For the past 14 months, high interest rates have had a severe impact on the
nation's housing market. Yet the current pressures and uncertainties should
not obscure the achievements of the past four years.
Working with the Congress, the regulatory agencies, and the financial
community, my Administration has brought about an expanded and steadier
flow of funds into home mortgages. Deregulation of the interest rates
payable by depository institutions, the evolution of variable and
renegotiated rate mortgages, development of high yielding savings
certificates, and expansion of the secondary mortgage market have all
increased housing's ability to attract capital and have assured that
mortgage money would not be cut off when interest rates rose. These actions
will diminish the cyclicality of the housing industry. Further, we have
secured legislation updating the Federal Government's emergency authority
to provide support for the housing industry through the Brooke-Cranston
program, and creating a new Section 235 housing stimulus program. These
tools will enable the Federal Government to deal quickly and effectively
with serious distress in this critical industry.
We have also worked to expand homeownership opportunities for Americans. By
using innovative financing mechanisms, such as the graduated payment
mortgage, we have increased the access of middle income families to housing
credit. By revitalizing the Section 235 program, we have enabled nearly
100,000 moderate income households to purchase new homes. By reducing
paperwork and regulation in Federal programs, and by working with State and
local governments to ease the regulatory burden, we have helped to hold
down housing costs and produce affordable housing.
As a result of these governmentwide efforts, 5 1/2 million more American
families bought homes in the past four years than in any equivalent period
in history. And more than 7 million homes have begun construction during my
Administration, 1 million more than in the previous four years.
We have devoted particular effort to meeting the housing needs of low and
moderate income families. In the past four years, more than 1 million
subsidized units have been made available for occupancy by lower income
Americans and more than 600,000 assisted units have gone into construction.
In addition, we have undertaken a series of measures to revitalize and
preserve the nation's 2 million units of public and assisted housing.
For Fiscal Year 1982, I am proposing to continue our commitment to lower
income housing. I am requesting funds to support 260,000 units of Section 8
and public housing, maintaining these programs at the level provided by
Congress in Fiscal 1981.
While we have made progress in the past four years, in the future there are
reasons for concern. Home price inflation and high interest rates threaten
to put homeownership out of reach for first-time homebuyers. Lower income
households, the elderly and those dependent upon rental housing face rising
rents, low levels of rental housing construction by historic standards, and
the threat of displacement due to conversion to condominiums and other
factors. Housing will face strong competition for investment capital from
the industrial sector generally and the energy industries, in particular.
To address these issues, I appointed a Presidential Task Force and Advisory
Group last October. While this effort will not proceed due to the election
result, I hope the incoming Administration will proceed with a similar
venture.
The most important action government can take to meet America's housing
needs is to restore stability to the economy and bring down the rate of
inflation. Inflation has driven up home prices, operating costs and
interest rates. Market uncertainty about inflation has contributed to the
instability in interest rates, which has been an added burden to
homebuilders and homebuyers alike. By making a long-term commitment to
provide a framework for greater investment, sustained economic growth, and
price stability, my Administration has begun the work of creating a healthy
environment for housing.