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House and Home Magazine - July 1956 - Return to Main Search
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Text Summary via OCR:

Jumbo billboard symptomatic of the outsize promotion stunts LoS Angeles builders are using to woo customer-”stands alongside a freeway in Orange County, where sales are slumping after a fabulous three-year boom. The 50 x 200' sign dwarfs model atop stepladder at its base.

builders have left building in favor of land development subdividing and selling improved homesites to other builders.

Despite the much-publicized unemployment in Detroit's auto industry, builders say they have seen no adverse effect on sales. Nor has unemployment caused much delinquency in mortgage payments. President Stanley Earp of Citizens Mortgage Co. says most of the unemployed are men with little seniority who have not bought a home yet and probably could not have bought one very soon.

Miami, with starts down 13% from 1956, is still characteristically optimistic. Builders contend that they will make up the deficiency before year's end and start as many units this year as they did in 1955.

Judging by the number of applications for CRV's pending in the Miami VA office, the builders mean it. Loan Guaranty Officer Asa Groves says builders are either looking forward to a loosening mortgage market or are adjusting their belts to mortgages at 96.

Some observers think the market is showing a tendency to split in the middle. Says one: "Five years ago builders here were working on a cross section of the public. There were homes for $6,000 to $15,000 with plenty of choices. Today it's either the cheap $9,000 model with terrazzo floor or the $14,000 to $17,000 house."

Los Angeles starts for the first five months of the year are down 20% from last year: 42,861 compared to 51,794. But statistics do not accurately reflect the whole picture for such a complex area. Starts are way off and the inventory of unsold houses way up in Orange County. But starts are holding up well and there is no overhang at all in other places like the San Fernando Valley.

Experts estimate the area needs from 75,000 to 90,000 units a year for new residents and to replace demolished units. For two years, builders have averaged 105,000. It is estimated there are 10,000 to 12,000 unsold completed homes in the area now. But Chief Underwriter Belden Morgan of FHA predicts: "Our absorptive rate is still so great and our demand so strong that the surpluses won't be around very long."

San Francisco's home building rate dropped by nearly 30% from 1955 but builders, cagily building only on firm sales, have no overhang. They blame the drop in starts (from 16,207 to 11,270) on tighter mortgage money and the expectation of a carpenter's strike. (Carpenters want a seven hour day. Builders say they won't give it.)

Cleveland Builder Maurice Fishman, head of Precision Housing Corp., summed up his market thus: '"˜I've never seen the building business as bad as it is now. We're cutting our starts about 50% from last year." He and others put a lot of blame on Cleveland's notorious high costs. Says Builder Herbert Luxenburg: "Cleveland has always sold less than its potential because . . . our prices are way out of line."

Through the first four months of the year there were 3,646 starts in the Cleveland area, compared to 4,341 for 1955. Contributing reasons: bad spring weather and a three-week strike of building tradesmen.

Philadelphia's housing market, off to a slow start early in the year, has begun to pull out of its slump primed by several important developments in the suburbs. General Electric has announced plans for a new missile plant while completion of the Delaware River bridge between the Pennsylvania Turnpike and New Jersey Turnpike has stimulated activity. Starts for the first five months were down 25%.

Louisville builders expect a substantial drop from last year's volume but at the present rate 1956 will still be the third largest year in the city-county history. Starts for the first four months of the year

were 2,011 compared to 2,532 in 1955, a drop of 20%.

Several large developments have overhangs of unsold homes. One large banker, taking note of them, is already cutting back on construction loans and warning builders to slow down. One large S&L is refusing to commit itself for any big project, taking them on piecemeal, 10 homes at a time.

Milwaukee is a bright spot. Starts for the first five months of this year were 3,028, up 15% from the 2,627 in the same period of 1955.

Part of the gain is due to a boom in duplex construction by builders accompanied by a decline in apartment house building. But builders feel their conservative approach to financing has helped.

Even so, Milwaukee builders are worried. Noting the slump everywhere else in the country, they fear the same medicine is just around the corner for them. But they have no overhang and a recent Milwaukee Journal consumer survey indicates there will be a continuing demand for new houses in the next year.

Oklahoma City is amid a big slump. Only 1,176 starts were reported in the first five months of this year compared to 2,418 for the first five months of 1955. That is a drop of 51%. Builders say they won't build when they have to give discounts of four to five points. Almost all builders have switched to selling from models.

While quantity is falling, quality is rising. Average residential permit in May was for $12,280. A year ago it was for $9,240.

Phoenix starts are off 15 to 20%. No figures have been compiled for the area as a whole. Big builders like Del Webb and Del Monte, who were completing five or six homes a week, now are building no more than two. The market for expensive homes seems better than the low priced mass market not too unusual for a resort city. Experts think Phoenix has just passed through a five year "hectic boom" and can settle down to a steady buyer's market. Bargains are still commonplace. Del Webb is offering free air conditioning in a $13,000 home. Builder John Long sells a three bedroom home for less than $10,000 and every home has a 28' swimming pool.

THREE

YEARS OF

HOUSING

STARTS

(First five months)

Area

Starts

Change

1954

1955

1956

'55 to '56

Miami .............

..... 5,201

6,653

5,878

12%

Los Angeles .......

..... 41,131

51,794

42,861

20%

San Francisco .....

..... 10,927

16,207

11,270

30%

Cleveland* .........

..... 3,618

4,341

3,646

16%

Philadelphia .......

..... 1,650

2,492

1,861

25%

Louisville4 .........

..... 2,607

2,532

2,011

20%

Milwaukee .........

...... 2,614

2,627

3,028

+15%

Oklahoma City.....

..... 2,024

2,418

1,176

51%

Omaha ............

..... 795

791

857

+8%

Chicago............

..... 16,057

19,086

17,591

7%

Atlanta ............

..... 5,190

7,339

5,552

24%

Detroit ............

..... 10,473

11,989

11,297

5%

Dallas .............

9,000

5,000

44%

TOTALS ..........

.....110,316

137,269

112,028

18%

All totals cover the metropolitan area.

β…œTotals are for four months only.

NEWS continued on p. 49