The Why of the Shortage

What caused the U.S. housing shortage? What, if anything, can cure it? To these questions, which directly or indirectly concern 139,000,000 Americans, FORTUNE devotes its entire April issue, achieving a remarkably concise diagnosis --but a prognosis obscured by the chronic ill health of U.S. housing.

Chief causes of the shortage, FORTUNE concludes, were two wartime phenomena: 1) the marriage boom; 2) migration of war workers from country to city.

Says FORTUNE: "Most of the people now looking for housing are recently married couples who were living in their parents' homes before the war. In 1940 there were about 29 million non-farm families in the U.S. At the end of this year it is estimated that there will be about 35 million. . . . The war brought a resumption of the historic American movement from rural to urban areas. . . .

"While the demand for housing has been piling up, the additions to the supply have been meager. During the war, residential building was limited to the needs of war workers. Even before Pearl Harbor the cities of the U.S. were underbuilt. In the last 15 years, as a result of depression and war, the building industry has turned out an annual average of only 330,000 housing units."

Taboos & Codes. As a temporary solution to the shortage, FORTUNE finds Wilson Wyatt's 2,700,000-unit housing program (see above) a worthy try:

"The program, if approved by Congress, would thrust Government funds and Government controls deep into the building industry. It would put an important segment of the U.S. economy under wartime discipline at a time when the industry and the country as a whole expected to be returning to the ways of a free market.

"But, as Wyatt points out, the housing shortage is largely a result of the war, and the families most painfully affected by the shortage belong to the men who won the war. The case for using the federal purse and powers to clean up the shortage is just as strong as the case for maintaining a Veterans Administration."

But will the Wyatt program get houses up? Will the $600 million subsidies to the building-materials industry relieve the dismal shortage of supplies? Will the building trades unions, traditionally jealous of competition, admit the 1,500,000 new workers necessary to carry out the program? Can the prefabricated housing industry expand from $100 million to $2.5 billion a year, even with Government help? Added to this is the fantastic complexity of building codes, union regulations, price & market agreements, and ancient, self-imposed taboos which hobble the building industry.

Gone: the Cheap House. The long-term prospects for U.S. housing are even foggier. The sheer cost of housing presents one almost insoluble problem. Despite prefabricators and designers like Buckminster Fuller (TIME, Feb. 11) who hope to produce houses in factories, no one has yet discovered a way to build a satisfactory house at a price everyone can afford to pay.

The materials used in prefabrication, chiefly plywood and gypsum board, are hard to work with; they cannot be stamped out like parts of an automobile. At present a prefabricated house costs as much as one built by conventional methods by a large-scale contractor, and only 20-30% less than one put up by a custom builder who constructs five or six houses a year. "It is quite possible," FORTUNE concludes, "that the price of the cheapest house may never fall below the $5,000 level."*

Uncle Sam, Builder? A survey made for FORTUNE shows that 31.8% of all U.S. families are looking for another place to live--or would be if there were no shortage. Of this number nearly half want to build or buy a house. But 45.8% of these prospective houseowners cannot afford to pay as much as $6,000; only 14.7% can afford to spend over $10,000.

Those who want to rent houses or apartments run into a similar problem of costs. More than three-fourths feel that they can afford no more than $50 a month--which, by the traditional methods of figuring rents, limits them to houses worth less than $6,000. Only 6.8% can afford to pay over $75 a month.

FORTUNE proposes no solution, but of those polled 48.1% are in favor of having the Government itself start building houses on a large scale, for sale or rent to the public.

* A conventional house which cost $8,000 to build before the war would now cost $12,000.

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