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More often than ever before, young singles have to double up or triple up in cramped apartments if they hope to pay the rent. The latest trend in New England is for married couples to get together in pairs and lease a house. Quite a few young marrieds are forced to postpone having children because they cannot afford enough space for larger families. To avoid the problem of searching for a reasonably priced place in which to live, company executives sometimes resist transfers to different cities.
In all, the difficulty of finding reasonably priced housing has contributed to the feeling of frustration in the nation. The Nixon Administration recognizes that the housing problem is fanning popular discontent about inflation. Moreover, rising pressures in the housing market may well aggravate tension in the ghettos. Rent strikes, led by predominantly Negro tenant unions, have occurred recently in St. Louis, Los Angeles and other cities. The strikers demand better living conditions, lower rents—or both. In Milwaukee, 14 couples and their 70 children not long ago took up unauthorized residence in an abandoned Army disciplinary barracks. The squatters have dubbed the place "Fort Homeless."
The Money Famine
Prices continue to rise partly because the supply of houses and apartments is not adequate. The U.S. has long taken pride in being the best-housed nation in the world, but today—despite its riches and technological power—it has slipped behind the pace of almost every big country in Western Europe in construction per capita (see chart following page). Even the U.S.S.R. puts up more housing than the U.S., though the Soviets' prefabricated apartments are so cramped and shoddy that most would be unrentable to middle-class Americans. George Romney, the Secretary of Housing and Urban Development, calculates that new housing in the past four years has fallen more than 1,000,000 dwellings shy of the amount needed to keep up with population growth and losses from fires, storms and bulldozers.
This year, starts of houses and apartments dropped from an annual rate of 1,900,000 in January to 1,300,000 in August. Despite a September upturn, which most economists dismiss as a freak performance by volatile statistics, the rate of housing starts may dip below 1,000,000 by year's end. "We are facing the worst housing shortage that we have had since the end of World War II," says Walter Hoadley, executive vice president of California's Bank of America. "The crisis is going to get worse."
Shortages and soaring prices are the outcome of many forces, but the problem right now is that, as Secretary Romney notes, "housing is the first casualty of the anti-inflationary fight." By making credit scarce and costly, the Government has choked off many of the sources of mortgage funds. More than any other U.S. industry, housing depends on private long-term credit. When interest rates rise rapidly, as they have this year, the financial institutions that normally provide most of the credit run short of money. Savings and loan associations and mutual savings banks have been hard hit by withdrawals; depositors have simply shifted their money out of savings accounts paying 5% and put it into Government bonds that offer an enticing 81%.