bls_1243_1959.pdf

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BUILDING PERMIT ACTIVITY

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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B U I L D I N G P E R M I T A C T I V I T Y

Bulletin No. 1243

UNITED STATES DEPARTMENT OF LABORJames P. Mitchell, Secretary

BUREAU OF LABOR STATISTICS Ewan Clague, Commissioner

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. - Price cents


Preface

The evolution of the U. S* Department of Labor*s Bureau of Labor Statistics* building perm it reporting system m irrors the spreading pattern of urbanization fn the United Statese To m eet the demands of a congressional committee investigating the critica l housing shortage during and im m ediately after W orld War I, the Bureau, in 1920, began collecting reports from a few hundred urban officia ls who issued building permits* In the intervening years since 1920, the Bureau has published a series of bulletins assembling the inform ation it has collectexLoir"all types o f building construction fo r which loca l communities require permits*

Building perm its are essentially instruments for enforcing zoning restrictions and structural requirements related to public safety, fire prevention, and sanitation* As cities and towns becam e m ore densely populated and as m ore safeguards w ere devised to protect the public from the potential hazards of living in increasingly com plex urban environments, building perm it system s spread rapidly. By 1956, about 7, 000 perm it-issu ing places were reporting to the Bureau.

The present bulletin, which continues the series on building perm its, is designed as a research tool as well as a statistical handbook. It presents the basic data for maintaining the continuity of the series through its history of continuous expansion. In addition, it presents the statistics in complete detail for the years 1954-56 and interprets these data in the perspective of the tim es. A set of six tables containing annual summaries for 1957 and 1958 has been added to supplement the statistical r e c ord, although the analysis of the building perm it data does not extend beyond 1956.

This bulletin was prepared in the Bureau*s Division of Construction Statistics by Adela L. Shesser. Henry F. Haase and Marvin W ilkerson developed the statistical techniques for collecting, coordinating, and summarizing the growing body of building- perm it reports on which the tabulations in the bulletin are based.

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CONTENTSPage

Introduction ................................................. .............................. ............... 1Background and scope of the series ...................................... 1Limitations of building perm it data ................*............... ............... 2

Part A* Com parison of new and supplanted series ........................... ............... 4D ifferences in coverage ............................. ............................ ..................................... 4

Com parison of the universes ......... ..................... ....................................... .. 4Com parison of population coverage ..................................................................... 4

Differences in building volume .............................................................................. ................. 6Variations by type of building . 6State and regional variations 8

Com parison of monthly trends ............................................................ .. 10linking the series ............................. ......................................... ................. 12

Part B. Building perm it activity, 1954-56 ................ .............................. 13Trends by type of building ooo . ooooooooo**** . . . . . **** . ***************** 13

Residential building ........................... ....................................................................................... 14Nonresidential building ........................................ .................................................... 17

Location of building activity ........................... .. 18Regional and State com parisons ......................... ........................................... 18M etropolitan-nonm etropolitan location * .................... . ............. ............................ .. 20Suburbs versus central cities ............................. ................................................................. 20Variations among m etropolitan areas oo*oa**ooo

TABLES Continued

PageA - 9. Valuation, by type of b u i l d i n g c o n s t r u c t i o n and region, January-

June 1954 ................................... . . ...................... ................. .................... 36

A - 10. Number of new dwelling units, by type of structure and region, January-June 1954 ......... .......................... .. 37

A - 11. Indexes of building perm it valuations, by type of building construction,1929-56 ............................................................................................................................... 39

Part B:B - 1. Valuation, by type of building construction, region, and amount in m et

ropolitan areas, annually, 1954-56 ........................................ 40

B - 2. Valuation, by type of building construction, region, and amount in m etropolitan areas, monthly, 1954-56 ......... 41

B - 3. Valuation, by type of building construction, region, and m etropolitan-nonmetropolitan and central city-suburban location, monthly, 1954-56 . . . 47

B - 4. Number o f new dwelling units, by region, and m etropolitan-nonm etropolitan and central city-suburban location, monthly, 1 9 5 4 -5 6 ................. .. 53

B - 5. Number o f new dwelling units, by type of structure, public-private ownership, region, and amount in m etropolitan areas, monthly, 1954-56 . . . 55

B - 6. Number of new dwelling units, by type of structure, public-private ownership, region, and percent of m etropolitan area total in central cities and suburbs, annually, 1954-56 .............................................................................. 58

B - 7. Valuation of new dwelling units, by type of structure, public-private ownership, region, and percent of m etropolitan area total in central cities and suburbs, annually, 1954-56 ......... ....................................... .......................... .. 59

B 8. Number and average valuation of housekeeping residential buildings, by type of structure, region, and m etropolitan-nonm etropolitan and central city-suburban location , annually, 1954-56 o o . o . . o . . . o o . o . o . o o . . o . o . < , o 60

B - 9. Valuation, by type of building construction, State, and geographic division,annually, 1954-56 ..................... .......................... 62

B -10. Valuation of new dwelling units, by type of structure, public-privateownership, State, and geographic division, annually, 1 9 5 4 - 5 6 . . . . . . . . . 65

B - l l . Number of new dwelling units, by type of structure, public-private ownership, State, and geographic division, annually, 1954-56 67

B -12. Valuation, by type of building construction and State, monthly, 1 9 5 4 -5 6 .. 69

B -13. Number o f new dwelling units, by State, monthly, 1954-56 81

B -14. Valuation, by type of building construction, and number of dwelling units in cities of 100,000 p o p u l a t i o n or m ore (1950 Census), a n n u a l l y ,1949-56...................................................................................................................... 84

B -15 . Valuation, by type of building c o n s t r u c t i o n , region , and percent of m e t r o p o l i t a n a r e a t o t a l in central cities and suburbs, annually,1954-56 ............................................................................................................................... 94

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TABLES Continued

PageB -16. Number of new nonresidential buildings, by type of building, region, and

percent of m e t r o p o l i t a n a r e a total in central cities and suburbs, annually, 1954-56 ............* 96

B -17. Average valuation for selected types of new nonresidential buildings, by r e g i o n , and m etropolitan-nonm etropolitan and central city-suburban location , annually, 1954-56 ........................................ .. 98

B -18. Valuation in selected m etropolitan areas and percent in central c ities ,by type of building construction, annually, 1954-56 100

B -19. Valuation of new dwelling units in selected m etropolitan areas, by typeof structure and central city-suburban location, annually, 1954-56 105

B -20. Number of new dwelling units in selected m etropolitan areas, by type ofstructure and central city-suburban location, annually, 1954-56 107

B -21. Average valuation of new dwelling units in selected m etropolitan areas, by type of s t r u c t u r e and central city-suburban location, annually, 1954-56 ...................................................................................0 . o o . o o o o o . o o o . o o o o o o 109

CHARTS

1. Per capita building rates of the Building Perm it Activity and the UrbanAuthorized ser ies , by State (based on 1950 population, and valuation of building construction, January-June 1954) ........................... 7

2. Indexes of perm it valuations of the Building Perm it Activity series and theUrban Authorized series , United States total, by type of building construction, January-June 1954 ............* . . . . ........................................................................... 9

3. Indexes of perm it valuations of the Building Perm it Activity series and theUrban Authorized ser ies , by type of building c o n s t r u c t i o n and region, January-June 1954 .................................................. .. 11

4. Perm it valuations by type of building construction, 1954-56 13

5 . N u m b e r o f d w e ll in g u n its f o r w h ic h b u ild in g p e r m it s w e r e i s s u e d , 1 9 5 4 -5 6 . . 15

6. Perm it valuations for selected types of nonresidential building, 1954-56 . . . 16

7. Percentage distribution of 1956 building perm it valuations, by State 19

8. Percentage distribution of 1954-56 building perm it valuations, by m etropolitan-nonm etropolitan and central city-suburban location 21

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Tre nd s in Building Perm it A ctiv ity

IN T R O D U C T IO N

Statistics on building construction a u t h o r i z e d by loca l building perm its, prepared by the U. S. D e p a r t m e n t of Labor*s Bureau of Labor Statistics, p ro vide the only detailed construction data a v a i l a b l e for loca lities and areas, as well as on a national basis* They are the main source of the Bureau*s monthly series on the number of new n o n f a r m dwelling units started, and in them selves are an important econom ic i n d i c a t o r .

S i n c e the building perm it activity series gives i n s i g h t into the econom ic im pact on loca l areas of changes in the geographic spread of building construction (residential and nonresidential), it is an especia lly valuable tool for shaping p o l i c y and adm inistrative decisions by State and loca l governments and planning agencies. It also provides national agencies and research groups with inform ation on important area deviations, which in construction, is e s s e n t i a l for making decisions on a national scale that take into account regional or loca l situations. Business firm s and labor g r o u p s also follow the trend and level of over a dozen different k i n d s of building construction in specific l o c a l i t i e s to determine in which areas,or parts of areas,,their products or skills are being used, and where and how great d e m a n d w ill be in the future. M oreover, because these statistics p r o v i d e a quantification of the d i s p e r s i o n of new building within the parts o f m etropolitan areas (central cities and suburbs), they are helpful in com munity planning, m a r k e t analysis, and socia l and econom ic research requiring current and dynamic inform ation a b o u t the m e t r o p o l i t a n a r e a econom y and society.

This bulletin presents the building perm it statistics in com plete detail for the years 1954-56, the period covered by the latest expansion in the series . In addition, it gives a brief* h istory of the ser ies , describes the scope and lim itations o f building perm it data, furnishes inform ation for linking the m ost recent statistics with those for years prior to

1954, and shows the trend of b u i l d i n g construction in p r i n c i p a l cities of the United States, beginning with 1949.1

BACKGROUND AND SCOPE OF THE SERIES

The Bureau*s series on b u i l d i n g c o n s t r u c t i o n for which perm its were issued has been expanded and im proved continuously s i n c e its o r i g i n in 1920. Although the number of p laces reporting building perm it data to the Bureau increased each year, a series s h o w i n g annual volume for 257 large cities was used from 1921 until 1929 to relate cu rrent activity to past perform ance in city b u i l d i n g construction. Beginning with 1929, building construction trends w ere reflected m ore accurately through indexes based on data from a larger and m ore representative s a m p l e of incorporated p laces. By 1942, the number of reporting places had grown large e n o u g h to provide the basis for estim ates covering the entire urban area of the country, as defined in the 1940 Census.

This "urban b u i l d i n g authorized** series was discontinued with publication of data for June 1954, because o f the problem o f resolving differences between the geographic areas used for building perm it system s and the urban areas as defined in the 1950 Census.2 In its p lace, a "building perm it activity se r ie s " was inaugurated to m easure building activity

1 These data (table B-14) bring up to date statistics for these cities for 1921-48, published in Building Construction in Principal Cities of the United States, 1921-48, U. S. Department of Labor, Bureau of Labor Statistics, Washington (June 1949).

2 Urban, as defined in the 1950 Census, includesnot only incorporated places of 2,500 or more population, but a large number of unincorporated specially delineated localities, and the densely settled but unincorporated fringes adjacent to large cities. These unincorporated areas were defined on the basis of housing or population density and their boundaries in general are not political but follow such .identifiable physical characteristics as streets, roads, railroads, streams, etc. On the other hand, building permit systems usually cover entire political subdivisions: cities, villages,townships, counties, etc.; it is not possible to obtain reports which segregate the building activity by urban and nonurban areas within such subdivisions.

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2in all perm it-issu ing places in the United States. The new series begins with data for January 1954, and thus provides a 6-month overlap period for which statistics from both series are available for com parison and for linking purposes.

In preparation for establishment of the perm it-issu ing universe, an intensive effort was made during 1953 and early 1954 to locate and obtain reports from all places having building perm it system s practica lly all l a r g e c ities , a large proportion of sm aller cities , and numerous unincorporated towns, t o w n s h i p s , d i s t r i c t s , and entire counties. It is believed that virtually all perm it-issu ing loca lities (over 7, 000) w ere covered'.

Among the fundamental purposes of the building perm it s y s t e m is the enforcem ent of zoning r e s t r i c t i o n s and structural requirem ents related to safety, fire prevention, and health considerations. As a necessary step in enforcem ent, the builder or owner of a proposed structure is required to obtain a perm it to build. The perm it describes the proposed construction and its estim ated cost at the time of application; the detail required varies among loca lities . This inform ation is co llected from the building perm it o fficia ls by the Bureau on a questionnaire form (BLS 404) which is m ailed to them each month.

In addition to the building perm it data reported by building o ffic ia ls , the Bureau*s series includes the amount of construction c o n t r a c t s a w a r d e d for Federal projects and for public housing (F ederal, State, and local) in p e rm it - issuing p laces. Likewise, p ro jects under various F e d e r a l a i d program s (e. g. , schools and hospitals) are included when it has been determined by correspondence that the building officia l did not cover them in his r e p o r t . Contract awards inform ation for p ro jects financed wholly or partially with Federal funds is re ported to the Bureau d i r e c t l y by the F e d e r a l agencies responsible for the construction; and for public housing, by the agency administering the particular program .

The s e r i e s conceptually does not include the costs of (1) demolishing or m o v i n g building s , (2) nonbuilding con - struction( streets and highways, pipelines, water and sewer system s, and the like), or (3) land, l a n d d e v e l o p m e n t , and architectural and engineering fe e s .3

LIMITATIONS OF BUILDING PERMIT DATA

Building perm it data are liable to the same defects as any other data co llected by m ail. That is , they are affected by e rro rs in response, problem s of om issions, and late or intermittent reporting.

T h e a c c u r a c y o f b u i l d i n g perm it response has never been determined conclusively. However, response e rro rs are overcom e as much as possible by careful e d i t i n g and frequent c o rre spondence with perm it o ffic ia ls . Furtherm ore, reporters for all of the large, active building areas have becom e thoroughly fam iliar with the form and uses of the Bureau s questionnaires during the many years they have b e e n submitting inform ation. For areas of low building activity, or p laces where reporting has been consistently inadequate, an abbreviated questionnaire (BLS 404B) was used until July 1957,4 as an aid in preventing response e rro rs . This short questionnaire r e l i e v e s the perm it o f f i c e r of the effort of classifying nonresidential buildings according to type. Omissions^ and late and intermittent reporting are t a k e n care of r o u t i n e l y by multiple requests for the data, satisfactory estimating techniques, and regular revisions.

To obtain a definitive answer to the question of how w ell building permit records re flect the amount of building that actually takes place would re quire an intensive field survey in sample areas. Such a survey should take into account what proportion of building is done illegally , without a perm it, and how

^ Construction on farms is included to the extent that farm buildings are covered by permit systems. By and large, however, the series relates to nonfarm building construction.

4 In July 1957, the Bureau s regular questionnaire form (BLS 404) was simplified and use of the additional questionnaire was discontinued.


3much is never begun even though a permit was obtained. However; from the re sults of small pilot studies made in re cent years, there is an indication that the perm it record is a reliable source for new building activity, but is l i k e l y to understate the volume of additions and alterations to buildings, because alteration work frequently may proceed without drawing the attention of the cruising inspector, while new building construction is obvious.

To the extent that various kinds of new b u i l d i n g s are covered by perm it system s, it a p p e a r s that virtually all privately owned structures are reported. However, many places do not r e q u i r e p e r m i t s for publicly owned buildings, mainly because inspection is under the j u r i s d i c t i o n of either another l o c a l agency, or a county, State, or Federal agency. In some p laces, buildings sponsored by the city or county governments require a loca l perm it, but State buildings are exempt.

From p e r i o d i c field s t u d i e s in sample loca lities , it has been determined that for new housing, at least, the proportion of dwellings for which perm its were taken out but never used (the "lap se1* rate) has been negligible in recent years 1 percent or less since 1951. Even though no com parable surveys have been made for n o n r e s i d e n t i a l building, it seem s likely that the lapse rate would be very low for this c a t e g o r y also, except, perhaps, when econom ic conditions are extrem ely unusual. One reason for this conclusion is that perm it fees ordinarily are based on construction cost, and therefore it would often be quite expensive to forfe it the perm it, especially in the case of large pro jects . Customarily, the perm it is obtained after the contract is awarded and work is fa irly certain to get underway.

In an attempt to im prove the cov er age of State and loca l public construction, the Bureau1 s questionnaire i n c l u d e s a r e q u e s t that o f f i c i a l s report public buildings even though they issue no permits for t h e m . Compliance with this request is good, but not com plete. A lso,

as mentioned ea rlier , all Federal and federally aided buildings are added into the building perm it data.

Various s t u d i e s have established the fact that perm it valuation u s u a l l y understates a c t u a l construction cost. This is particularly true for places where special perm its are required for service facilities or equipment essential to the g e n e r a l use of the buildingplumbing, heating, air conditioning, e l e v a t o r s , e lectrica l work, e tc ., or built-in production equipment in industrial buildings. The costs of such facilities and equipment may be excluded from construction cost in the general perm it because they are included in special perm its.

Perm it valuation is m ore n e a r l y com parable with construction cost in a s m a l l number of c i t i e s in which the building com m issioner review s and may ask for revisions, in the costs reported; a few cities demand that the owner state the actual cost of the building after com pletion. Obviously, these d ifferences in valuation practice tend, in some cases , to distort intercity com parisons. M oreover, data for New York City are not strictly com parable with those for other perm it-issu ing p laces, since the form er are based on i n s p e c t i o n records and represent work actually started. Building volume is probably understated m ore for New York than for other cities because of delayed reports from building inspectors.

Since precise inform ation is lacking regarding the extent of the understatement of costs for serv ice f a c i l i t i e s , equipment, and the like, as w ell as the extent to which builders* overhead and profit are included in the estim ates, no adjustments are made in the building perm it data to reflect the fact that p ermit valuations generally understate the actual cost of construction. Nor are the data adjusted for lapsed perm its or the lag between perm it issuance or contract- award dates and start of construction. Therefore, they should not be considered as representing the total value of building construction authorized by perm its, or the volume of building construction started.


4 Part A . C om p arison o f N e w a n d S u p p la n ted Series

The new series on building perm it activity, like the supplanted urban authorized ser ies , provides inform ation on new building construction, as well as additions, a l t e r a t i o n s , and repair work. Nonresidential building is shown by detailed type of building, and dwelling units are presented by t y p e of s t r u c t u r e . Statistics by State also are continued in the new series.

U r b a n data for 9 individual geographic divisions w ere r e p l a c e d with b u i l d i n g p e r m i t inform ation for the 4 broad Census regions ( N o r t h e a s t , North Central, South, and W est), and for m etropolitan-nonm etropolitan l o c a t i o n . Statistics for the total m etropolitan area of the country represent the 168 Standard M etropolitan Areas defined in the 1950 Census. Building construction located outside these areas is c l a s s i f i e d as nonmetropolitan.

In the new ser ies , estim ates of total building activity fo r a number of individual m etropolitan areas are p r e s e n t e d , showing the amount inside and outside the central cities . Data for these individual areas (which were selected from those for which building perm it coverage is com plete or virtually com plete) include an estimate for non-perm it-issu ing places in each area.

DIFFERENCES IN COVERAGE

Comparison of the Universes

The old ser ies , as mentioned above, covered all places defined as urban in the 1940 Census, i. e ., all incorporated places of 2 ,500 or m ore population plus a sm all number of unincorporated areas which were c lassified as urban by special rule. Some of the sm aller places were not covered by perm it system s. However, the series included estim ates of their building volum e, based on activity r e p o r t e d for sim ilar places which did require building perm its. Despite this rather lim ited coverage, the urban series p ossessed the m erit of r e l a t i n g to a standardized universe for which a wealth of statistics from Census sources were

readily available for use in interpreting the building construction data.

The new series , which applies to all p laces that require building perm its, covers considerably m ore territory than the old urban series. However, not all changes in coverage from the old to the new series were in a positive direction, b e c a u s e the non -perm it-is suing places estimated for in the urban series were not included in the perm it activity series.

Nationwide, these losses in coverage were m ore than compensated for by gains in the following types of p laces: ( l ) incorporated perm it-issu ing loca lities that were too sm all in 1940 to be classified as urban; (2) places that were incorporated after the 1940 Census; and (3) unincorporated perm it-issu ing p laces, such as t o w n s , townships, d i s t r i c t s , and counties. L osses and additions to the universe were not distributed uniformly throughout the country; in some States, the number of p laces covered was increased substantially, while in others, the net gain was slight, and in a few, t h e r e was e v e n a net l o s s . T h e s e changes, which are m ore meaningful in term s of shifts in population coverage, w ill be discussed at greater length in the following section.

Because of its expanded coverage, the new series provides the first detailed inform ation on a current basis about the geographic distribution of n e w building construction, by m etropolitan area, State, and region. It gives quantitative in formation a b o u t the central city-suburban d i s p e r s i o n of building activity within m etropolitan areas, and some m easure o f trends in land use.

Comparison of Population Coverage

In term s of population, the cov erage of the new perm it a c t i v i t y series is significantly greater (16 percent) than that of the s u p p l a n t e d urban series. Many of the places added to the universe of the perm it activity series were rapidly g r o w i n g unincorporated areas in m etropolitan counties that received the spillover of population from the central


5cities . Examples of these places are the unincorporated p o r t i o n s of Prince G eorges and Montgomery Counties, Md., a n d Fairfax County, Va (W ashington,D. Co, m etropolitan area); Baltim ore and Anne Arundel Counties, Md. ( Baltim ore area); Dade County, Fla. (Miami area); C o o k , DuPage, Kane, Lake, and Will Counties, 111. (Chicago area ); and Los Angeles and Orange Counties, Calif. (Los Angeles area).

In addition, many of the incorporated villages and towns covered by the new s e r i e s but excluded from the old series because they were too sm all to be c lassified as urban in 1940, also were fast growing p laces. They contributed substantially to the g r e a t e r population coverage of the perm it activity series in both the m etropolitan and the nonm etropolitan segments of the universe.

When the 2 s e r i e s are com pared with respect to the gain between 1940 and 1950 in the population covered by their respective universes, it is evident that in all 4 broad regions of the country5 the increased coverage of the m etropolitan segment of the new series was due in part to the addition of places with a cce lerated population g r o w t h (table A - 1). The same situation is apparent also in all regions of the nonmetropolitan univ erse , except in the South where there were located r e l a t i v e l y m ore o f the non-perm it-issu ing places (mainly small m unicipalities) previously estimated for in the urban series , but dropped from the perm it activity series.

The e x p a n d e d coverage of th e building perm it universe includes lo ca lities containing about 79 percent of the total- nonfarm population, 94 percent of the m etropolitan nonfarm population, and 53 percent of the nonfarm population of nonmetropolitan p l a c e s , based on 1950 Census data. For the supplanted urban series , c o m p a r a b l e figures were 68 p e r c e n t , 81 percent, and 46 percent, respectively (table A -2 ).

Despite its considerably increased coverage, the new perm it activity series

5 Composition of the regions is shown in chart 7,p. 19.

still is rather lim ited as to the extent of nonfarm p o p u l a t i o n covered in the nonmetropolitan universe. N evertheless, this is actually less restrictive than it seem s, b e c a u s e a B u r e a u study of building construction data revealed that p l a c e s having building perm it systems are g e n e r a l l y m ore a c t i v e than the others. Consequently, building activity in nonmetropolitan perm it-issu ing places represents a larger proportion of t o t a l nonmetropolitan b u i l d i n g construction than is apparent from these population statistics alone. Thus, if inform ation on new building construction w ere available for every locality in the country, perm it issuing or otherw ise, it would probably show only a s l i g h t l y sm aller ratio of m e t r o p o l i t a n a r e a building than is evident from the perm it activity ser ies , and a little larger proportion of building in nonmetropolitan places.

In the case of the metropolitan universe of the new series , the proportion of 1950 n o n f a r m population covered is above the national average in all regions except the South. Even there, w h e r e building perm it system s are less com mon than e l s e w h e r e , the new series represents 89 percent of the n o n f a r m p o p u l a t i o n in m etropolitan areas. In nonmetropolitan areas, the ratio of nonfarm population c o v e r e d is below the figure for the country as a whole, both in the South and in the Northeast, the respective proportions being 48 percent and 51 percent.

The 16-percent increase from the old to the new series in the total amount of population covered was shared by all States except Iowa, M ississippi, Arkansas, and V e r m o n t , where there were decreases of varying magnitude, and the D istrict o f Columbia, where there was no change, of cou rse , since it consists of one political subdivision included under a single perm it system . Both num erica lly and percentagew ise, the increase was greater in the West than in any of the other broad regions. N evertheless, the West c o n t i n u e d to account for the sm allest share of the total population in the universe (tables A -2 and A -3).


6DIFFERENCES IN BUILDING VOLUME

Comparing volume for the first 6 months of 1954 (the only period for which data are available from both the old and the new series), valuations of building construction r e p o r t e d for all perm itissuing p l a c e s totaled $70 9 billion , as against $5. 1 billion for urban p laces a difference of 56 percent (table A -4 ).

This re flects the fact that m ost of the p l a c e s added to the s e r i e s w ere building quite actively to take care of their rapidly increasing population. For exam ple, roughly 90 percent (or nearly $4 .6 billion) of the building volume of the old s e r i e s was in perm it-issu ing urban places c o v e r e d in both series . That means the places brought into the new series (accounting for only 15 p ercent of the nonfarm population covered) contributed about $3. 3 billion, or a little m ore than 40 percent of the total building- perm it volum e.

To illustrate further, the per capita building rate for January-June 1954 (i .e ., the amount of perm it v a l u a t i o n s per p e r s o n in the covered loca lities) was higher, in g e n e r a l , for the perm it activity series than for the urban authorized series (table A -5 and chart 1). By and large , this results from the addition of numerous less densely populated, but very active, suburban areas surrounding the larger cities .

Variations by Type of Building

Since housing is the type of building m ost c lose ly related to population m ovem ents, and so many of the places added to the new series were loca lities experiencing p o p u l a t i o n increases l a r g e l y because of inm igration, it is not surprising that the higher level of the perm it activity series was due chiefly to gains in residential building. Valuations for new residential building during the first half of 1954 cam e to $4. 7 b illion for all perm it-issu ing p laces, or 71 p e r c e n t m ore than the $2. 8 billion total fo r the urban series .

Variations among the several types o f residential structures re flect the influence of suburban b u i l d i n g on the new

estim ates. Increases between the two s e r i e s w ere much greater for 1- and 2-fam ily houses types m ore likely to be built in outlying areas where land costs and other factors are m ore favorable than they were for multifam ily structures (table A -6). M oreover, public housing, which in 1954 was located alm ost exclusively in the larger c ities , was only a little h i g h e r in the new s e r i e s , and alm ost half of this increase was due to the addition of a single pro ject built by the City of M iam i, but located in Dade County, Fla.

The c a t e g o r y showing the l e a s t amount of gain from the rebasing of the estim ates was additions, alterations, and repairs, which i n c r e a s e d 21 percent, from $0 .6 billion to $ 0 .7 billion . It is probable that alteration and repair work com prises a larger proportion of total construction volume in long-established cities having an inventory of structures of relatively greater age than in newer, fast-grow ing p laces , and virtually all of the older c i t i e s were a l r e a d y in the urban estim ates.

Valuations for n e w nonresidential building totaled nearly $2 .5 billion in all perm it p laces, as against $1 . 7 billion in u r b a n p laces a 43 percent difference. The greatest relative in crease , 85 p ercent, was in public buildings (fire and police stations, courthouses, city halls, a rm ories, ja ils , and other buildings used by Federal, State, or loca l governm ents), and is attributable mainly to F e d e r a l construction in unincorporated areas, for exam ple, atomic energy and other industrial fa cilities , w arehouses, and m ilitary barracks. Largest dollar gains w ere in educational and industrial building, re flecting not only greater n u m b e r s o f buildings but also m ore costly structures, evident from com parison of the average perm it v a l u a t i o n per building. (See tables A -4 and A -7 . ) School and industrial construction are among those types of building which have shown the m ost rapid suburban growth in recent years.

Although virtually all of the other types o f buildings also showed significant gains in num bers, they had lower average valuations in the new series . E x c e p t for industrial plants, the kinds of stru c-


7Chart 1

Per Capita Building Rates of the Building Permit Activityand the Urban Authorized Series, by State

(Based on 1950 population, and valuation of building construction. January-June 1954)

P e r c a p i t a v a l u a t i o n , p e r m i t a c t i v i t y s e r i e s ___________________ _________ _____________________________ _________ _ _ _ _ _160.

150 -

140

130

120

110

100

90

80

70

60

50

40 h

30

20

10

' FLA.#

ARlZ.i

CALIF.#

N.M.#ICOLO.

DEL.#

MICH.#

MD.# #KY. MINN.#CONN#

VA.#KANS.#

wash.

GA. WIS.

TEX.

UTAH# --------- #ARK.OHIO#

N.J.# LA # 0REG- ILL.# #MO.

TENN.# ,ND# #WYO. #MONT. OKLA.i

PA.#N.Y.#

IOWA##NEBR. S.C . # . #S.D.

N.C.

N.D.

MASS.#ALA M MISSIDAHO

W.VA.

ME.i

VT.

10 20-L J.

30 40 50 60 70 80 90 100 110 120 130 140P e r c a p i t a v a l u a t i o n , u r b a n s e r i e s

Nevada falls outside the scale on both axes.


8tures built in the fringe areas to serve the new and e x p a n d i n g com m unities shopping and recreational f a c i l i t i e s , churches, institutional buildings, and the like characteristica lly are sm aller and less expensive than those in central cities where the relatively scarce land is used m ore intensively This relationship of building types and costs to location and land usage w ill be developed m ore fully in part B of this report.

State and Regional Variations

D ifferences between the two series in the levels of some of the State estimates are much m ore pronounced than those for the Nation as a whole (table A - 8). In Maryland, for example, the expansion of the estimating base alm ost quadrupled the total perm it valuation figure. The addition of the highly urbanized counties in the Baltim ore and Washington m etropolitan areas accounted for m ost of this increase. Sim ilarly, the Delaware data profited by the addition of the northern portion of New Castle County, and statistics for Arizona, by the inclusion of M aricopa and Pim a Counties In both of these States, building perm it volume was w ell over three tim es greater in the new series than in the old

States generally experienced gains or losses in building volume that were in the same direction , if not in the same degree, as changes in population cov erage. However, Arkansas, Iowa, M ississippi, and Verm ont all showed population lo sses , as mentioned ea r lie r , yet in only the latter two was there less b u i l d i n g construction in the new series .

In s e v e r a l States Montana, Nebraska, North Carolina, North Dakota, and South Dakota there w ere gains both in population c o v e r a g e and in building volum e, but the per capita building rate in those States was low er for the perm it activity series than for the urban estim ates. In addition, although the building rate was low er in the new s e r i e s for M ississippi also, it was higher for V ermont (See tables A -2 , A -5 , and A -8 , and chart 1 .)

Thus, it is apparent that in V ermont, the p laces remaining in the series

were m ore active in b u i l d i n g than the urban places no longer included in the estim ates despite the fact that the latter were m ore p o p u l o u s . In M ississippi, the incorporated places added in rebasing the estim ates were both sm aller and less active than the urban places that were no longer covered . C onversely, in Arkansas, places added were m ore active and larger than those discontinued. This was true also in Iowa, but only with respect to the nonmetropolitan universe. The additional coverage in Montana, N ebraska, North Carolina, North Dakota, and South Dakota was com prised mainly of numerous sm all villages and towns where b u i l d i n g activity was at a r e l a t i v e standstill.

Among the four broad regions, the W est reg istered the largest increases in total building activity, both percentagewise and in actual dollar volume (table A -9 ). On the other hand, using the per capita building rate as the yardstick for com parison, the Northeast s h o w e d the greatest, and the West the least, rela tive gain over the old series . Inasmuch as the amount of b u i l d i n g activity per person in the large urban centers already i n c l u d e d in the estim ates was much greater in the West where c i t i e s are newer and less densely settled than in the Northeast, the addition to the series of many com paratively new, rapidly expanding places provided less of a contrast in the form er region.

In both series , the North Central States led the other three regions with respect to the total valuation of perm its issued during the first half of 1954, and the South, W est, and Northeast followed, in that order. The North Central region also accounted for the largest share of new residential and new nonresidential building valuations in both ser ies . This ranking is reflected in the much higher per capita b u i l d i n g rate in the North Central, in contrast with the Northeast, which contained the largest amount of the population covered by each series .

New residential b u i l d i n g was the only category for which the rebasing of the estim ates resulted in a shift among the regions in their order of im portance. The W est, r a n k i n g third in the urban


9(.hart 2.

Indexes of Permit Valuations of the Building Permit Activity Series and the Urban Authorized Series

United States Total by Type of Building Construction. January-June 1954J A N U A R Y - J U N E 1 9 5 4 = 1 0 0

I n d e x

1954

I n d e x


10

series, with respect to dollar v o l u m e , advanced ahead of the South into second place in the perm it activity series . In term s of numbers of dwelling units, the West again rose from t h i r d to second place, but in this instance, it replaced the North Central States. The South held first place in number o f dwelling units, and the Northeast ranked fourth, in both the old and new series (table A -10)o

These shifts re flect regional d ifferences in structural characteristics and cost of housing. For exam ple, the West gained m ore dwelling units than the North Central States, yet the latter continued to account for the largest share of new residential perm it valuations because the housing constructed in the North is m ore expensive. Among other features, this housing tends to have b a s e m e n t s and central heating system s m ore generally than that in the rest of the c o u n t r y . S i m i l a r l y , although the West did not overtake the South with respect to numbers of units, it did so in term s of dollar volume because a larger proportion of w estern houses contained such "ex tra s11 as firep laces , garages or carports , and additional bathroom s, and thus are m ore costly than houses built in the South. In fact, Bureau surveys reveal that the price o f new 'housing is consistently lower in the South than in the other regions. 6

The West was the only region in which there was a sm all decrease from the urban to the perm it activity series in the average perm it valuation for new dwelling units authorized. This is partly a reflection , with the expansion of the ser ies , of larger gains in the West than in the other regions in the number of dwelling units in multifam ily structures reported (2-fam ily dwellings and apartments) which, as a rule, are less expensive than 1-fam ily houses. The degree by which other f a c t o r s variations in size of houses, d ifferences between lo calities in m aterials and l a b o r costs , and the like affected the average valuation figures is not so readily apparent.

For detailed information on national trends and regional differences in structural characteristics and prices of housing, see New Housing and Its Materials, 1940-56, U. S. Department of Labor, BLS Bull. 1231.

COMPARISON OF MONTHLY TRENDS

From a com parison of the data for the first half of 1954, it appears that the m o n t h l y trend of total building perm it valuations was changed very little by the expansion o f the series (chart 2)c P rob ably the chief reason is that the volume added to the series as a result o f rebasing the estim ates was distributed fairly w ell geographically* T h e r e f o r e , the seasonal trend was not greatly affected, as it w o u l d have been if m ost of the additional volume had been either in the North where f l u c t u a t i o n s in building activity from the winter low to the summ er peak are relatively extrem e, or in the South where seasonal m ovements are generally less pronounced.

For the country as a whole, new n o n r e s i d e n t i a l building was the only m ajor category to show any appreciable difference in the trend of the two series . This follow s as a matter of cou rse , since volume in a single month f l u e t*u a t e s m arkedly with the inclusion or exclusion of large p ro jects , and these are m ore prevalent in the nonre sidential building category than in the others. Among the many kinds o f nonre sidential buildings, the greatest im pact was m a d e by the addition to the series of those in the fo llowing three g r o u p s : (1) factories and assem bly plants in outlying a r e a s ; (2) publicly owned pro jects , such as sewage treatment plants, weather stations, and National Guard a r m o r i e s , as w ell as testing laboratories, flight-control buildings, barracks, w a r e h o u s e s , shops, maintenance hangars, and other installations at m ilitary bases; and (3) r e c re ational facilities such as country clubs and buildings a s s o c i a t e d with sports centers and resort p laces.

Even on a regional basis , w h i c h accentuates the effect o f large pro jects and the monthly fluctuations of data for individual loca lities , there was considerable sim ilarity in the trend of the two series with respect to the valuation of all building construction, especia lly in the North (chart 3). The slightly greater divergence in the South and the West may be due simply to the fact that coverage was expanded there relatively m ore than in the other regions, particularly in the


11

Chart 3.

Indexes of Permit Valuations of the Building Permit Activity Series and the Urban Authorized Series

By Type of Building Construction and Region, January-June 1954I n d e x j a n u a r y - j u n e 19 5 4 = 10 0 I n d e x

1160


1 2

nonmetropolitan places and fringe areas m ost likely to be the sites of industrial plants and m ilitary installations.

Of c o u r s e , for individual State s , there frequently were substantial d ifferences in the m o n t h - t o -m o n t h trends (table A -8 ). To illustrate, in the case o f residential construction, for w h i c h the trend n a t i o n a l l y and in the North Central and Southern regions was nearly identical for both ser ies , there was a sharp M arch-A pril r ise in the perm it activity series o f 4 western States, in contrast to a decline or leveling off in the urban series . Largely responsible for the April gain in the new series was the high volume reported for that month by several county system s not covered in the old se r ie s M aricopa County, Ariz; Los Angeles and Kern Counties, C a lif.; M u l t n o m a h County, Oreg. ; and King County, Wash.

LINKING THE SERIES

After thorough analysis of the data for the o v e r l a p period , January-June 1954, it was determ ined that the n ew building perm it activity series could be linked to the old urban authorized series with relative ease, and yet produce satisfactory m easures of trend, for national totals and for each of the 3 m ajor categor ies new residential b u i l d i n g ; new nonresidential b u i l d i n g ; and additions, alterations, and repa irs. This is not to imply that it would not be possib le , p rovided extrem e care were exercised , to link the series on a sm aller geographic b asis by region or by State but only that the Bureau does not have sufficient resou rces to devote to the task of exploiting the enormous volume of detailed inform ation that would yield the factors to adjust for the influences of shifting coverage and very large p ro jects .

The index numbers shown in table A - 11 for the years 1954-56 w ere com puted by using an imputed 1947-49 base which was derived by applying a ratio,

based on the relationship of perm it volume fo r the new series to that for the old series during the overlap period , to the base aggregates used for the urban authorized series . For exam ple, to obtain the imputed base o f $6 ,061 ,848 ,000 for the residential building component, the urban s e r i e s base a g g r e g a t e of $3,536,028,000 (average perm it valuations for the years 1947-49) was m ultiplied by 1.71431 (the ratio o f new r e s i d e n t i a l building valuations in the new series to those in the old series for the firs t half o f 1954). Then, to obtain the index number for 1954 (164. 8), the $9,991,800,000 of new r e s i d e n t i a l building reported during the year for all perm it-issu ing places (see table B - l , p. 43) was divided by the imputed base figure. 7

For the b e n e f i t o f users o f the building perm it a c t i v i t y data who may wish to compute indexes in addition to those presented in table A - 11 monthly indexes for 1954-56, annual indexes for succeeding years as new figures becom e available, or indexes of the number of new dwelling units the imputed base aggregates for the perm it activity series are given below:

Imputed 1947-49 baseItem Monthly Annual

Valuation (in thousands of dollars):All building construction ........ 857,926 10,295,115

New residential building....... 505,154 6,061,848New nonresidential building.... 257,451 3,089,413Additions, alterations,

and repairs.... 7 ................. 95, 321 1,143, 854Number of new dwelling units....... 77, 926 935,110

H istorica l statistics for combining with data in this bulletin may be found in the publications listed on pages 111-113.

7 January-June 1954 data for all permit-issuing places presented in part A tables are not identical with those appearing in part B tables because the latter include revisions not incorporated in the former. Preliminary figures were used in part A so as not to distort (or widen) the differences between the old and new series, since it was not feasible to revise the urban series for that period.


Part B. B u ild in g Permit A ctiv ity , 1 9 5 4 -5 6 13

B u i l d i n g construction spurted to record levels in 1955, both contributing to and reflecting the dram atic econom ic expansion of that y e a r . P erm it valuations of building construction rose 15 percent to nearly $19 billion. In 1956, however, total building volume was off slightly (to $18 .8 b illion ), owing alm ost entirely to a drop in new r e s i d e n t i a l building (chart 4 and table B - l ) .

Building activity was buoyed up in 1955 not only by the stimulus of general econom ic expansion, but also by a number of continuing influences which had maintained construction v o l u m e at extraordinary levels even during the b rie f recession of 1953-54. Among these influences was a huge backlog of need for

community buildings, s u c h as schools, churches, and hospitals, and for shopping and other b u s i n e s s structures to s e r v e numerous new housing developments and continually growing suburbs. At the same tim e, demand for new housing, which continued s t r o n g , was bolstered, in part, by rising incom es, a steadily increasing and highly m o b i l e population, stability in consum er prices over the previous several years , and accelerated rehabilitation of urban centers.

A m ajority of the influences underlying high construction volume were still operative in 1956. However, important contrasting fo rces had com e into play, the m ost s i g n i f i c a n t of which was an unprecedented d e m a n d for f u n d s that o u t p a c e d the readily available supply.

Unusual pressures w ere placed on the money market in 1956 because of the many parts of the e c o n o m y that w ere operating at or near peak leve ls . State and loca l governments were seeking funds to finance a record volume of construction approved in the 1955 bond e l e c t i o n s . Businesses, in addition to using accumulated e a r n i n g s , found it n ecessary to borrow heavily in order to increase plant capacity and to have sufficient working c a p i t a l to support new high levels of industrial output and sa les, rising ord ers , and inventories. C o n s u m e r c r e d i t reached new heights, and interest rates rose to the highest level in m ore than 20 years.

TRENDS BY TYPE OF BUILDING

New housing was affected m ost by the overall money tightness in 1956, as the heavy drafts on capital by other sectors of the econom y diverted a substantial part of the cred it supply from home l o a n s , especia lly Government assisted m ortgages, because of t h e i r relatively low yield. Valuations of perm its issued for new residential building, at $10.3 b illion , w ere o ff 12 percent from the record volume of 1955. On the other hand, p ermit values for new nonresidential building and for additions, alterations, and repairs r o s e to alltime highs $ 6 .7 billion and $1 . 8 billion , respectively (table B - l ) .


14

Residential Building

The housing boom of 1955 had its inception in the closing months of 1954. From N o v e m b e r 1954 through March 1955, perm its were issued for n e a r l y440,000 new dwelling units the largest winter volume in our h istory.

Because of the great influence of new home building on econom ic conditions, this unusually high level of winter housing activity, together with the state of the housing m arket generally, becam e matters of concern by the spring of 1955. Indications w ere that an inflationary spiral was developing, and there ^was considerable apprehension a b o u t overbuilding. Rising or f a l l i n g trends in residential building affect not only producers, handlers and suppliers of building m aterials and housefurnishings, con tractors, a n d construction w orkers, among others, but also play a vital role in the ebb and flow o f m oney, since housebuilding is a m ajor outlet for savings and investment. Reverses or acceleration in home building, and in the real estate market, can quickly initiate or greatly aggravate a deflationary or inflationary trend in the general econom y.

New housing activity continued at record levels through the early summer of 1955. In the m eantime, business, industry, and consum ers, encouraged by good business conditions, began thronging to the lending institutions to obtain financing for new ventures. To hold credit in bounds, the Federal R eserve Board i n c r e a s e d the rediscount rate several tim es during the year. A series of other anti-inflationary m easures also w ere put into effect, i n c l u d i n g one that raised downpayment requirem ents and shortened the am ortization period for FH A-insured and V A -g ua r a n t e e d m ortgages, as of July 30.8

But w ell before the July regulations w ere issued, V A - and FKLA-underwritten home m ortgages had lost some of their

For summaries of major legislative and regulatory actions affecting housing and construction, see the monthly issues of Construction Review, published jointly by the U. S. Department of Labor and the U. S. Department of Commerce. See also Construction in 1955 (in Construction Review, January 1956, pp. 4-11).

attractiveness for investors, because of their fixed interest rates (4. 5 percent for YA-guaranteed m ortgages and 4.5 percent plus 0. 5 percent insurance prem ium for the FH A-insured). The m ortgages with the m ost liberal term s VA-guaranteed, no-downpayment loans, with 30-year maturity had becom e difficult to f i n a n c e early in the year. By A pril, there was a sharp downturn in applications for FHA m o r t g a g e insurance and appraisal re quests to the Veterans Administration. Discounting of VA and FHA m ortgages, which was relatively rare late in 1954, becam e m ore prevalent.

Perm it activity was maintained at a relatively high level through the rest of the sum m er, chiefly because of the large n u m b e r o f units (both G o v e r n m e n t assisted and conventionally financed) for which com m itm ents had been made under the easy cred it conditions of 1954 and the beginning of 1955. By fall, perm it vo lume began the decline, which, except for seasonal movements and the usual fluctuations from month to month, continued throughout m ost of 1956. The number of new d w e l l i n g units for which perm its w ere issued totaled 1 ,148,500 in 1955, c o m p a r e d with 1,074,500 in 1954 and 942,600 in 1956. These units were valued at $9.86 b i l l i o n in 1954, $11.53 billion in 1955, and $10.14 b i l l i o n in 1956. (See chart 5 and tables B-2 to B -7 .)9

Since virtually all of the 1956 decline in new residential construction was in h o u s i n g bought with FHA- or V A - backed loans, a number of steps w ere taken during the year by the Federal Government in an effort to increase the flow o f mortgage funds, particularly for low - and m oderate-cost housing.10 The latest in the series , effective in early Decem ber, lifted the interest rate ceiling for FH A-insured m ortgages from 4. 5 percent to 5 percent. None of these a c t i o n s ,

^ Monthly data presented in part B tables may not add to annual totals because of (a) rounding, and (b) late revisions incorporated in the cumulative figures but excluded from die. monthly statistics. In most instances, these differences are minor. Also because of rounding and late revisions, State data may not equal national totals.

10 See Construction in 1956 (in Construction Review, January 1957, pp. 4-14).


15

Chart 5

N u m b er o f D w e llin g Units fo r W h ich B u ild in g Permits W e re Issued1954-56

however, had much effect on housing activity in 1956. In addition, the interest r a t e on VA-guaranteed m ortgages re mained at 4.5 percent, the statutory lim it.

Term s of home mortgage lending, and, in turn, the kind of purchasers who could qualify for loans and the type of housing being built, showed the effects of the increasingly stringent housing credit

supply in 1956. Downpayment requirements rose , the perm issib le am ortization period was shortened by l e n d e r s , and custom ers for credit were m ore carefully screened than they had been the year befo re . Consequently, a larger proportion o f those who could m eet the term s for new houses were in higher incom e groups* and this increased the demand for larger and m ore costly hom es.


16

Chart 6.

Perm it V a lu a t io n s fo r S e le c te d T y p es o f N o n re s id e n tia l B u ild in g1954-56

Millions of dollars Millions of dollars

Nationwide surveys of single-fam ily houses started early in 1955 and 1956 re vealed the general trend toward higher price houses with m ore quality fea tu res .11 P r ices rose in all regions of the country, and the median selling price of all new houses begun during January-M arch was 6 p e r c e n t higher in 1956 than a year e a r l i e r . The 1956 houses were m ore spacious than in 1955, half had m ore than one b a t h r o o m , and the m ajority had garages or carports.

11 See New Housing and Its Materials, 1940-56, Bureau of Labor Statistics, BLS Bull. 1231.

The average valuation of 1-fam ily houses for which p e r m i t s w ere issued also showed the influence o f rising p rices and la rger, m ore fully equipped hom es. Between 1954 and 1955, in both m etropolitan and nonmetropolitan areas, average p e r m i t valuations of single-fam ily hom es ro se , roughly, $900. However, between 1955 and 1956, the average increased a b o u t $1,000 in m etropolitan areas, com pared with about $700 in nonm etropolitan places (table B -8). These averages re flect the s h a r p curtailment in 1956 of FHA- and V A -assisted housing,


17

which tends to be built in volume in the suburban areas of cities supporting large housing market So As a result, conventionally financed homes u s u a l l y m ore expensive and elaborate than Government aided h o u s i n g com prised a relatively greater share of the residential building in m etropolitan a r e a s in 1956 than in 1955* In nonmetropolitan p l a c e s , the1955-56 rise in average valuations was probably due m ore to increased construction costs than to a shift in the kinds of houses being builto

Public housing activity in perm itissuing p laces advanced in 1956, following a dip in the preceding year, but s t i l l accounted for only a small fraction (about 2 percent) of the year*s total housing volume. The gain was chiefly in State and loca l public housing program s. However, federally owned housing at m ilitary bases on pro jects p o p u l a r l y re ferred to as Capehart housing (authorized in the Housing Amendments of 1955), also showed an increase.

Monresidential Building

All types of s t r u c t u r e s , except com m ercia l garages, contributed to the 1956 increase in new nonresidential building, with industrial facilities showing the m ost significant gain, both relatively and dollarw ise. This sharp advance in industrial building continued an uptrend that started e a r l y in 1955 (see chart 6 and table B -2), and reflected a n u m b e r of underlying influences. Among them were sustained strong demand fo r virtually all types of products; the need for m odernizing and e x p a n d i n g plant facilities to achieve greater efficiency and higher output to 'm ee t the demand; high earnings; t e c h n o l o g i c a l im provem ents; and the requirem ents for new plant and equipment, generated by expanded research program s which developed new products and low er cost p ro cesses , and im proved e x i s t i n g products for c o m p e t i t i v e m arkets.

Both durable and nondurable goods industries shared in the industrial expansion of 1955-56. C o n c e r n s producing a u t o m o b i l e s , s t e e l , and machinery accounted for m ost of the i n c r e a s e d

s p e n d i n g for new plant and equipment among the durable goods m anufacturers, while plant expansion in the nondurable goods group was dominated by firm s in chem ica ls , petroleum , and paper production. 12 Part o f the gain in nondurable goods manufacturing facilities was due to increased use of plastics and synthetic fibers.

O ffice buildings and schools were the next m ost important contributors to the 1956 advance in perm it valuations for new nonresidential building. Construction of new office buildings took a sharp upturn in 1953 and showed substantial gains in each succeeding year, as f ir s t -c la ss office space continued in great demand because of the huge volume of business and the increased dispersal of business establishm ents. Furtherm ore, in many central c ities , office buildings w ere undergoing extensive modernization.

Perm it valuations for new s c h o o l construction r o s e throughout the post- W orld War II period , except for a dip in 1951, but the rate of increase for educational buildings was s m a l l e r in recent years than that for several other kinds o f buildings industrial plants, o ffices , p u b l i c utilities buildings, for example. On the other hand, the dollar volume of perm its issued in 1954-56 was greater for school construction than for any other type of nonresidential building. This sustained high volume of educational building reflects the efforts of loca lities to keep pace with the requirem ents of larger enrollm ents (particularly in elem entary and s e c o n d a r y grades), obsolescen ce , shifting school population, and the need f o r n e w facilities necessitated by re organization of school d istricts.

Construction of churches, gasoline and service stations, and of new buildings for privately owned public utilities com panies, a d v a n c e d considerably in both 1955 and 1956. However, while perm it volume for hospitals and for public adm inistrative, or serv ice buildings also showed an increase in 1956, it was down in 1955.

12 Business Investment PlansFirst -Quarter of 1957 (in Survey of Current Business, Vol. 36, No. 12, December 1956, pp. 2-3).


18

The sm allest 1956 gain in the nonre sidential category was shown by store building, which just edged above 1955, after s h o w i n g substantial increases in each of the 3 preceding y e a r s . From January through May, the 1956 d o l l a r volume of perm its issued for new stores and other m ercantile buildings was at an all time high, but in June, it started to drop below 1955 levels. Completion of a number o f large regional shopping centers was partly responsible for the leve ling off of p e r m i t valuations for store construction in th e last h a l f of 1956.

LOCATION OF BUILDING ACTIVITY

Regional and State Comparisons

The geographic d i s t r i b u t i o n of building perm it activity rem ained re la tively unchanged throughout the 1954-56 period , and was fa irly evenly d i v i d e d a m o n g the four broad Census regions (tables B -9 to B -13). In 1956, the North Central r e g i o n accounted for about 30 p e r c e n t of total building perm it valuations; the West and the South, 24 percent each; and the N o r t h e a s t , 22 percent. This distribution was roughly the same also for each of the m ajor c la sses com prising the total new residential building; new nonresidential b u i l d i n g ; and additions, a l t e r a t i o n s , and repairs.

In making regional com parisons of the level of building perm it a c t i v i t y , however, it should be kept in mind that the regions vary with respect to the p ro portion of coverage by building perm it system s, as explained in part A of this report. The ratio of the nonfarm population in perm it-issu ing p l a c e s to the total 1950 n o n f a r m population, ranged from 67 percent in the South to 88 p ercent in the West (table A -2).

Perhaps a m ore meaningful yardstick than t o t a l building valuations for making com parisons, of building activity among the r e g i o n s is the per c a p i t a building rate, that is , the amount of p ermit valuations per person in the perm itissuing loca lities . P er capita building rates based on nonfarm p o p u l a t i o n in

1956,13 as w ell as the increase in pop-ulation from 1950 to 1956, are shown in the following tabulation:

Valuation of 1956 building construction

Per capita ofPer capita of nonfarm popu

1956 nonfarm lation increase,Region population mo-56

United States ... $165 *1,375Northeast...... 115 1,625North Central ...... 170 1,450South ........... 165 1,350West............. ...... 235 1,175

The Northeast, which is the m ost densely settled of the four regions and has the greatest amount of e x i s t i n g structure, had the lowest per capita building rate in 1956. In contrast, this region experienced the least amount of population increase after 1950, com pared with the other three r e g i o n s , and consequently showed the highest building rate per unit of population i n c r e a s e . In the West, however, where the influx of population has been heaviest, but the population total is still far s m a l l e r than in any other region, the 1956 per capita rate was over twice that in the N o r t h e a s t , and the amount of building per unit of population i n c r e a s e was about 30 percent low er. The rates for the South and the North Central r e g i o n s fe ll about midway between those for the other two regions,

*3 Since the only 1956 population data available in the required geographic detail are related to total, rather than nonfarm population, it was necessary to derive 1956 nonfarm population estimates (using the provisional estimates of total population of States on July 1, 1956, shown in Current Population Reports, Series P-25, No. 148, Bureau of the Census, U. S. Department of Commerce) by assuming (1) that the farm population remained static between 1950 and 1956, and (2) that permit places accounted for the same proportion of the 1956 nonfarm population as they did of the 1950 nonfarm population (i.e., that permit places grew at about die same rate as nonpermit places). The first assumption resulted in a small understatement of die 1956 non farm figure because farm population has actually been declining in recent years. However, die national total derived by the procedure described above was only slightly (about 0.5 percent) below the national nonfarm population figures indicated by the latest Census Bureau estimates of the number of persons living on farms in April 1956. See Farm Population, Series Census-AMS (P-27), No. 24. Any error introduced by die second assumption cannot be evaluated precisely, but is probably minor.


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Chart 7.

Percentage Distribution of 1956 Building Permit Valuationsby State

Less than 0.5%0.5% and under 2.0%

2.0% and under 4.0%

4.0% and under 8.0%

8.0% and over

with the North Central slightly ahead of the South. Population increased a little faster in the South between 1950 and 1956, but total population in 1956 was greater in the North Central States*

This suggests that building volume in the northern and eastern sections of the country results chiefly from replacement demand and the requirem ents of a l a r g e population. In the southern and western parts, however, the g r e a t e r influence a p p e a r s to be a m ore rapid increase in population, caused mainly by inmigration.

California o u t s t r i p p e d all other States each year, from 1954 through 1956, with respect to the total dollar volume of

building perm its issued. (See chart 7 .) In 1956, the California total o f nearly $3.2 billion com prised 17 percent of the perm it valuation f i g u r e for the entire Nation.

The next 5 highest ranking States in1956 New York, Illinois, Ohio, Michigan, and Texas held* the same order o f im portance in the 2 preceding years , except that in 1954, Michigan was in third place instead of Illinois* Each of those States, plus 3 others Florida, New Jersey , and Pennsylvania accounted f o r between 4 percent and 8 percent of the n a t i o n a l total in 1956.

Eight of the leading States (excluding Florida) contain 14 of the 25 largest


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cities (those having a 1950 population of over 400, 000),14 which is one reason for t h e i r high building volume. New York City alone, with building construction valued at $0,5 billion in 1956, was responsible for m ore than a third of the New York State total.

Building activity is i n f l u e n c e d a great deal m ore by central cities in some States than in others (table B -14). Well over half of the 1956 total building volume in Texas was in cities having a 1950 population of 100,000 or m ore , with these cities accounting for 45 percent of the State*s new housing, and over 60 percent o f all the other building construction. In c o n t r a s t , only 7 percent of the 1956 building valuation total for New Jersey was located in cities of over 100,000 population in 1950, Chiefly because so much o f New Jersey serves as a s u b u r b a n dorm itory for huge m etropolises in the bordering States of New York and Pennsylvania, a m e r e 2 p e r c e n t of New Jersey*s h o u s i n g volume in 1956 was scheduled for its largest central c ities , com pared with about 15 percent o f the State total for other kinds of b u i l d i n g construction.

Metropolitan-Nonmetropolitan Location

Reflecting m a i n l y population and econom ic growth patterns in recent decades, the present tendency is to locate m ost building within m etropolitan areas, that is , if not within the large c i t i e s proper, at least within commuting distance. Throughout the 1954-56 period , four-fifths of the total value of building c o n s t r u c t i o n for which perm its were issued was for building within the m etropolitan s e g m e n t of the c o u n t r y , and one-fifth w a s for nonmetropolitan area activity. This ratio for m etropolitan area building is probably somewhat high because the p r o p o r t i o n of population covered by the building perm it series is greater for m etropolitan than for nonm etropolitan loca lities . (See table A -2 and discussion on page 5 .) However,

*4 These are central cities, exclusive of the suburban fringe.

even after allowance is made fo r d ifferences in coverage, it is still evident that the vast m ajority of today*s b u i l d i n g volume is in m etropolitan areas.

Although 1954-56 activity predom inated in m etropolitan areas for e v e r y kind of building c o n s t r u c t i o n , some t y p e s w ere m ore h i g h l y concentrated there than others. As might be expected, m ultifam ily housing, office buildings, and com m ercia l garages showed the greatest ratio (85 percent or m ore) of a c t i v i t y within the m etropolitan segment. Most apartments and business structures are located in these m ore urbanized segments o f the country, where the largest markets and labor force are to be found.

On the other hand, the s m a l l e s t

froportion of m etropolitan area activity about three-fifths) was r e p o r t e d for gasoline and s e r v i c e stations, and for nonhousekeeping r e s i d e n t i a l buildings ( h o t e l s , m o t e l s , and tourist cabins), which provide both the m etropolitan area and nonmetropolitan area p o p u l a t i o n s with serv ices and accom m odations when they travel. However, a significant p ro portion of perm it valuation was reported for n o n m e t r o p o l i t a n places (ranging roughly from a fourth to a third of the United States total in at least 2 out of the 3 years) for m ost other types of buildings, specifica lly amusement buildings such as theaters, halls, and auditorium s; public buildings such as fire and police s t a t i o n s , courthouses, and city halls; schools, churches; hospitals and o t h e r institutions; and public utilities buildings.

Suburbs versus Central CitiesWithin the m etropolitan s e g m e n t ,

there is a pronounced trend toward suburban15 living, and associated construction activity which is well illustrated by th e 1954-56 building perm it d a t a . In each of the 3 years, m ore than 60 p ercent of the total value of perm its issued in m etropolitan areas was for building o u t s i d e of central cities (table B -15).

15 The suburbs (or rings) are defined, for purposes of this report, as the entire portion of each Standard Metropolitan Area (SMA) outside of the political boundaries of the central city or cities of each SMA as delineated in the 1950 Census.


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Chart 8.

Percentage Distribution of 1954-56 Building Permit ValuationsBy M etrop o lita n - Nonm etropolitan and Central City - Suburban L ocation

P e r c e n t0 10 20 30 40 50 60 70 80 90 100

P e rc e n t

When m easured in term s of numbers of buildings, the suburbs a c c o u n t e d for about 70 percent of total m etropolitan area activity, i n d i c a t i n g the greater prevalence in the fringe areas than in the central cities of sm aller, less costly structures, particularly some t y p e s of nonresidential buildings and multifam ily housing16 (tables B -8 , B -16, and B-17).

Construction of private dwellings, with development of community centers to

16 For a more extensive analysis of metropolitan area growth and trends in land use as revealed by building permit statistics, see Building in Metropolitan Areas, 1954-56 (in Monthly Labor Review, June 1957, pp. 689-696).

service new neighborhoods, and decentralization of industrial plants, gave the greatest boost to suburban building in the 1954-56 period (chart 8), Perm it valuations for single-fam ily houses, w h i c h com prised well over half of the total for all building construction com bined, were divided one-fourth in the central cities and three-fourths outside the c e n t r a l c ities , within metropolitan areas. About two-thirds of both industrial buildings and residential g a r a g e s for which perm its were issued in m etropolitan areas were scheduled for construction in the rings of urban centers, as were about 50-60 percent of the valuations for e a c h of the following types: nonhousekeeping re s i-


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dential buildings (hotels, m otels, e t c .) , dwellings in 2 -4 fam ily structures, public* administration (or serv ice) b u i l d i n g s , schools, churches, gasoline and serv ice stations, and stores and other m ercantile buildings (tables B -7 and B -15).

Valuation figures for all the other kinds of new building construction (types which are m ore characteristic of downtown districts where relatively s c a r c e land is used i n t e n s i v e l y ) , as w ell as additions, alterations, and repair work ( w h i c h usually predom inates where the building inventory is greatest and oldest), showed that m ore than half of the m etropolitan area building of these types was to take place in the central cities . The proportion was greatest usually between two-thirds a n d three-fourths for n e w o f f i c e buildings, com m ercia l (parking) garages, and i n s t i t u t i o n a l buildings (m ostly hospitals), which are frequently l a r g e , m any-story structures, using a relatively s m a l l plot of land for each unit of serv ice , or population served.

Some of the reasons for the m ovement of homebuilding to outlying districts, especia lly during the early postwar years, had to do with reducing costs . In fringe a r e a s , lots are generally cheaper than in the city; taxes are frequently low er; there is m ore room to build m ass housing p ro jects , thus permitting econom ies of la rge -sca le o p e r a t i o n s ; and, in some suburban loca lities , building codes are less restrictive . However, by 1954-56, other influences had com e to the fore , which also maintained the trend of new housing to the suburbs and, in addition, tended to attract a d i f f e r e n t kind of housing, namely, larger, higher priced hom es. These influences include, among others, ( l ) the i n c r e a s i n g number of larger fam ilies requiring m ore space for children; and (2) a greater proportion of fam ilies who could afford larger houses with surrounding play and garden area, as well as the a u t o m o b i l e and other transportation required by increased distance from work and shopping and serv ice facilities .

The building perm it statistics bear out the fact that the suburban home of recent years is m ore e x p e n s i v e than houses in other sections. In 1956, for

exam ple, the average perm it valuation per private single-fam ily dwelling in the outlying d istricts of m etropolitan areas was about $1,100 higher than the average for houses inside the central c ities , and $2,100 above the figures for houses in the small towns. 17

The flow of industrial building to the suburbs also occurred for a variety of reasons, some of which were the same that influenced the outward movement in homebuilding. Among the reasons for the i n c r e a s e in suburban factory building w ere the desire to escape high city taxes; to be nearer the new markets resulting from the em ergence of entirely new com munities; to locate on sites which perm it full utilization of m odern engineering and design princip les for plant construction, and provide ample parking space for the convenience of em ployees and custom ers; and to be c loser to s o u r c e s of labor supply.18

Average perm it valuation f i g u r e s reveal that factories scheduled for construction in the m etropolitan rings, like single-fam ily houses, w ere usually larger and m ore e x p e n s i v e than those to be located in either central cities or nonm etropolitan p laces. In contrast, average perm it valuations were h i g h e s t in the urban centers for virtually every other kind of building r e s i d e n t i a l or nonre side ntial.

Variations Among Metropolitan AreasThere are wide differences among

m etropolitan areas in the degree to which each follow s national trends of suburbanization or cen tra l-city concentration of building construction, with some areas even running counter to the general tendency (tables B -18 to B -20). This is not surprising, in view of the great variation from place to place of influencing factors such as population density; size, age, and

17 Although the $2,100 difference may be somewhat high, since there is evidence that the amount by which permit valuations understate actual cost of construction is likely to be greater in small than in large places, this does not invalidate the conclusion that housing is considerably more expensive in the fringes of metropolitan areas than in nonmetropolitan places.

18 See Building in Metropolitan Areas, 1954-56, op. cit., p. 693-


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regional location of the m e t r o p o l i t a n area; special topographical characteristics ; zoning and other adm inistrative laws or regulations; the tax structure; the extent of territory annexed by the central city; and past levels of building construction, to mention but a few.

A r e a differences in suburbanization or centralization in b u i l d i n g construction are not readily accounted for by one or two of these f a c t o r s alone. For exam ple, 3 c it ie s Columbus, M ilwaukee, and San Diego all annexed about the same amount of territory b e t w e e n 1950 and 1956. Population density in the annexed land was about equal for Columbus and San Diego, and was much lower than the rate for Milwaukee. Yet, in the firs t area, roughly t w o - t h i r d s of the 1954-56 perm it valuations were for suburban construction, com pared with less than half in the other two areas.

As a further illustration, the proportion of suburban building was about the same in the New York-N ortheastern New Jersey and the Salt Lake City m etropolitan areas as in the Columbus area, but the density (1950 p o p u l a t i o n per square m ile) in the central city or cities was higher for New York than for any other place in the country, very low for Salt Lake, and only m oderately high for Columbus.

The m ost uniform building pattern among the individual areas was the suburban and fringe tendency of new house construction. San Diego was the only one of the 24 areas in which m ore new dwelling units were s c h e d u l e d for the central city than outside during each of the years 1954-56. In the other areas, not only was there m ore new hom ebuild- ing outside the central cities , but, with few e x c e p t i o n s , m ore dwellings were built in the less thickly settled parts of the metropolitan area than in either the central cities or the satellite c i t i e s c i t i e s other than central cities having10,000 or m ore p o p u l a t i o n in 1950. Despite these general sim ilarities, the areas differed appreciably in the d ispersion of h o u s i n g , because of variations in size , age, topography, econom ic developm ent, and other influences.

Contrary to trends nationally, the average perm it valuation of single-fam ily d w e l l i n g s was higher for cen tra l-city houses than for suburban homes during the entire 1954-56 period in 9 out of the 24 m etropolitan a r e a s . Likewise, although n a t i o n a l l y the less expensive multifam ily housing was in the suburbs, reflecting the greater prevalence there of walkup garden apartments, com pared with h igh -rise elevator apartments characteristic of the central city, in 9 m etropolitan areas the average valuation for apartments (units in 2 -o r -m o re -fa m ily structures) was lower inside the central cities than outside (table B -21). A m ajority of the areas in the first group were located in the West, and m ost of those in the second group were in northern and eastern sections of the country.

T h e r e were also wide variations among the 24 areas with respect to p e r - unit costs (for houses and apartments) reported for the metropolitan area as a whole. Average perm it valuations in the Cleveland area were h i g h e r than anywhere else for 1 - f a m i l y h o u s e s and among the highest for units in !2 -o r -m o re . fam ily buildings. Lowest averages re ported for single-fam ily homes were in th e N orfolk-Portsm outh area, and f o r multifam ily units in Birmingham. A large part of these differences was due to the location of the areas, and reflected re gional variations in clim atic conditions and loca l custom s which affect the structural characteristics , and thus the cost of housing.

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