View all Archives -
Environment and Development »
The American Energy Consumer
housing lags far behind demand, especially with rapidly
increasing numbers of marriages in recent years. Therefore, prices
and rents for existing housing have risen sharply also—rents
by almost 10 percent from 1972 to 1974 (first half) and house
prices by more than 10 percent—from a median of $26,700 in
1972 to over $30,000 in 1974.
Most of the
need for energy saving features in housing, and most of the need
for upgrading their housing (including moves to new dwellings) is
among households that are middle income or below. These households
represent a huge backlog of unmet housing need and demand. In fact,
the American housing situation is reaching a crisis stage. What
could be better timed than a substantially expanded national
program to improve the housing stock and the housing supply, with
special attention to energy conserving features?
Recommendations
-
A
substantially expanded FHA loan program should include incentives
for rehabilitation and repair of moderate value and low value
existing homes, with special emphasis on energy conservation.
The FHA rehabilitation loan program as of July 1974 places an upper
limit of $5,000 for loans of no more than seven years at interest
rates from 7.57 percent to 10.57 percent, depending on the loan
size and term. The short term and the high interest rates, together
with the low ceiling, make the present program too expensive and
limited. A program that doubles the loan period and subsidizes the
interest rate would provide strong incentives for both homeowners
and landlords to improve their houses to include more and better
insulation, space and water heating improvements, and other
weatherproofing. A higher ceiling is required for major
installations, for which costs are now well above $5,000. The
proposed program as a whole would serve energy conservation needs
and improve the total housing stock. With proper direction this
program could substantially upgrade deteriorating neighborhoods and
strengthen the economic situation of special trades contractors,
their suppliers, and the industries that make the materials they
use.
-
A
substantially expanded and low interest-long term FHA loan program
should be introduced for builders of middle and lower income
housing, to provide a mix of apartment and single family dwellings
whose design takes energy conservation into account. The
present trend in housing subsidies by the Department of Housing and
Urban Development is toward housing allowances for low income
families. By itself even a modest program limited to housing
allowances could exacerbate demand for a small supply, without
commitment to provide new housing through the normal private
market. Housing allowances are an improvement over the bewildering
welter of subsidized programs, which were suspended on January 5,
1974. (The remaining authorizations will take several years for
housing to reach completion.)