and figures regarding facts zzling More the pu future of home building

Vacancies are estimated to have remained quite stable for the past decade at roughly a tenth of all dwellings. Should this ratio continue to hold in the decade ahead, the construction of housing units to accommodate growth in vacancies would rise from about 104,000 yearly in 196I-65 to 130,000 yearly in I97l-75. This projection, however, probably should be viewed as conservative. Second homes manifestly are becoming an increasingly important-if as yet imprecisely enumerated-component of the country's housing stock. On the basis of recent studies, in fact, NAHB came to the tentative conclusion that annual additions to stock accounted for by second homes have numbered some 150,000-175 000 units in the recent past.

The future demand for houses and apartments that is suggested by analysis of trends in household formation, removals, and vacancies need to be reduced, to the extent that data permit, by expected growth in the use of mobile hom'es as dwellings. This. of course. is because mobile homesparticularly in favor in the South and West -are alternatives to conventional residences. Again, estimates vary, but it seems certain that in years ahead these units will grow in importance in relation to the country's aggregate housing supply. On the rbasis of the industry's production forecasts and the estimate by a close student of the industry that roughly half of mobilehome deliveries are used lor new living quarters (with the otl-rer half replacing obsolete mobile-home units and serving other purposes such as construction-site field offices), it appears that the net annual figure {or this type of new housing will increase some 21ft times between the first half of the 60's and the like period of the 70's, or approximately 150,000 units a year.

Changing Stytes

All together, then, these estimates combine to suggest that demand for housing in the first half of the next decade will rise to an average oL 2 million or so starts a ,. year. There is more to the demand story, though, than the simple sum of its likely parts. Numerical analysis needs to be amplified by consideration of certain impond- erables, especially changing trends in the population's style of life, that could alter the composition of the starts figure and possibly also its size.

Sfory sI s Glonce

Concluding segment delves into the f uture and evaluates more factors that affect the giant home building industry. lt concludes that major changes are necessary to break the two million starts level. Series is by Morgan Guaranty Trust Co. of New York.

One such imponderable is the trend in child-bearing. The present generation of young couples has produced far fewer babies than was predicted a few years ago. The birth rate dropped sharply in the 1956-65 decade from 25.3 to 19.1 per thousand of population. This turn of events has caused speculation as to whether couples have decided to reduce the size of families or whether they merely are postponing childbearing. In the next few years, of course, the number of annual births is virtually certain to increase even if birth rates remain depressed, since the number of women of childbearing age will increase sharply. Non,etheless, growing efforts to make family-planning services even more widely available than is now the case suggest the possibility of a relative slowdown in the birth rate over the long term.

Declining birth rates could well lower demand for single-family units. Most young couples start out as apartment dwellers, buying a house only when they have children. But if with smaller families they delay moving, they will not vacate apartments for occupancy by the on-coming generation of young adults. Consequently, demand for apartments very likely will rise-especially for garden apartments in the suburbs, which many young couples find an accept' able substitute for a house of their own.

[ "o.ru"*" possibility is that the trend toward higher iniomes for the majority may give demand for houses a lift. In the past ten years the proportion of families unable to buy homes because of very low incomes has declined significantly, while the part with at least comfortable incomes has risen markedly. For instance, whereas a decade ago 70/o oi all families earned $7,000 or less (in 1965 dollars), the ratio had fallen to 5O/o by 1965 and is expected to decline further to under ao/o by 1975. More people with more money can be expected to support demand for apartments as well as individual houses, assuming a continuation of the trend of recent years for the population as a whole to spend a fairly steady proportion of disposable in' come on housing.

On balance, it appears likely that in the years just ahead the trend toward construc' tion of apartments will accelerate. Apartment units already have grown spectacularly in relative popularity in this decade -doubling ftom l7/o of starts in 1960 to 34/o in 1964. While they fell back in 1965 and 1966 to some 32/o ol starts, this probably was a temporary reversal. During the next few years, the swelling generation of young people may very well boost demand for apartment units to some A}/a-A1/o of total housing starts. After 1970-when yesteryear's postwar babies will be having babies of their own-the mix of housing is expected to shift somewhat again, with demand for single-family houses gaining somewhat on demand for apartments.

Key Intangibies

There is nothing immutable, of course, about the ratio of consumer spending on housing to consumer income. The ratiostable in recent years at a reading ol I3/olL/o-could move dramatically higher if some interesting breakthrough in housing were to arouse widespread excitement over the new product. At present, people generally do not exhibit any marked enthusiasm over newer houses. Today's typical offering seems to be regarded mainly in utilitarian terms, as something one has to have, rather than as a preferred object of expenditure. Actually, executive and professional people and others with significant amounts of oodiscretionary" income often show decided preference for houses built 40 or so years ago in the older suburbs. As their incomes rise, people in this group tend to leave city apartments, perhaps stopping over temporarily in a new house in a recent subdivision, but setding finally-when peak earnings enable them to realize their desires for the amenities-in the older, more spacious suburbs.

Many critics o{ the home-building industry argue that this established residency cycle could he broken if builders showed more enterprise. With greater architectural innovation, it is asserted, a demand for new dwellings could be generated far bigger than anything forecast at present.

'

(Continueil on Page 10)