Category Housing and Urban Development

In the Affordable Housing Demonstrations, actual housing developments were built in 27 cities and communities in 24 states throughout the United States, with local public officials and the designated builder cooperating to reduce the cost of the completed homes. All the developments built in the program were subject to the ultimate test of the marketplace when the homes were completed and sold. Costs and savings in each demonstration project were carefully monitored, and each project was described and analyzed in a Case Study prepared by the NAHB National Research Center and published by HUD. A list of the projects appears in Appendix

The central theme of the demonstrations was that builders and local officials can, together, identify ways to reduce the cost of housing and to modify or interpret local building codes and site development regulations to promote efficiency and affordability. No Federal funds were provided either to the builder or to the community to support the projects. In each case, HUD asked for a formal commit­ment from the highest elected official that the local government would give its strong support.

The experience of the Joint Venture for Affordable Housing demonstrates that the answer to the question, "Can affordable housing be built on a substantial scale through widely-replicable procedures?’, is YES. Thousands of dollars can be shaved off the cost of new homes – enough to broaden the audience of buyers, to reverse the ominous economic and social trends described above, and to place America once more on the path toward increasing fulfillment of the overwhelming wishes of its citizens. The two keys are knowledge and commitment.

The Joint Venture for Affordable Housing has greatly increased our understanding of how it can be done. Knowledge gained from the Demonstration Projects has been distilled in this two-volume report.

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

For years the U. S. Department of Housing and Urban Development (HUD), the National Association of Home Builders (NAHB), and the NAHB National Research Center (formerly the NAHB Research Foundation, Inc.) have been searching for solutions to the rising cost of housing.

The Joint Venture for Affordable Housing (JVAH) program has been. a significant step toward lowering _ housing costs. This manual contains a compilation of proven cost-reduc­tion methods of land planning and development, as well as actions local governments can take to _ encourage more affordable housing.

All the techniques may not be applicable in every situation, but most builders will find many ways to lower housing costs. Volume II, the companion manual, contains proven cost-saving construction techniques.

Acknowledgements

This manual is the result of material obtained from the Joint Venture for Affordable Housing Demonstration

builders and from other sources. It was prepared for the Department of Housing and Urban Development by the NAHB National Research Center. The demonstration program was directed by the Office of Policy Development and Research.

The principal author was Carol Baker Schaake, with assistance from E. Lee Fisher, Mark S. Nowak, Ralph Lee Smith and others who provided years of residential research effort and documentation. Most importantly, we wish to thank the builders of the JVAH demonstrations and the com­munities who took the risks and put their resources on the line to prove that affordable housing for all Americans can be a reality.

The work that provided the basis of this publication was supported by funding under a contract with the U. S. Department of Housing and Urban Development. The substance and findings of that work are dedicated to the public. The authors are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the Government.