Residential Building Approaching Pre-Dcpression Levels

Bv F. \7. Marlow, District Director, Southern

['he comparative brightness of the present outlook tends t,r dull the recollection of t,he distress in which home owners ancl the lumber industry found themselves but a few short years ago, or prior to the passage of the National Housing Act. An average of 26,000 single-family residences were built in 1932,'33 and'34. This was a significant drop in lumber consumption from the 1926 to 1929 level, but like the $5.0O offer from the soap factory for "Old Dobbin," we had to take it.

Lumbermen and the construction industry welcomed 1935 rvhen the score sheet at the end of the year showed m,000 homes provided. Residential lots and home properties began to take on the aspects of stabilized value. Builders appeared at yard ofifrces and lumbermen's advertising seemed to be effective.

Many lumbermen suddenly discovered that they owned something the prospective home builder wanted and could buy now that some of the hazards of building finance had been washecl aside.

Some believed and some laughed when the press carried a quotatron from Federal Housing Administrator, Stewart McDonald, on March 9, 1936 in which he estimated "250,000 non-farm dwelling units would be built in 1936." The year is over-the records are not complete, but enough have been received to show that 27O,W dwellings have actually been constructed. Administrator McDonald says, "If this estimate is in error, the error arises from understatement rather than over-statement."

Lumbermen themselves are the best judges of what this volume of new home construction has meant to their business. The c.onstruction industry has been completely rehabilitated. All types of business or commercial endeavor have felt the surge of the rapidly returning purchasing power which this building program has produced.

But rvhat of the future? Administrator McDonald, after making a complete check of each insuring office of the Federal Housing Administration in the United States says, "On the basis of all the information at our command and the most reliable opinion we can secure, there will be an in-

California , Federal Housing Administrdtion crease in 1937 of approxim ately 5O/o over the number built in 1936." Which means that about 400,000 dwellings rvill be the contribution to the welfare of the nation during 1937. That is hardly equal to the number produced in 1929'

Any estimate must necessarily depend upon a numl:er of elements regar<ling which certain assumptions have to be made. Four-hundred thousand new dwellings will be built during 1937 provided:-

(1) That no considerable decline occurs in the volume of industrial production and the consequent volttme of incomes in the United States.

(2) That the present supply of funds for financing new construction is not apprec:ably reduced.

(3) That the cost of building does not rise so sharply as to constitute a major deterent to building.

On the other hand we have some powerful forces operating to induce a larger volume of new home construction in 1937 than was introduced in 1936. Simply stated, they are these and every business man will readily recognize them :

(1) The increasing volume of incomes arising from high rate of industrial production and the grolving volttme of business transactions.

(2) The abundance of credit available on relatively easy terms and for long Periods.

(3) Rising rents in residential properties.

(4) An increasing demand for ciwelling units in excess of the existing supply.

The Southern California oftice of the Fecleral Hottsing Administration is ready to share its responsibilitres in the realization of a substantial, new construction program' The underwriting procedure has been materially simplified and processing time has been cut to the minimum rvhich care and good business will permit.

A further knowledge of the procedure of the Federal Housing Administration and its advantages to the home owning public by lumber and material merchants and their salesmen, and a little study of present trends in the home building market cannot help but produce profitable business for lumbermen in 1937.