In the nearly three decades since the national policy of "a decent home and a suitable living environment" was established in the Housing Act of 1949, millions of families have been able to reach the goal of home ownership. In recent years, however, this goal has proved elusive for others, particularly young families seeking to buy their first home.
Background,
The fundamental problem is that housing prices and mortgage interest rates rose faster than family incomes, particularly in the 1970’s. The median house price rose approximately 115 percent while incomes were increasing only about 105 percent. Even worse, during this period mortgage interest rates more than doubled, from below 9 percent to over 18 percent in many areas.
These figures are not precise, nor need they be to demonstrate the scope of the problem facing the nation in the early 1980’s. The fact is, many families were prevented from buying homes due to the increasing price of housing and cost of money.
Controlling mortgage interest rates is not something the housing industry can do independently; these rates reflect larger national economic issues. As a result of changes in the economic marketplace, by 1987 mortgage interest rates had dropped to about 10 percent, helping to make housing more affordable.
But housing prices have continued to rise; the median price of a house in 1986 was approximately 33 percent higher than it was in 1982. This increase was due to a number of factors, such as a trend to larger homes on larger lots, increasing amenities such as air conditioning and more bathrooms, higher material prices and labor costs, and sharply higher land costs around many of the nation’s major cities.
As will be seen in the ensuing chapters, the cost of land is often the largest single variable in the price of a house. Since land is a fixed quantity, the amount of land available for housing is constantly decreasing as new homes are built; utilizing land more efficiently is one of the best ways to make housing more affordable.
Studies by the President’s Commission on Housing in 1981, confirming earlier studies of the housing industry, also showed that excessive regulatory requirements and outmoded building practices also contribute to higher housing prices. In many instances, these studies pointed out that local officials and builders often were unaware of steps each could take to reduce housing costs.
The Joint Venture for Affordable Housing (JVAH) was initiated by Samuel R. Pierce, Jr., Secretary of Housing and Urban Development, in January 1982 to bring about changes in the way housing is controlled, designed, and built. Recognizing that many of these changes could only be made at the local level, Secretary Pierce organized the Joint Venture as a working partnership among the following organizations and groups:
• American Planning Association
• Council of State Community Affairs Agencies
• International City Management Association
• National Association of Counties
• National Conference of State Legislators
• National Governors’ Association
• Urban Land Institute
• National Association of Home Builders (NAHB)
• NAHB National Research Center
• U. S. Department of Housing and Urban Development
