The Key West Citizen

Americans Borrow Millions To Speed Up Predicted Building Of More Than 250,000 Homes

Many Factors Contribute To Sudden Rush Toward Immense Program Of Construction
By SIGRID ARME
(H: Associated Press)

WASHINGTON, April 16.-

Building of private homes has increased so rapidly in the last half year that a building "boomlet" is predicted for 1936.

This year will see the construction of 250,000 new homes, says Stewart McDonald, federal housing administrator. He is corroborated by the federal home loan bank board which foresees the construction of "over 200,000" new homes during the year.

Many factors contribute to this sudden rush of Americans for homes of their own—some social, some financial.

Federal experts point to the shortage of homes, estimated from 750,000 to 1,500,000, created by the depression years when new construction slumped. They also point out that there is a large "marriage reserve" among persons unable to marry during the depression; to widespread doubling-up of families which now are seeking homes of their own; to accumulated obsolescence of old homes; to the normal desire to escape run-down neighborhoods, and to the return of net population movement from farms to cities.

New Home Owners

New schemes to finance home building, inaugurated by the federal housing administration, have opened avenues to a new set of would-be home-owners. Prior to the government's entry into the field it was customary to write no mortgages for longer than 12 years.

Many of the homes were secured by first and second mortgages, necessitating periodic renewals with extra charges. Furthermore, most financial institutions limited their lending on homes to 60 to 66 per cent of the value of the property.

Federal housing put into effect last year a plan for mortgaging that permitted payments over 20 years. The plan was a single mortgage arrangement which also permitted lending a higher per cent of the value of the home.

Federal housing records for last year forecast the types of homes and loans that the majority of Americans will be seeking. The average value of the new one-family homes secured by federal housing last year was $6,000.

Terms for payment average between 17 and 20 years, and 70.8 percent of those mortgages were written for 76 to 80 percent of the value of the homes.

FHA Strides Ahead

The Federal new home housing program started in January, 1935, and 12,360 loans totaling $60,248,256 were made that year.

These figures are expected to double during 1936.

In addition 708,405 loans totaling $245,070,729 were made for the modernization of old homes.

Mortgages accepted by the FHA in the first three months of 1936 for home building and modernization totaled $63,043,685, compared with $7,070,013 in the same period last year.

Many other institutions are engaged in combatting the housing shortage. The federal home loan bank board is releasing money to building and loan associations.