equity. Being a revolving fund, the same dollars would be used again and again to finance many housing purchases. The initial taxpayer “sacrifice" would thus be minimal compared to the benefits gained, particularly since the fund, by eliminating interest charges, would radically lower everyone's cost of housing purchase. Two of the largest reductions possible in housing costs could be accomplished through this mechanism. It would remove one of our most expensive basic necessities from massive, unnecessary finance charges. It would make possible the stable and high level of housing production needed to eliminate housing scarcity and scarcity prices. And it would also eliminate the drastic These changes make possible immediate reductions of 75 % in the cost of housing purchase and ownership, and eventual long-term savings of up to 90% in the overall cost of housing for generations to come. impact of federal monetary policies upon the state's housing industry by removing its mortgage financing from the finance market so heavily burdened by federal monetary controls. 2. Reducing energy operating costs: Conservation Inexpensive conservation can reduce energy expenditures by 75%. The second largest hunk qf housing dollars goes to energy operating costs. Over a 50-year period, this can easily amount to $50,000-$75,000. An extra economic cost of a few thousand dollars for superinsulation could result in a 90% reduction in heating costs, and the new generation of small-size fluorescent lights and more efficient appliances could similarly reduce energy costs in these areas by 75%. Along with more durable construction, these are prime examples of increased first cost of construction providing major savings over the life of the house. It also underscores the importance of dealing with financing costs, which put a massive penalty charge on such sensible first-cost alternatives. 3. Extending economic productivity: Durability incentives Increasing the durability of housing construction and renovation to an anticipated life of400 years would generate a five- to ten-fold increase in the economic productivity of our resources put into housing. It would correspondingly reduce the economic cost of housing by an equivalent 80% to 90%. The benefits of housing durability are great, but not quickly obtainable. Their consideration is essential, however, in a period when substantial expansion of our housing stock is occurring and when durability has not been a central feature of our housing tradition. We must Page 16 RAIN March/April 1984 make proper investments now if we are to reap the eventual massive benefits of durability. Durability incentives can reduce maintenance and repair costs, stretch the useful life of the economic work that went into the original construction of a house, and reduce insurance expenditures. ■ Economic, rather than monetary, analysis should be the basis of all housing-policy analysis. Financial analysis, through the "future-discounting" of high interest rates, leads to ignoring the all real benfits occurring more than 10 or 20 years in the future, leading frequently to shortsighted decisions with greater long-term maintenance and replacement costs. ■ Eliminate tax and mortgage subsidies that encourage investor-owned rental housing and its attendant financial-based, short-term-biased decisions. ■ Encourage use of materials, construction methods, and detailing that contribute to durability of housing through research and publicity of their benefits, code requirements, and financing and insurance premiums that reflect their economic contributions. ■ Where possible, eliminate or minimize housing finance charges, which magnify the additional cost of durable construction. (See discussion on revolving loan funds.) ■ Minimize the impact of factors such as neglect, fire, demolition, or earthquakes, which cause premature loss of housing, through preventive programs, codes, and ordinances. ■ Generate a housing surplus to allow housing prices to move away from scarcity levels down toward the actual economic cost of the housing. A revolving loan fund can accomplish this expansion in housing supply. 4. Reduction in selling costs: Community housing exchanges Virtual elimination of realtor's fees, through establishment of community housing exchanges, could realize lifetime savings in housing expenditures amounting to 25 % to 50 % of the sale price of a home. Every home sold through a realtor diverts an average of 6% of the sale price from the homeowner's pockets. With houses being bought and sold on the average of every eight years, homeowners pay an average of six realtor's fees during their lifetime. And if the money saved from paying the realtor's fees was applied to reducing the mortgage on the house purchased, it could save two to three times its amount in interest charges. The need for realtors or other professional services has generally escaped close scrutiny; we can reduce or eliminate the need for many such sources by using standardized documents, new technologies, or public education. Multiple-listing services (MLS) have been set up in most communities by realtors to simplify access for themselves and their clients to information on properties available for sale. The seller fills out a card with detailed information such as lot size, number and size of rooms, kind of heating, tax assessment, mortgage situation, and amount of insulation. The realtor sends the card, along with a Polaroid picture of the computer-prepared booklet containing the pictures and information on all the houses for sale in the community, broken down by location, price bracket, number of bedrooms, and so on.
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