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F e b r u a r y 5 , 1937 8PMMARY OF THE SBCOHD fiEMORAMDUM ON THE PROSPECTS FOR THE PURPLE ,QpQI?g INDUgTfiP? By George T e r b o r g h ffQUSINg Introduction* Certain d i f f i c u l t i e s beset a d i s c u s s i o n o f housing, connected w i t h r e a l e s t a t e , or anything e l s e i n terms o f n a t i o n a l averages and t o t a l s * There i s no n a t i o n a l h o u s i n g market comparable w i t h the market f o r s e c u r i t i e s commodities, since housing i s , dependent on l o c a l demand* i n the n a t u r e o f t h e c a s e , a l o c a l That i t terms i s because o f the f a c t can be d i s c u s s e d a t a l l in generalizations i g n o r i n g the exceptions which are e x c l u s i v e l y t o non-farm housing* non-farm M w i l l not be c o n s t a n t l y r e i t e r a t e d , b o t h the t e x t and t h e s t a t i s t i c s the f i g u r e s reflect present* cussion which follows relates u descrip- f o r t h e c o u n t r y as a whole can do no more than One o r two f u r t h e r i n t r o d u c t o r y e x p l a n a t i o n s a r e i n order* tive inflation, I t mast be k e p t i n mind, however, t h a t t h e p r e p o n d e r a n t movement o r c o n d i t i o n , invariably national i n the g r e a t m a j o r i t y o f cases t o g e n e r a l economic developments s u c h as war, tive utility t h a t h o u s i n g m a r k e t s , though l o c a l , a r e n o t e c o n o m i c a l l y i s o l a t e d , b u t on t h e c o n t r a r y respond s i m i l a r l y d e p r e s s i o n , and recovery® or The d i s The a d j e c - i t b e i n g understood that imply t h i s l i m i t a t i o n t h r o u g h o u t . c i t e d are almost without e x c e p t i o n estimates, Secondly, and a r e t o be r e a d as such* Importance o f housing* There c a n be no q u e s t i o n t h a t we have i n h o u s i n g one o f the most im portant of a l l d u r a b l e goods* E x p e n d i t u r e s f o r new c o n s t r u c t i o n and r e p a i r s i n t h i s f i e l d averaged over 5 b i l l i o n d o l l a r s a n n u a l l y d u r i n g t h e residential b u i l d i n g boom o f 1923-1928, a f i g u r e w h i c h r e p r e s e n t s r o u g h l y 35 P© r ce **t o f the t o t a l f o r consumers 1 d u r a b l e goods, and 15 p e r c e n t o f t h e t o t a l all d u r a b l e goods, i n the same p e r i o d * W h i l e the r e l a t i v e h o u s i n g over a l o n g p e r i o d i s somewhat l e s s 29 and 12 f respectively, (these percentages over tho p a s t 18 y e a r s ) b a s i s a major component o f the d u r a b l e goods importance it since i t i s subject of averaged remains even on t h i s output* The s i g n i f i c a n c e o f r e s i d e n t i a l c o n s t r u c t i o n from t h e s t a n d p o i n t business f l u c t u a t i o n s for i s g r e a t e r t h a n t h e s e r e l a t i v e magnitudes of suggest, to swings i n a c t i v i t y more extreme t h a n those w h i c h c h a r a c t e r i z e t h e o u t p u t o f d u r a b l e goods as a whole* D u r i n g the low y e a r o f t h e d e p r e s s i o n , house b u i l d i n g and r e p a i r o p e r a t i o n s were o n l y 15 p e r c e n t o f the p r e v i o u s h i g h , as c o n t r a s t e d w i t h U5 p e r c e n t f o r the o u t p u t of a l l o t h e r d u r a b l e goods* The consequences o f One r e a s o n f o r is durability* the extreme a m p l i t u d e o f f l u c t u a t i o n i n h o u s i n g a c t i v i t y the e x t r a o r d i n a r y d u r a b i l i t y o f the p r o d u c t . average l i f e expectancy o f somewhere between 50 supply of r e s i d e n t i a l structures New d w e l l i n g s have a n 100 y e a r s . Since the i n use i n t h i s c o u n t r y has been e x p a n d i n g c o n t i n u a l l y s i n c e the b e g i n n i n g , a c o m p a r a t i v e l y s m a l l f r a c t i o n o f the p r e s e n t s t o c k i s o f advanced age ( o n l y 8 p e r c e n t o f the h o u s i n g i n 64 c i t i e s c o v e r e d by t h e R e a l P r o p e r t y I n v e n t o r y i n 1933 was o v e r 50 y e a r s o l d ) t h e volume o f o l d - a g e r e t i r e m e n t s is and therefore r e l a t i v e l y i n s i g n i f i c a n t . The -3- a n n u a l d e m o l i t i o n and wreckage f r o m a l l c a u s e s , f l o o d , have a v e r a g e d i n r e c e n t y e a r s much l e s s o f the amount o f h o u s i n g i n use* i n c l u d i n g wind, f i r e , t h a n one h a l f and e f one p e r T h i s means t h a t even w i t h a complete p e n s i o n o f new c o n s t r u c t i o n t h e e x i s t i n g s u p p l y o f f a c i l i t i e s a n almost i m p e r c e p t i b l e r a t e , making p o s s i b l e a p r a c t i c a l l y cent sus- contracts at undiminished t o t a l consumption f o r s e v e r a l y e a r s • There i s a n o t h e r consequence o f t h i s noted. extreme d u r a b i l i t y t h a t s h o u l d be S i n c e replacement demand i s so i n s i g n i f i c a n t , t h e market f o r new h o u s i n g depends c h i e f l y on a c o n t i n u e d e x p a n s i o n i n r e s i d e n t i a l ( i n the 1 occupancy, t w e n t i e s replacement a c c o u n t e d f o r about 10 p e r c e n t o f the hew construction). D u r i n g t h e p a s t 17 y e a r s , f o r w h i c h e s t i m a t e s a r e available, t h e growth o f n o n - f a r m occupancy i n the U n i t e d S t a t e s averaged 2 , 1 p e r a n n u a l l y , b u t t h e r e were two y e a r s (1931 a n d 193 2 ) when t h e r e was an a c t u a l s h r i n k a g e and one y e a r (1923) when the g r o w t h was as h i g h as b . Z p e r o r t w i c e the p e r i o d average* Fluctuations r e l a t i v e l y s m a l l , but f l u c t u a t i o n s are l a r g e . Since i t building activity is cent, i n t o t a l volume o f occupancy a r e i n the r a t e a t w h i c h t h i s volume grows the r a t e o f growth w h i c h c o n t r o l s (except f o r cent t h e volume o f new the c o m p a r a t i v e l y i n s i g n i f i c a n t demand) c o n s t r u c t i o n tends t o d i s p l a y a r e s p o n s i v e replacement instability. T i m i n g o f movements. A r e v i e w o f h o u s i n g c o n s t r u c t i o n s i n c e 1919 shows a movement w i t h t u r n i n g p o i n t s d i f f e r i n g q u i t e w i d e l y f r o m those r e c o r d e d by most types d u r a b l e goods p r o d u c t i o n , and by b u s i n e s s a c t i v i t y i n g e n e r a l . d e n t i a l b u i l d i n g t u r n e d down i n t h e m i d d l e o f 19X91 a Thus y e a r ahead o f of resithe b r e a k i n b u s i n e s s , and began r i s i n g e a r l y i n 1921, s e v e r a l months ahead o f I the general recovery* I t s next downturn came l a t e i n 1925 > f o u r y e a r s ahead o f g e n e r a l r e c e s s i o n , and the s u c c e e d i n g u p t u r n a p p e a r e d about the b e g i n n i n g o f 1935$ a l m o s t two y e a r s a f t e r the b u s i n e s s r e v i v a l s e t in« It is a p p a r e n t t h a t h o u s i n g c o n s t r u c t i o n has been i n an e x c e p t i o n a l degree a l a w unto itself* This i s due not only to the fact that the demand f o r new housing moves i n cycles d i f f e r i n g from those which characterize most goods, but also to the fact that readjustments of supply to demand i n this f i e l d proceed so slowly, and with such i n e r t i a , that they are l i k e l y to over-compensate, and to give r i s e to swings i n production that are at times out of phase with the swings of business i n general• M a l a d j u s t m e n t s o f s u p p l y and demand i n h o u s i n g , as e v i d e n c e d by an e x c e s s o r d e f i c i e n c y o f vacant d w e l l i n g s , affect the output o f new u n i t s l a r g e l y i n an i n d i r e c t manner, t h r o u g h t h e i r e f f e c t on t h e r e n t s and v a l u e s of e x i s t i n g properties* sluggish* Readjustments i n s a l e and r e n t a l v a l u e s a r e generally Not o n l y do r a t e s on new l e a s e s r e s p o n d w i t h c o n s i d e r a b l e t o changes i n vacancy s i t u a t i o n s , b u t because o f t h e f a c t t h a t most inertia rental c o n t r a c t s r u n f o r a y e a r a t a f i x e d r e t u r n t h e average r a t e s a c t u a l l y p a i d and r e c e i v e d l a g w e l l b e h i n d new l e a s e r a t e s ^ the s e l l i n g p r i c e s of r e s i d e n t i a l properties, being As f o r movements these r e q u i r e t y p i c a l l y p e r i o d o f i n c u b a t i o n b e f o r e they g a t h e r f o r c e and v e l o c i t y * in a Readjustments i n b o t h r e n t s and v a l u e s c a n t h e r e f o r e l a g so f a r b e h i n d changes i n vacancy situations ]J t h a t h o u s i n g s u r p l u s e s o r s h o r t a g e s accumulate b e f o r e new c o n - T h i s l a g i s a g g r a v a t e d , i n upward movements, by the tendency o f r a t e s t o advance more s l o w l y t h a i r a t e s on new c o n t r a c t s * renewal -5I s t r u c t i o n i s s u f f i c i e n t l y c u r t a i l e d or s t i m u l a t e d , as t h e case may b e , to check the a c c u m u l a t i o n * E x p e r i e n c e i n t h e p r e v i o u s b u i l d i n g boom. The W o r l d War o c c a s i o n e d a d r a s t i c c u r t a i l m e n t o f r e s i d e n t i a l t h e volume f o r 1917 and 1918 b e i n g o n l y about h a l f t h a t o f building, the two p r e c e d i n g H o u s i n g s h o r t a g e s , w h i c h were c o n f i n e d d u r i n g the p e r i o d o f years* t i e s l a r g e l y t o s p e c i a l war s i t u a t i o n s , hostili- became f a i r l y g e n e r a l w i t h d e m o b i l i - z a t i o n o f tho m i l i t a r y f o r c e s , and under t h e s t i m u l u s o f r i s i n g r e n t s r e s i d e n t i a l p r o p e r t y values a sharp recovery i n c o n s t r u c t i o n and developed* T h i s was c u t s h o r t a f t e r a few months by t h e s p r o c k e t i n g o f b u i l d i n g After costs*^ the m i d d l e o f 1919 a c t i v i t y dropped as r a p i d l y as i t had p r e v i o u s l y risen* As a r e s u l t , t h e y e a r 1920 saw a h o u s i n g o u t p u t comparable w i t h the l o w l e v e l o f 1917 and 1918. The c o l l a p s e o f commodity p r i c c s r e d u c t i o n i n b u i l d i n g costs* i n t h e f a l l o f 1920 brought a marked Thus f a c i l i t a t e d , and f u r t h e r e d by a d v a n c i n g r e n t s and v a l u e s f o r e x i s t i n g r e s i d e n t i a l s t r u c t u r e s , construction revived a g a i n i n 1921, but by t h a t time the h o u s i n g s h o r t a g e had become acute* general business recovery which f o l l o w e d the depression of t h a t y e a r was accompanied by a n e x c e p t i o n a l l y r a p i d growth i n non-farm r e s i d e n t i a l p a n c y , so t h a t d e s p i t e a t r u l y s p e c t a c u l a r u p s w i n g i n r e s i d e n t i a l t i o n no s i g n i f i c a n t i/ general a l l e v i a t i o n of occu- construc- t h e h o u s i n g s h o r t a g e was a c h i e v e d A d e c l i n e i n t h e a v a i l a b i l i t y o f mortgage money s h o u l d be mentioned* I t appears from f r a g m e n t a r y d a t a t h a t b u i l d i n g money became d e c i d e d l y s c a r c e , p a r t l y because o f r i s i n g l o n g - t e r m money r a t e s g e n e r a l l y , b u t c h i e f l y because l e n d e r s became i n c r e a s i n g l y d i s t r u s t f u l o f the permanence of the h i g h c o n s t r u c t i o n c o s t s t h e n prevalent* The -6I -until By that time rental and sale values for existing residential property had reached so high a l e v e l that the incentive to b u i l d was intense, and construction a c t i v i t y was of boom proportions. After 1923 there was a f a i r l y steady decline i n the annual growth of non-farm occupancy. From a high of 800,000 dwelling units i n that year, i t receded to a l e v e l of about ^50t000 i n 1928 and 1929® So intense was the building incentive developed by the prolonged housing shortage, however, and so great was the momentum of the boom, that construction mounted u n t i l 1925. Because of the decline in the growth of occupancy, this high l e v e l of output resulted i n a rapid accumulation of vacancies i n the existing supply of housing. While a c t i v i t y receded s l i g h t l y after 1925, the decline in output i n the next three years was less rapid than the decline i n the annual addition to occupancy, so that the growth of vacancies continued. By 1928, these had reached a high l e v e l . The slowness of this recession in building a c t i v i t y i s worthy of particular notice. While the r i s e i n vacancies which began i n I92U was followed after a few months by a decline i n rental rates on new leases, i t was a couple of years before this produced any significant decline i n the average rate on a l l leases outstanding, and at least as long before there was any marked softening of residential property values. By the time these declining tendencies appeared, the p r o f i t margins per unit obtained generally by contractors and developers had become so wide (a con- 1/ The unusally rapid expansion of non-farm occupancy i n 1922 and 1923 may be l a i d to the following factors: ( l ) heavy net migration from farms to c i t i e s , towns, and villages; (2) heavy immigration from foreign countries; (3) high marriage rates; (k) undoubling of families forced to share l i v i n g accomc dations during the war and subsequent depression. sequence of course, of the prolonged housing shortage) that they could he narrowed materially with hut l i t t l e effect on the volume of construction* By this time also, the building boom had developed lender confidence, not to mention new financing expedients such as r e a l estate bonds, so that the a v a i l a b i l i t y of construction loans was actually increasing during the period when an excessive vacancy supply was being accumulated* Notwith- standing the f a c t , therefore, that the contractors 1 construction costs did not decline, sales of new housing were f a i r l y w e l l maintained for two or three years i n the face of f a l l i n g rents and values for existing properties by a more or less continuous shrinkage of the unit p r o f i t margins of the producers of housing, and by the a i d of thinner equities demanded of buyers * • This process obviously could not go on forever. The weight of the growing volume of vacancies accelerated the cheapening of existing resident i a l f a c i l i t i e s competitive with new construction, while a further c h i s e l i n g of p r o f i t margins by contractors snd developers became less and less compatible w i t h the maintenance of the former rate of a c t i v i t y . As the prices required to move new housing declined, more and more situations developed i n which construction was curtailed or suspended* stage i n the process was reached i n 1929* A critical Partly because of a tightening of the mortgage market then under way, but c h i e f l y because of overbuilding, construction a c t i v i t y i n the residential f i e l d entered an acute slump, which, incidentally, was i n f u l l swing before the break: i n the general economic situation i n the f a l l of the year. 1/ The a b i l i t y of producers to s e l l new housing at declining prices was probably increased somewhat during this period by a softening of the prices of vacant land* -3I The decade o f the t i v e example o f 1 twenties thus p r e s e n t s an i n t e r e s t i n g and i n s t r u c - the c o u r s e o f a b u i l d i n g boom^ housing shortage, the boom g a t h e r e d a momentaam w h i c h c a r r i e d i t a l o n g u n t i l a s u r p l u s h a d accumulated* building activity Generated by a n a c u t e into a The impact o f t h i s surplus eventually sent tailspin* Had t h e g e n e r a l economic s i t u a t i o n remainded s t r o n g a f t e r 1929» a moderate p e r i o d o f c u r t a i l e d h o u s i n g output might have a b s o r b e d excess v a c a n c i e s and r e c t i f i e d t h e s i t u a t i o n , but t h i s c o r r e c t i v e p r o c e s s had h a r d l y begun when t h e slump i n b u s i n e s s supervened* To t h e d e p r e s s i o n the weakness i n t h e h o u s i n g s i t u a t i o n was a s e r i o u s a g g r a v a t i o n , w h i l e reflex effect the o f t h e d e p r e s s i o n on h o u s i n g was t o make a bad s i t u a t i o n worse* H o u s i n g d u r i n g the d e p r e s s i o n * The most i m p o r t a n t e f f e c t tf t h e d e p r e s s i o n on h o u s i n g was t o suspend f o r s e v e r a l y e a r s t h e growth i n occupancy on w h i c h , as we have seen, most of the demand f o r new c o n s t r u c t i o n depends* p o p u l a t i o n f r o m u r b a n communities t o farms t i o n from abroad, the c u r t a i l m e n t d o u b l i n g up o f f a m i l i e s f Because o f the m i g r a t i o n t h e c e s s a t i o n o f net of immigra- i n t h e number o f m a r r i a g e s , and the on a c c o u n t of r e d u c e d incomes, t h e t o t a l o f non- f a r m occupancy a c t u a l l y d e c l i n e d d u r i n g t h e w o r s t p a r t o f t h e d e p r e s s i o n a n d remained u n t i l 193^ below the 1929 f i g u r e * Even now i t exceeds I929 by o n l y 1,500,000 t o 1,600,000 d w e l l i n g u n i t s , as compared w i t h a g a i n o f a t l e a s t 3,000,000 u n i t s This to be e x p e c t e d e x c e p t f o r t h e depression. i n c r e a s e i n t h e p r e s e n t occupancy over 1929 has been accomo- d a t e d i n p a r t by a g r o w t h i n the h o u s i n g s u p p l y i n t h e i n t e r v a l , which, despite the d r a s t i c curtailment of b u i l d i n g , has amounted to 800,000 to 900*000 dwelling units* In part i t has "been accomodated by an absorption of some of the large supply of vacancies e x i s t i n g at the beginning of the period* Although the number of vacant units increased from 1929 to 1933 by something l i k e J009000§ the reduction since then nas been approximately twice as great. At the present tine the supply i s about 400,000 to 500,000 dwelling u n i t s below the l e v e l indicated by a long-term average vacancy ratio* The decrease i n vacancies which be#an i n 1933 193^ hy an upturn i n rental rates on new leases* followed early i n I t was at least a year l a t e r , however, before there was any s i g n i f i c a n t advance i n the average of rents on outstanding leases or i n property values* not begin to revive before 1935* New construction d i d Th e tendency f o r b u i l d i n g to give a de- layed reaction to vacancy situations has been evidenced again i n t h i s movement. The housing shortage, as measured by the supply of vacancies, was more acute i n 193^ than i n 1925* when 900f000 dwelling units were produced, yet the 193^ output has been less than a t h i r d of that amount. Realignments i n rents and values have c l e a r l y not proceeded fast enough to keep b u i l d i n g i n step w i t h the growth of occupancy. Just as i n the 'twenties we passed from a short ago to a surplus of housing because of the delayed response of b u i l d i n g to the underlying supply and demand s i t u a t i o n , we have already passed i n the ' t h i r t i e s from a surplus to a shortage, and f o r the same reason* Building prospects during the next f i v e years* Without going here into questions of method and procedure (which are -10I discussed i n the f u l l memorandum) I shall merely summarize the results of an analysis of the probable housing market during the next f i v e years* The estimates are based on the assumption that the period w i l l be prosperous: Components of the give-Year Housing Market 1* Increase i n households (a) Prom currently accruing natural increase (b) Prom reduction of the depression marriage backlog (c) Prom undoubling of families (d) Prom net reduction i n farm households Total increase i n households 2* Replacement of dwelling units demolished during the period Elimination of present housing shortage 3. Total housing market i n dwelling units Average market per year 2,400,000 300,000 300f000 200,000 3,200,000 ^00,000 500,000 Uf100,000 820,000 The prospect may be summarized a l i t t l e more f u l l y i n three propositions. ( l ) I f building averages 800,000 units a year for the next f i v e years, the period should close with a reasonably comfortable housing situation. (2) I f construction averages J00f000 units annually the period should close with a shortage comparable i n magnitude with the present shortage. (3) I f the average i s 600,000 units, the shortage at the end of the period promises to be very acute, comparable, l e t us say, with the worst period after the World War* In view of the fact that the f i v e years start at a r e l a t i v e l y low l e v e l of construction (250,000-300,000 units i n 1936) the attainment of a rate of 800,000 units a year cannot be expected u n t i l we are well into the period, and the achievement of that rate as an average for the period •11* as a whole would c a l l , therefore, for an output of at least a m i l l i o n units a year i n i t s later stages* While this i s not impossible ( i t i s only 10 per cent higher than the 1925 peak) i t seems to me doubtful that i t w i l l pome soon enough, i f i t comes at a l l , to produce an average of 800,000 f o r the f i v e years, She inference i s , therefore, that theire w i l l be 9ome housing shortage remaining at the end of the period* One reason for this doubt i s the danger that as construction a c t i v i t y increases there w i l l develop shortages of s k i l l e d labor, and of certain classes of building materials, that w i l l retard further expansion* Such a l i m i t a t i o n of the output of new housing, i f i t becomes effective, w i l l be reflected partly i n higher labor and material costs and partly i n higher unit p r o f i t margins f o r contractors and developers, but i n any event the f i n a l cost of the product to buyers w i l l tend to r i s e s u f f i c i e n t l y to equate demand with the l i m i t e d supply being produced* I t seems l i k e l y that i t w i l l require prices for new housing materially higher than those now prevailing to mobilize enough productive a c t i v i t y to offset demolitions and occupancy expansion during the next few years, to say nothing of eliminating the shortage now existing* I am inclined to believe that barring unexpected developments i n pre-fabrication, government subsidies, or other a l l e v i a t i v e s of the situation, supply and demand w i l l be equated during the next f i v e years by a volume of construction which averages between 600,000 and 800,000 dwelling units a year, with 700,000 as l i k e l y a guess as any* This would represent an average expenditure at pre-de- pression building cost levels (including repair a c t i v i t y ) of U#5 to 5 -12- f b i l l i o n s Of dollars annually* Higher cost levels would of course increase this figure. There seems no doubt, i n any event, that the current housing shortage w i l l become considerably worse before i t begins to be generally alleviated. Even with the most rapid pick-up i n construction f o r which we have any reason to hope, the prospect i s for a worsening of the situation for at least a year, and the p r o b a b i l i t i e s appear to favor a period nearer two years than one. The shortage seems destined to become decidedly acute i n many places during t h i s stage. The attainment of reasonably comfortable housing conditions i s , of course, much more remote than the beginning of improvement, since progress w i l l at f i r s t be slow. More remote prospects. For the next few years the housing market w i l l experience an exceptional concentration of demand. Superimposed on the regular demand arising from the currently accruing uatural increase i n households and the replacement of structures currently dexaolished w i l l be a special and temporary demand attributable to the after-effects of the depression. This special demand appears to t o t a l something l i k e 1,300,000 dwelling units, as follows: Accumulated housing shortage at the end of 1936 Delayed marriages l i k e l y to be contracted i n the future Probable undoubling of fnmilies s t i l l doubled because of the depression Probable net decrease i n farm f a m i l i e s i / 500,000 300,000 300,000 200,000 I f , as seems probable, these special demands w i l l become effective 1/ Theru i s no satisfactory way of estimating t h i s item. The assumpt i o n here i s that the net decrease i n farm fnmilies during the next few years w i l l be half of the increase attributable to the depression. This seems a conservative supposition. d u r i n g be t h e f i r s t s t i m u l a t e d f e w t o a y e a r s l e v e l s a t i s f i e d . The i n c r e a s e i n d e m o l i t i o n s d w e l l i n g u n i t s demand a o p e r a t e m i l l i o n r e g u l a r a u n i t s a o f n e v e r t h e l e s s a t t h e j u s t i f y i n a t h e I f t h e e x p e c t a t i o n a t t h e g r o w t h c o s t s p r o f i t d e s p i t e a t h e be a e a r l y s u p p o r t e d n a r r o w i n g t h e i n B y t h a t l o a n s s t a g e s w i l l o f t h e t h e t i m e t h e a g a i n s t o f l a s t i s o f t h e w i d e t h e tiiv b y a l o n g w h e n momentum g r o w t h a l s o , o f a t r e c e s s i o n g r o w i n g p r o f i t t h e l o o k and t h e t o p be v a l u e s . c o m p e t i t i o n m a r g i n s u p t o s a y r i g h t l y b u t i t b o o ^ be seems o b t a i n i n g f o v e r y t o me p r e v a i l i n g t o d a y w i l l r t v a l u e s , t o r e p e a t , f u l l t h a t w i l l t h e l a t t e r o v e r t a k e s t i m e c a r r y c o n s t r u c - i t a c c u m u l a t i o n o f c o n f i d e n c e . m a r k e t , o r The s a l e new o f e x i s t i n g p r e v i o u s l y p r o t r a c t e d l a s t t h e o f a c o n t r a c t o r - d e v e l o p e r booja t h e o w i t h a t By and and o f s p e c i a l c a n a c t i v i t y b u i l d i n g w i l l a n d 6 0 0 , 0 0 0 o n e . v a l u e s o c c u p a n c y i n t h o s e b e e n a r o u n d c o n d i t i o n s d e m o l i t i o n s ) . l e n d e r s made wtxy r e n t s l a n d o f a n d b u i l d i n g ( p l u s w i t h b e t w e e n h a v e i n e v i t a b l e . one f o r t h c o m i n g v o r i s i n g be no p r o C w d i u & j u s t i f i e d , l e v e l s be boom be s t e p p e d s i t u a t i o n s , s i m i l a r i t y t h a t w i l l a n d e a r l i e r b u i l d i n g o c c u p a n c y h i g h , and d e c l i n e l i b e r a l e n o u g h p a t t e r n h i g h i n be m a r g i n s , v a c a n c i e s . m o s t v e r y w i l l f r o m a c c o m p a n i e d s h o r t a g e , c u l m i n a t i n g t i o n c l o s e , e x p e c t a t i o n w a y , c u r r e n t a r e i s w i l l u n p r e c e d e n t e d g e n e r a l a c t i v i t y l e t - d o w n s e l d o m a n h o u s i n g t h e y p r o b a b l y w h e n s u b s e q u e n t i s o f w i l l o f w o n c e b a r r i n g p e r i o d c o n s t r u c t i o n t h a t t h e r e t h e b u i l d i n m a i n t a i n e d t h e r e a f t e r , d u r i n g d r a w n g e n e r a l h o u s i n g a be t h e r e p l a c e m e n t s , i n f e r e n c e s t e n t a t i v e t h i s a n d a n a l o g i e s b e g i n n i n g a c a n n o t demand I f y e a r , p r o s p e r i t y , t h a t c o n c u r r e n t l y H i s t o r i c a l c o n f i d e n t y e a r . o f e v e n b y o f The d u r i n g h o u s i n g s t r u c t u r e s o b t a i n e d f o r w a r d w i l l b y c o n t r a c t o r s I - 1 4 - a n d d e v e l o p e r s , i t s c r i t i c a l b y and s t a ^ e e x c e s s i v e w h e n s e v e r e l y r e s t r i c t t r e n d d e v e l o p m e n t s , o f new o u t p u t h o u s i n and A c r e d i t . w h e n f a i r l y c a n w I n be l e n d e r s a b r u p t t h e s o l d ei;& t h e o n l y become a t p r o c e s s p r i c e s d i s t u r b e d c o n t r a c t i o n o f b y w i l l e n t e r w h i c h t h e a c t i v i t y a d v e r s e w i l l t h e n e n s u e . T h i s b u t p a t t e r n m e r e l y s t a n t t i m e aw goes o f o n . t h e p r o d u c t i o n , become i s c u r r e n t m o d i f i e d so p a t t e r n r e v i s i o n o f t h e s e h o u s i n w i n n o t o u r p o s s i b l e g e n e r a l e x p e c t a t i o n s f r o u p r e c e d i n g s u c h i n t h e o f now, h o u s i n g as t h e t h e o f a thus t h e moment. be u a r k e t , o r I see t h a t no f o r and mass l a t e r t h e c o u r s e h o u s i n g r a d i c a l l y r e a s o n t e n t a t i v e as d e v e l o p - m a y t h a t a C o n - n e c e s s a r y i n c i p i e n t b a c k g r o u n d a f o r e c a s t , p r e - f a b r i c a t i o n T w e n t i e s as d e f i n i t e w i l l p a t t e r n , h o w e v e r , boo^i a a t m o r t g a g e p r o v i d o t h a t J u s t some a l t e r w x y as e x p e c t a t i o n s s i t u a t i o n , t o p r e s e n t e d t h a t l e a d e r s h i p r e s u l t s . t h e o f q u i t e d i f f e r e n t p a t t e r n i s o r i e n t i n g c o n t r o l l i n g a c t i v i t y c o n s t r u c t i o n f o r s°veriUuent s u f f i c i e n t l y b u s i n e s s t h e and I t o r d e v e l o p m e n t s b a s i s r e c h e c k i n ^ m e n t s o f a o f g u i d e t o r e j e c t t o t h e f u t u r e . I f o f t i o n i t g o v e r n m e n t a l a seems h o u s i n g t o me c o n s t r u c t i o n m o r e i n t i i a a t e r a t e s now I t and i s q u i t e t h e a n d w i t h i n one s u r p l u s t h a t i s t h e t o and c o n t r o l m o s t d i r e c t t i l i n g a n o t h e r a u t h o r i t y a t o o v e r th*«x> o f i n v o k e d t k o t h o R e s e r v e t h e t h e o f a p p r o a c h * bl^irikut and p r e v e n t some m o r t g a g e T h i s w o u l d g e n e r a l t h e y e a r s f l u i d s h a v e c o n t r o l a c c u m u l a - f r o m f o r t o now, new bo o v e r m u c h money B o a r d , d e v e l o p m e n t v o l u m e t o r e a c t i o n s u p p l y t h e p r e v e n t s t a b i l i z e be s u b s e q u e n t p r o m i s i n g p o w e r t o i s o f o f h o u s i n g r e s i d e n t i f J. s u r p l u s e s , c o n s t r u c t i o n * -15- E v e n i f c u r r e n t h a v e we g r o w t h b u i l d i n g h a v e I o n ? a s s e e n , t h e p r e v e n t i o n t h e m o s t p r e v e n t a p o s s i b l e i n b o o n s i s o f boom a t o a n d i s h o u s i n g c a n and p r o m p t , c o n s t r u c t i o n ( p l u s c u r r e n t d e p r e s s i o n s . e x t r e m e l y we t i e o c c u p a n c y econosay t h a t r e c e s s i o n w e r e i ^ s u r p l u s e v e n h o p e r e c e s s i o n g r a d u a l , i n a n d t o g r o w t h a n d p r o m i s e s p e r i o d i c s e v e r a l f o r t h e f r o n o f y e a r s h e n c e r e g u l a t o r y I t v/e t o t h e w o u l d o c c u p a n c y , t o b u s i n e s s m e a n t i m e . o r d e r l y • c l o s e l y r e p l a c e m e n t s ) The i r r e g u l a r , s u b j e c t a c t i v i t y r e g a i n s t i l l as so as d e p r e s s i o n s . - w h i c h c o n t r o l c a n o n l y i s - The a b o u t w i l l make n o t t h e
