLINGS IN THE NATIONAL HOUSING ACT FOR CONSIDERATION OF THE BANKING AND CURRENCY COMMITTEE OF THE SENATE. AND HOUSE OF REPRESENTATIVES, 2D SESSION, 83D CONGRESS, IN CONNECTION WITH H. R. 7839 AND S. 2938
To aid in the provision of housing for families in essential and migratory occupations and to encourage the growth of a mobile housing resource for national security by extending certain credit insurance provisions of the National Housing Act to occupants of trailer coach mobile dwellings.
FEDERAL HOUSING ADMINISTRATION AMENDMENTS OF TITLE I OF NATIONAL HOUSING ACT
SEC. 101. Section 2 (a) of the National Housing Act, as amended, is hereby amended by striking out the period at the end of the first sentence and inserting the following: "and for the purpose of financing trailer coach mobile dwellings by owner-occupants thereof.".
SEC. 102. Section 2 (b) of said Act, as amended, is hereby amended (1) by striking out the semicolon at the end of the clause numbered (1) and inserting the following: "or for the purpose of financing mobile dwellings exceeds 75 percent of the purchase price or $5,000 whichever is less;" (2) by inserting in clause numbered (2) the following: "or for mobile dwellings seven years and thirtytwo days," between the words "days" and "except".
SEC. 103. Section 2 (c) of said Act, as amended, is hereby amended by inserting in paragraph numbered (2) the words "or mobile dwelling" immediately after the phrase "any real property”.
Amendments of title II of national housing act
SEC. 104. Section 207 (a) of said Act, as amended, is hereby amended
(1) by inserting in paragraph numbered (1) a comma followed by the words “including facilities for trailer coach mobile dwellings” immediately following the phrase “designed principally for residential use”.
(2) by striking out the period at the end of paragraph numbered (6) and inserting the words "or space in a trailer court or park properly arranged and equipped to accommodate a trailer coach mobile dwelling.”.
SEC. 105. Section 207 (c) of said Act, as amended, is hereby amended by inserting in paragraph numbered (3) the words "or not to exceed $1,000 per space or $300,000 per mortgage for trailer courts or parks" immediately following the parenthesis and words "four per family unit".
STATEMENT OF THE MOBILE HOMES MANUFACTURERS ASSOCIATION, CHICAGO, ILL..
Two million Americans are housed today in more than 750,000 mobile homes. Included in this figure are about 125,000 service families who find the answer to their housing problem in this type of dwelling. If all these 2 million mobile home dwellers were to locate in the same area, it would create overnight the sixth largest city in the United States.
Mobile homes today represent the best example of successful, low-cost, unsubsidized, prefabricated housing.
Though the industry is some 23 years old, it became prominent first in the period of World War II. Trailers, as they have generally been known, date back to 1930 when total sales represented some $1.3 million. By 1937 this figure had grown to $17 million.
At war's end in 1945, sales for trailers in the United States totaled $39 million and leaped in 1946 to $114 million as their utility for housing began to be realized by the general public. This upsweep in use continued through 1948, in which year sales totaled $204 million. In 1953 mobile home sales totaled $320 million. Last year, production of mobile homes was just under 77,000 units. However,.
this was down somewhat from 1952 production of 83,000 units, and 1948, which was the high year, with 85,000 units' production.
It was in the period of World War II that the trailer really began to outgrow its name and become in fact, a mobile home and to be so used. In the early days of the war, the Government purchased for the use of defense workers and other essential personnel, some 35,500 trailer homes. An additional 2,500 units for special purposes such as offices, laundries, etc., were bought by the Government.
These units did yeoman service throughout the war, particularly in such jobs as housing personnel who were rushed into Oak Ridge to build the first atomic energy production center.
It has been estimated that during the war, and down to 1950, these Government-owned units were moved on the average of 11 times. This figure alone would indicate the utility of mobile housing and its adaptability to many requirements. In the postwar period, these trailers were utilized effectively in meeting the needs of the returning veteran, and in meeting similar problems.
It might be pointed out that similar uses have been found for trailers in civilian disaster areas such as Texas City in 1947; the Vanport, Oreg., flood of 1948; Kansas City flood in 1951; and similar emergency requirements. In the recent past, great reliance was placed upon mobile housing for the workers at the Savannah River atomic energy installation and at Portsmouth, Ohio. The Defense Housing Act of 1950 provided for the Government purchasing of mobile homes.
While this demonstrates beyond question the great utility of this type of housing in unique situations, it is therefore, more significant to note that over 90 percent of the mobile-home owners today use them as permanent homes. Sales figures for the past several years show a substantial majority of mobilehome sales going to military personnel and defense workers. For example, a survey showed that in the first 6 months of 1951, these 2 groups bought 93 percent of all mobile homes sold. This was, of course, stimulated by the Korean crisis. However, there is every reason to believe that about 70 percent of all sales today are being purchased by these groups.
It is reasonable to conclude that the advantages of a permanent home that travels with the family as the military or job requirements dictate, have brought the mobile home into high prominence in the thinking of a large and substantial segment of our population.
With this upsweep in demand, there has been, of course, a revolution in design and conception of mobile home living. It is difficult to assess cause and effect in such a picture, but the manufacturers are satisfied that much of the public acceptance of this type of housing must be attributed to the comfort and adequacy of the modern mobile home.
Pre-World War II trailers seldom reached 20 feet in length. Little housing was expected from this trailer beyond vacation needs. Even by 1948, only 17 percent of the trailers sold were 30 feet or longer. This 17 percent grew to 64 percent in 1951, to 74 percent in 1952, and remains about the same today. (Length is a standard consideration in mobile homes, for highway requirements in moving, etc., limit their width to 8 feet and their height to 14 feet; hence, growth of trailer size is limited to length.)
Production last year found 20 percent of the 35-foot class, by far the largest grouping.
It seems certain that the trend to larger sizes will continue and the era of the 40-foot trailer is not far away.
Pricewise, the mobile home represents the most housing for the least money available today. Last year, the average unit cost was $4,200. In price range, the mobile home dweller has the choice of models ranging from $2,800 up to $6,000, furnished with the essentials of housing from cooking to bathing. Twobedrom units are commonplace and bathtub and shower bathing almost standard equipment. Complete electrical equipment is included, and toilet facilities. The modern mobile home has a kitchenete with refrigerator and stove arrangements that leave nothing to be desired. The air-conditioned mobile home will, no doubt, be introduced shortly.
It should be noted too, that the mobile home comes equipped with all furnishings, thus providing at these low prices, an answer to two problems for the homemaker, i. e., a house and its furniture and furnishings.
Comparing industry production and sales figures with FHA's report on its low-cost (under $6,000) houses it appears that mobile homes are supplying about 90 percent of this market. Only about 6,000 such fixed-to-site houses are
produced under section 8 of title I of the National Housing Act each year whereas about 80,000 mobile homes are produced and sold each year.
Contrary to common belief, the desire to travel is not the prime motivation of mobile-home dwellers. Mobile or semimobile occupation workers make up the largest class of current mobile-home buyers (about 60 percent), followed by military personnel (25 percent), as mentioned earlier. Retired people make up a third definite class (about 10 percent) and the rest are lumped as miscellaneous. Their average annual income in 1950 was $4,500 as compared to the national average of $3,313. This past year, their income approached $5,000, still far above the national average. About 40 percent of the mobile-home dwellers have children. Statisticians figure it at over 2.5 persons per mobile home.
Further statistics on the mobile home dweller show that 3 out of 5 of them are under 40 years of age, with 25 percent of the mobile population being young married couples. One in eight has passed 60 years of age. And finally, 14 out of 20 of these mobile dwellers now say they plan to live indefinitely in a mobile home.
This seems reasonable when the surveys show that 2 out of 6 such mobile dwellers have lived this way more than 5 years and 3 out of 6, or 50 percent, have lived "mobile" from 2 to 5 years.
In this connection, the most significant figure developed out of last year's sales showed that over 60 percent were repeat sales. These were people who had owned at least one other mobile home.
That mobile-home living is now an established part of our American way of life appears, therefore, beyond question. It leaves only the matter of how this
group is to be fitted into the general housing picture.
Clearly there is a considerable economic gain for our society to have available, a moving or movable body of skilled labor that can be concentrated quickly and easily when it is needed. Sociologically, it would seem equally clear that it is desirable that this group be able, by virtue of mobile housing, to keep the family unit intact. Each of these considerations as part of the other. Society, as a whole, has the economic resources of the skilled groups who can move. The standard of living and family conditions of this group of mobile workers are assuredly better as they take their families and literally their home with them.
There is the same consideration in the case of the military. Here, however, we must confess that the authorities in the services have only in varying degrees seen fit to accept the mobile housing in their plans. They have taken the restricted view that mobile housing is acceptable only for emergency and/or temporary housing.
Because of this rather negative attitude, it is significant that some 125,000 service families now own their own mobile housing. Moreover, the services have, in the face of inadequate available commercial facilities, constructed many of their own courts for parking servicemen's mobile homes. Congressional committees such as the so-called Preparedness Subcommittee from time to time during the Korean crisis, recommended that the services provide more facilities for trailers and mobile homes in the face of the housing emergency. Recent policy statements by the Department of the Army have improved this situation considerably.
It would seem that the same considerations might apply to the services as did in the case of the Savannah River atomic energy installation where mobile housing was largely relied upon to furnish housing for family workers. These could be, and were, rolled away at the end of their period of need, thus avoiding the danger and the waste of creating substandard areas or slums through leftover temporary housing.
In the case of military personnel who buy their own mobile homes (we are not urging purchases by the services, incidentally) they take them with them as they move from base to base, or as they return to civilian life at the end of their tour of duty.
As for the retired people who now make up 10 percent of the mobile home users, over 200,000 people, there seems little doubt that this group will grow. Increased life expectancy, as we know, has increased tremendously the size of our retired population. Social-security and general prosperity have made mobile living available and attractive to this group. The simplicity of mobile living with its refinement of convenience makes it most attractive to older people.
The ability to follow the seasons and to take their home with them has a great attraction for these people, as it would for almost anyone.
From the rough and uncertain beginnings of the early 1930's our industry has grown to more than 150 companies. However, no one of them does as much as 10 percent of the business. There is keen competition and cost manufacturers make several models.
The process of manufacture is actually assembly, which has built up necessarily a large group of suppliers. Perhaps 500 suppliers can be said to be doing a substantial business with the mobile home builders.
Although design varies from model to model, the modern trailer is built of steel, aluminum, and high-grade wood construction. It is certain that the useful life of the modern trailer is far beyond its proposed mortgage or loan life. The financing of mobile homes has been a somewhat slowly developing feature of the industry. Many problems have had to be faced, including the mobility of the mortgaged property, an uncertain depreciation rate for used units, etc.
It is estimated now that there is about $400 million of mobile home paper in circulation. While it is a growing field for lending institutions, it is only very recently that it could be said that more than a few were participating. The one single feature in this industry that has brought more credit facilities into the picture, has been the development of the trailer into a mobile home. The increased usage of these units as homes has done much to win the confidence of the bankers and other.
This, plus the obviously solid character and income status of the average mobile home dweller and the outstanding record of minimum defaults on the paper, has reassured the lenders.
Nevertheless, it is clear that more capital is required in the future if this industry is to continue to expand. We are, of course, certain that Federal recognition of mobile homes as housing, such as this legislation would provide, will assist tremendously in attracting more capital. We believe too, that it is only fair that Federal Housing should include this very substantial group of our citizenry, and what is available to others in the form of governmental housing assistance should, in principle be available to them.
The average installment sale contract for a mobile home today is running about $3,000 for new units and $1,400 for used. Typical terms are one-third down, 3 to 5 years on the balance. Interest rates range between 5 and 8 percent discount, or 9% to 15%1⁄2 percent simple interest.
A recent survey of banks and finance companies elicited replies from 274 who handle mobile home paper. Two hundred and fifty-five of these replies reported no losses or negligible losses. Fifteen reported losses less than one-half of 1 percent. The largest reporting lending institution which carries currently about $31 million in mobile home paper, calculated its loss ratio at one-eighth of 1 percent.
Overall, the loss ratio on mobile home paper is estimated at less than onefourth of 1 percent. This is indeed an impressive record.
Despite this outstanding record for mobile home paper, and the efforts that our organization has put forth in bringing it to the attention of the lending authorities in this country, we are still concerned that our sources of credit will prove inadequate in the future. Because of our concern for the future, we are urging your careful consideration of the amendments before you today. We believe these amendments would be most helpful because mobile homes, which in unit cost represent low-cost housing, become high-cost housing due entirely to high financing requirements.
If mobile housing is able, by this legislation, to qualify for the rates now provided in title I of 4% to 5 percent discount, it would mean a reduction of 20 to 35 percent of this financing cost.
The establishment of a 7-year pattern for this financing would similarly achieve a reduction of 35 percent in the monthly payment. For example, if a contract of $4,000 is assumed-4 years at 6 percent discount-under present-day terms it requires a monthly payment of $109 including insurance.
Under the terms of the suggested amendments the loan term is extended to 7 years at 5 percent discount. This would result in a monthly payment of $69, a reduction of $40 per monthly payment.
This leads naturally to the situation of the mobile home court operators who, to date, have had to rely almost entirely upon equity financing and which is inadequate to the need.
Mobile homes, of course, need a site, just as any other housing, which means they have to have available to them utility connections, water, sewerage, and electricity. We have included them in our request for legislation because, in