Inflation and Housing
OF THE BASIC necessities of lifeÛÓfood, fuel, [housing ÛÓit is in 'housing that the current inflation is having its most destructive effects. The enormous increases in food prices at least seem to he expanding food production. The increases in fuel prices at least are enforcing a certain healthy degree of conservation, and push us to develop stable and secure new sources of energy. But the inflationÛªs effect on our housing supply is pure and unrelieved damage.</br></br>The administration is relying on unprecedentedly high interest rates as its chief weapon against inflation. The high rates in turn make the housing inflation worse, because they force down the rate at which new houses are built. The administration is aware of this danger, and that is why it announced 10 days ago a series of measures that might put as much as $10 billion into the mortgage . market. But while that gesture will be modestly helpful, it will have no very dramatic impact at a time when inter-; est rates are the highest in our history and still climbing. The administration often talks as if housing construction were important mainly to keep up the Gross National Product and employment. To the contrary, it is important mainly because it determines the degree of crowding in which our children will be living for many years into the future.</br></br>Keep in mind that this is the decade when the postwar baby boom enters adulthood. How much new housing is enough? Through the 1960s new homes were built at a rate of about 1.4 million a year. Construction rose to 2.4 million homes in the record year of 1972, and was over 2 million last year. Currently it is down to a rate of about 1.6 million a year. That is more than the average for the 1960s, but it is not nearly enough for the 1970s. In the 1960s, the number of Americans turning 21 averaged about 2.8 million a year. In the 1970s, it will be about 3.8 million a yearÛÓa full million a year more.</br></br>In the Washington metropolitan area, there is a special factor at work that makes housing costs here climb even faster than in most other parts of the country. The three big suburban counties ÛÓ Montgomery, Prince GeorgeÛªs -and FairfaxÛÓare all deliberately cutting back the rate at y-which new housing can be built for our growing popula-Û¢ tion. In Montgomery and Prince GeorgeÛªs, the state of [Maryland has imposed sewer moratoriums that the local ^authorities seem in no great hurry to overcome. Fairfax tisi explicitly trying to work out a low-growth planning policy.</br></br>-ÐÊ The number of building permits issued in the metropolitan area, in the first three months of this year, was less than half as many as a year ago. This formidable drop is, so far, chiefly the result of the high interest .rates. But as time goes on and the backlogs of approved building projects decline, the moratoriums and other legal curbs will 'hold construction levels do\vn regardless of mortgage costs. The politics of low growth is, at the moment, popular among suburban voters, most of whom own their homes. Low growth, they assume, means lower tax rates and faster appreciation of the value of existing houses. Perhaps that is true, but there are other consequences as well.