Secretary Andrew Cuomo's Prepared Remarks
"Housing America in the Next Millennium"
50th Anniversary of 1949 Housing Act
November 3, 1999
Thank you very much, Charlie Ruma. First I want to thank the sponsors for today's event. The National Association of Home Builders, thank you. National Building Museum, thank you. Fannie Mae, Freddie Mac, National Housing Conference -- thank you very much for really putting an exclamation point to a national success story. It could not be held in a more fitting shrine to the achievements of American housing�this National Building Museum, a tribute to your achievements.
It�s amazing what we can accomplish when we work together. I�m reminded of the two muscle-bound moving men who were struggling with a grand piano lodged in a doorway. It was stuck there, despite all the pushing and pulling.
Finally, one mover said, "I give up, we�ll never get this in the house."
And the other said, "In? I thought we were trying to get it out."
But HUD and NAHB and the housing movement are definitely pushing in the SAME direction these days and we�re doing great things together.
I. By any measure, the 50 years since the Housing Act of 1949, housing is an unparalleled American success story.
We�ve made the American Dream of homeownership a reality. In the 1940s, we were a nation of renters -- just 45% of Americans owned their homes. But this past week, we set another record high homeownership rate of 67%. It is the American Dream -- it is the promise of hope and stability. It is the monument to the great American experience.
Looking back, the Housing Act of 1949 helped create a housing boom that was unparalleled in our Nation�s history � a simple piece of legislation pointing to an unassailable national goal, setting the bar high, challenging us to reach new heights.
And we did. We tripled the nation�s housing stock and built a nation. Visionaries rose to the challenge and carried this nation to a higher place. Giants like William Levitt, who envisioned and then created Levittown and built suburban America; like Jim Rouse who saw things others didn�t see, and transformed what was into what could be; pioneers like Leon Weiner. And carrying on that tradition today: Charlie Ruma, Bill Pulte, and Tim Eller and many others.
And today housing is a vital engine of national prosperity. According to a report by Harvard University, housing accounts for almost one-fifth of America�s economy�that�s astounding, 20% of GDP. 5 million people are employed in housing construction. For every 1,000 single family homes we build, we create 2,500 jobs and generate $80 million in wages.
And how�s this for an endorsement? Federal Reserve Chairman Alan Greenspan said yesterday that home sales have done more than stock trading to fuel consumer spending in America. The stable, long-run jump in home sales has added more to this record-shattering economy than the much more publicized frenzy on Wall Street.
And housing is not only a national accomplishment, but an international one. We are the world leaders in building technology and housing finance. The world is coming to us as never before, we are receiving them at HUD almost every day -- this week China, the world�s largest emerging housing market; last month Central America, working hard to rebuild smarter after storms that swept away lives and whole communities; South Africa, which is literally building a Nation from the ground up. It�s Italy and France -- all coming to us to learn, to follow our lead.
And they should � while the media headlines focused on the advances in the Internet and the Pentium processor, there has been a quiet revolution in housing technology. In 1950, it took about 70 days to build the average home, and now�with smart scheduling and components, we can do it in 40% less time and produce twice as much home. Home heating has been cut by more than 40% since 1949. It used to be that 100% of our stock was stick-built, now we have 25% modular and prefab and we�re still going.
But housing is more than four walls and a roof, and it is even more than an economic generator � it is the building block of community and the key to strong families.
The Declaration of Purpose of the 1949 Act said it clearly, with a mandate to build homes not just for the sake of housing, but to "contribute to the redevelopment of communities, and to the advancement of growth, wealth and security of the nation".
Housing is more than just bricks and mortar; it is the building block of community, it is powerfully tied to civic behavior�to working together with neighbors on shared concerns, to literally making us a part of a block, a neighborhood, a town, a county, a nation. Homeownership makes us stakeholders in something grander than ourselves.
II. What is remarkable is not just what we have done in the last half century, but how we have done it. We have the winning formula.
The 1949 formula is the first story of public/private partnerships � long before public/private partnerships were "in".
The success is driven by the private sector. That was a key hope of the �49 Act, that we unleash the energy of the private sector to house a Nation full of hope but short on housing.
But at the same time, government has played a vital role, incentivizing and facilitating, helping to trigger overlooked markets, as we are working so hard to do today -- but of course, never substituting for the private sector.
That is the story of a stronger-than-ever FHA: 28 million home mortgages insured since 1934. Plus 38,000 multifamily projects, 4.1 million apartments. The private lender writes the check, and FHA insures the deal. You build the Dream. That�s the winning formula, and this year FHA just completed its best year in its 65-year history � insuring a record $125 billion in mortgages. In fact, 1 in 8 American homeowners now have a mortgage insured by FHA.
III. But if the past fifty years is a story of triumph, the next fifty years are just as bright. There are challenges to be sure, but in each challenge there is an opportunity. Let me give you my "Top Ten" issues on the doorstep of the new millennium:
(1) First, there is still more to do � this record economy actually has a downside.
- There are still 5.3 million American families who desperately need and deserve our help. Families with "worst case" housing needs, paying more than half their income for rent, locked out of the Dream. There is evidence now of a widening gap between supply and the demands of struggling, working families. We seem to be losing, not gaining, ground for those on the bottom.
- Rural areas are still not sharing in America�s success. There are 28 million housing units in rural America�and still 1.7 million substandard. In places like the Mississippi Delta, Central Appalachia, and the Colonias, we need to overcome their isolation. They have lived far too long in the shadows � we must make their dream a reality.
- At the same time, some of America�s strongest regions for business�those in the spotlight�are literally being "priced out" of housing by their success. Go to the Silicon Valley - the leading companies driving the global information age have identified affordable housing as their number one backyard concern�what a statement that is. They can�t attract and retain workers at relative middle income levels, the commutes are endless, housing costs are just too high.
(2) We need to build for the changing functions of the home � we will see the home as workplace. I believe with that new function there is a next generation of suburban development to envision and produce, one that serves the emerging home office marke and the telecommuter.
Not just suburbs within commuting distance of urban areas�the traditional "bedroom communities"�but suburban residences that have severed the umbilical cord tying them to the city, because the computer and Internet reduce or eliminate the need to physically commute.
The home-centered society will develop. Already, the number of people who work at home has tripled. By the year 2000, 14 million people are expected to work at home at least one day a week. There are websites dedicated exclusively to those who want to find telecommuting jobs; there is a movement to make zoning and other policies more "home office friendly."
(3) There�s another trend on the horizon�there will be a new wave of redevelopment in our cities. Why? Location, location, location � and cities offer what no other location does: concentrations of people.
- The concentration of people attracts people. We are fundamentally social beings and we like proximity to people. We like to do business face to face. We like to do business with a hand shake. We like to see people, we like to socialize.
- And cities afford this nation the most economical way to house people. They offer lower infrastructure costs, lower environmental costs, lower housing costs, and less time commuting.
- Cities have another unique asset�hundreds of years of history and culture. They have museums and restaurants, playhouses and universities. As good as we are at building, only time can create history.
- The evidence is clear: cities are back as places to live, even at the extremes: new single-family homes on Charlotte Street in the South Bronx � values have tripled in last 15 years. There is a renaissance of downtown living sweeping Chicago, Detroit, and many other cities, and more is yet to come.
(4) We are a different population than we were 50 years ago. We are getting older. We must house the rapidly growing generation of older Americans, the so-called "graying of America." Demography is destiny. The number of older Americans is growing faster than any other segment of the population�it will double by the year 2030. How do we house them? Do they live alone? How do we move from homes as residences to homes as assisted living, and to homes as medical facilities?
HUD�s new Housing Security Plan for Older Americans will create a new Continuum of Care for the elderly, that we believe, will be blueprint for industry to follow. But just like 50 years ago, meeting the needs and seizing the opportunities is up to you, limited only by your imagination and creativity.
(5) We must reach out to a new generation of immigrants, of "New Americans": The days of primarily European immigrants are over. By the year 2050, we will be a majority minority nation. The Urban Institute projects that immigrants and their offspring will account for two-thirds of population growth over the next forty years � 70 million people.
We are already seeing hundreds of new faces, languages and cultures, requiring new understanding and new marketing. And not just in traditional gateways like New York and LA. Southeast Asians are coming to Lowell, Massachusetts, Guatemalans and Salvadorans to Chicago, the Hmong to Minneapolis, Ethiopians to Washington DC, Vietnamese to Biloxi, Mississippi. They are the Americans of the tomorrow, and they are your customers of tomorrow. Look at the trends � minority homeownership accounts for more than 40% of the growth over the past 6 years. Good citizenship and good business means we must reach out.
And now we are working with the National Association of Realtors and Mortgage Bankers in learning about marketing to new cultures, while we enforce the Fair Housing laws, through our "One America" initiative -- doing good and doing well.
(6) We must reach out to the underserved by reducing the cost of building and operating housing. The President has challenged to the nation through the Partnership for Advancing technology in housing (PATH) --- our partnership with you -- to make the next generation of American housing more durable, more energy efficient, and more disaster resistant, but also to cut costs by 20%. We can do it.
(7) We must keep the housing industry strong and united as it develops. This is especially true in the mortgage finance area, where new products and fierce competition are pushing the traditional boundaries. Lines are blurring between primary markets and secondary markets, challenging our definition of where one begins and one ends. We must work through these changes together. I believe HUD can help as an independent and strong regulator�ensuring fairness to both sides and, most of all, keeping our housing industry unified.
(8) We must continue to improve consumer confidence. The most complex transaction that many Americans will face is buying their own home, (unless of course they ever fill out a HUD application.) I was an attorney at real estate closings. I know that we must ensure a full, open and transparent system. Remember, if consumer confidence goes down, home sales go down.
One key area is mortgage underwriting. The formula for mortgage approval or disapproval must be clear and definable. We cannot, and should not, defend secret formulas or computer software programs which generate rejections or acceptances by unknown means.
The FHA will lead by example again. In 1949, FHA led the fight on segregation when it broke racially restrictive covenants. Today, FHA will be the first to bring transparency to automated underwriting. Our underwriting scorecard will be fully open and understandable. If a person is rejected, they will know why, on what basis, with no suspicion or fear. This is America, people have a right to know and we will tell them. We will keep home buying a transaction that Americans feel secure and confident in, and thus we will keep Americans buying homes.
(9) We must lead the movement to smart growth and the marriage between development and the environment -- it�s not a question of whether to grow but of where and how. We need to build 1.6 million new units per year but we cannot consume 7, 000 acres of never-developed "greenfields" per week. I believe that good builders always respected the environment, way before anyone envisioned Earth Day. We must continue to lead the way. Regardless of government regulation, smart growth is the future. The market will demand it, the consumer will demand it, and we must provide it.
Charlie Ruma recognizes this future. That is why, under Charlie�s bold leadership, NAHB has been working with HUD and the U.S. Conference of Mayors and has committed to building 1 million new homes in our cities over the next 10 years. Today, we officially launch the 1 million homes initiative in 14 cities across America, which will open up new markets for builders and result in stronger urban economies, stronger communities and stronger families.
(10) We must expand the constituency that represents our industry and its value to this nation � rebuild the coalition. We are 20% of GDP, but our constituency does not project our strength. We must organize the entire industry to ensure our housing coalition for the next 50 years.
The 1949 Housing Act was spurred by the National Housing Conference, itself spurred by organized labor. We need to get labor back into the fold and we�re doing just that. John Sweeney wrote a letter on behalf of HUD�s budget this year � the first time since the 70s that an AFL-CIO President has done so. We have many more potential partners � builders and realtors, and bankers and universities and low-income groups, and mayors and county executives � and we must build bridges, not walls, between them. Now that would be a coalition with the clout we deserve.
And it is in formation: we just won the best budget in a decade in one of the worst budget years. But we should not have to beg Congress for a housing budget every year. We deserve more and better.
IV. As we set out on the next 50 years, the wind is at our back and the current is with us.
We have the strongest economy in history. We have the historic economy that makes it possible -- after years of deficits we have an historic surplus. We have the resources.
Government -- private sector�s essential partner -- is credible once again. HUD, which for too many years was the reason why we couldn�t do more is now a vehicle for progress. We did the reforms that were necessary. We have cleaned up our house so that you can build more homes. We have reformed FHA. We have physically inspected all our units (REAC). We are safeguarding tax payer dollars � zero tolerance for fraud, waste and abuse. We are transforming public housing from a liability to an asset � it�s now a trend-setter, a model for the future.
That new credibility is already bearing fruit. We raised the FHA loan limit. Last year we protected GNMA. This year we are effective GSE regulators � with a new affordable housing goal of 50% , which will mean $2.4 trillion for affordable housing over the next 10 years
We have a President who has supported HUD like none before him � who for the first time issued a veto threat because of inadequate funding for HUD. And it worked. We won our best budget in a decade.
Now, we only need the daring - the boldness � the commitment. The 1949 Act was powerful in it�s simplicity. It said we will do this, period - no caveats. It reflected a Nation that believed in itself. We had won the war. We had young people looking for work and looking for homes. The need was clear.
We built the seemingly impossible: We reached new heights because we believed we could. JFK sent a man to the moon � 250,000 miles. We built the Golden Gate Bridge � 2 miles, 895,000 tons. We built the Hoover Dam � 4.3 million cubic yards of concrete. We built the Interstate Highway System � 160,000 miles. Now we are building the Information Superhighway -- no limits or boundaries, infinite.
We did great, great things and we set great goals, and we set the bar very high, and we met it time and time again. We just have to decide as a nation and re-commit ourselves, and re-pledge ourselves to providing a decent home for every American -- because we can, and because we should. Because when you have the most powerful nation on the globe it's wrong that you have men and women who sleep on the streets tonight, or sleep in homeless shelters. It shouldn't be. Nobody should be homeless in this country. And we just need to re-commit ourselves to re-establish that coalition, to get that energy back up, and say, we are going to do this.
We had the visionaries then, we have the visionaries now: Charlie Ruma � a man of vision and courage who says we will build 1 million new homes in our cities over the next decade. Dan Pincus -- fighting to break down barriers to affordable housing and raise the FHA loan limits. Don Martin -- reaching out to new international markets. Bill Apgar -- taking FHA to new heights in a new millennium.. Cushing Dolbeare � the housing conscience of the nation. Steve Coyle � bringing the union movement back to the housing coalition, back to the housing family because together we can get more done than we can separately. Fannie and Freddie -- connecting Wall Street to Main Street.
Let us renew the pledge today in this great hall: 50 years from today, no family in America -- the greatest nation on the planet � goes without a roof over their head. On your shoulders, the shoulders of giants � we go forward. Together we will make it a reality. Now, let�s build. Thank you.
Content Archived: January 20, 2009