and both programs serve families with incomes below 80 percent
of area median. Like urban housing programs, however, rural
programs have been at risk in recent years. In fact, during both
1985 and 1986 the President's budget proposed complete elimination
of the Farmer's Home Administration, and the transfer of
responsibility for rural programs to
hud, but without any
commensurate budget increase for
hud. The proposal was
unsuccessful, and
fmha continues to
operate rural housing programs, although with a significantly
reduced budget.
Projections of Future Need
The baby-boom
generation produced a tremendous growth in household formation and
housing demand during the 1970s. Nearly 17 million households were
formed and new construction totaled 21 million units. In the 1980s,
however, as baby boomers began to give way to the baby-bust
generation, only 14 million households are expected to form;
consequently, housing starts should reach only 16 million
units.
The
stabilization of demand in combination with a non-inflationary
economic environment may help to stabilize the real price of
market-rate housing in the future. However, the erosion of real
income for the poor in recent years means that they are unlikely to
benefit quickly or much from stabilized prices.
For instance,
the average cost of a new-construction unit through the Section 235
program is approximately $50,000, for which monthly mortgage and
maintenance costs would amount to about $600. At that price,
a