Boom or Bust?

For some 18 months, home builders have been held down by WPB's order L41 ; they could build no house that cost more than $8,000. When WPB swept out most of its restrictions at war's end, it also promised to drop L-41, at the end of this month. But last week, the construction industry was shocked to learn that L41 is far from dead. OPA was waging a rear guard action to keep the L41 restriction of $8,000 -- or raise it to $12,000, at most -- on all new private houses for another six months or a year. It had a slim chance of wanning its fight.

Lined up stoutly behind OPA was the National Housing Agency, the Office of Economic Stabilization and the A.F. of L. and C.I.O. They argued that only by keeping the price ceiling would badly needed cheap housing be built, a wild inflation in building be averted. Without a ceiling, a $6,000 house could easily sell for $12,000 in the present shortage. Furthermore, frantic bidding for prices of scarce materials would soon boost their prices out of sight, and further jack up building costs all down the line.

But the Federal Works Agency, and the nation's contractors and real estate men, were just as grimly determined to dump L-41, scrap any other ceiling plan. Said they: 1) L41 is retarding normal building activity just when it is most needed; 2) the sooner the building industry gets going, the sooner it can hire the four to eight million workers it will need; 3) materials and labor will be so plentiful by the time the building boom gets under way next spring that competitive production alone will hold prices down. The whole price problem was of such prime importance that President Truman would probably have to step in to settle it.

Nip the Boom? That there is a rip roaring building boom in the making was plain to everyone. But it was equally plain that a sudden rise in prices would take the steam out of the boom. Armed with the latest and one of the most comprehensive of building surveys, ARCHITECTURAL FORUM drove that point home this week. The FORUM found that 2,778,000 families are "good prospects" to buy or build houses. Some 70% of them plan to spend less than $8,000 and more than half of them have the cash in the bank or in War Bonds. One third of the prospects plan to buy or build within the next year. The FORUM estimates that this may mean 555,600 new houses, almost as many as the alltime building peak in 1925.

Nevertheless, the riproaring boom may not develop. Most of the prospective builders are already worried about high prices next year. So, said the FORUM: if prices rise steeply, nearly half the immediate market for low-cost houses will be sharply cut. Said the FORUM: the market can reach its maximum potential only if the building industry can keep costs low enough to provide plenty of low cost houses.

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