HOUSING

Teachers have an interest in the health of the housing industry that goes beyond even their concerns as housing consumers. It has become even clearer over the past year that the quality of public education and the very security of our jobs are dependent upon the health of the economy in general since education like all public services is funded by tax money, and tax receipts decline as the economy declines. It is a fact that housing is the bellwether for the rest of the economy. When housing declines, the rest of the economy cannot be far behind. Teachers have an even more direct interest. Education receives a great portion of its funds from real estate and property taxes. When houses are not being built or bought, it means that taxes are not being paid. When people are unemployed, it means mortgages are foreclosed and the tax basis is reduced. The result is real trouble for education. The current situation is frightening, and if improvement in the housing industry is not forthcoming, our troubles may only have just begun.

Housing starts in 1974 were 34 percent less than in 1973, and 43 percent, or more than one million units, below the 1972 level. The full extent of the decline from October 1972 to December 1974 in the annual rate of new housing starts was 65 percent. That December cur­rent production rate of 868,000 units is less than half of what is needed to meet the continuing increase in the number of households and to replace losses from the existing supply of housing.

This underproduction level contributes to both inflation and recession as local housing market shortages develop. Despite the temporary protection of one- and two-year lease for tenants, the rent index has been increasing at a 6 percent annual rate. The median price of existing homes sold in December was up 11 percent above a year ago. The homeownership cost index, which reflects home purchase prices and mortgage interest rates, has been rising at an annual rate of more than 14 percent.

Today unemployment among construction workers is close to a million. Construction unemployment will continue to rise as housing, started during preceding months, is completed and the volume of construction work under way declines.

Building materials and appliance supplier industries, transportation, furniture and home furnishings industries have also suffered a sharp decline in demand and production in the wake of the homebuilding decline. Un­employment in those industries has increased. Reduced purchasing power of the unemployed in construction and related industries has weakened economic demands and confidence in the entire economy.

The overall unemployment rate is now 8.9 percent and the continued high unemployment, projected by the Administration for the next 12 to 18 months, can lead to widespread mortgage loan defaults and widespread home foreclosures. This would cause tens of thousands of individuals hardships and a further weakening of confidence and housing demand.

The Administration has failed to counteract the two basic causes of the housing slump: high mortgage interest rates and the deliberate drastic cut-back in Federally-assisted housing production.

In order to bring residential construction back to a level that will meet the housing needs of the American people and provide jobs for hundreds of thousands of presently unemployed, additional actions must be taken by the Congress and the Administration with all possible speed.

We urge the Congress to enact a program to make 6 percent mortgage loans available for middle-income home purchasers, and to make all committed funds under special mortgage purchase programs available at 6 percent.

The Congress should also amend the Housing and Community Development Act of 1974 to provide additional authority for conventional public housing. It should also direct HUD to reinstitute the approval of new public housing projects.

We also urge the Congress to direct the Administration to immediately reactivate those programs that generate production of needed low- and moderate-income housing.

In order to guard against widespread home foreclosures which are certain to increase as unemployment grows, there is an urgent need for legislation to provide mortgage relief payments on behalf of homeowners whose income has been reduced due to unemployment or other emergencies.

The American Federation of Teachers joins the AFL-CIO and urges the Congress to meet this goal with a speedy and equitable measure before the problem becomes worse.

Education as a public service shares the fortunes of our economy, and no lasting improvement in our economy can take place until the housing industry is back on its feet.