New Building Organizations

The more efficient and less costly building methods have so far been used mainly by organizations which operate on a large scale. Because of their size they can get advantages that are out of reach of the builder who puts up a few houses each year. These larger builders buy materials in quantity and hence get lower prices; and they can keep tighter control of their subcontractors. It is from these newer house-building organizations that housing authorities expect the greatest help in reducing prices of homes after the war.

Chief among them is the “operative builder.” He builds on his own land and usually according to his own plans. Operative builders have worked mainly in the medium- and low-priced fields where, as we have seen, there is the greatest demand—and need—for more houses.

The growth of operative builders was one of the features of the recovery period in house building in the late 1930’s. In 1940 over half the FHA applications came from such builders, who were usually found in and around large cities, where their methods often enabled them to build a better house than their competitors could for the same money.

Some operative builders construct homes for rent, usually garden apartments. These often prove to be beautiful and desirable types of housing, attractive to renters.

A unique kind of building organization has been developed by some of the insurance companies. These corporations, seeking ways of investing their money at a profit, have begun to build large housing projects. Here the builder is an agent for the insurance company. He studies the condition of the market, recommends projects, selects sites, directs the planning, chooses the materials, and works out the building methods. He operates on a cost-plus-fixed-fee contract. One insurance company has built about 17,000 rental units in New York City, San Francisco, Los Angeles, and Alexandria, Virginia. The scale of operations makes it possible to erect apartments and garden projects that give the tenant good housing for less money.

In communities of 25,000 or less, another new type of builder has arisen. The local lumberman or supplier of building materials has become a dealer-builder. He finds the buyer, arranges the financing, undertakes the actual construction, and supplies the materials. He also repairs and alters old houses. Some dealer-builders have used prefabricated materials, thus saving money on construction as well as on materials. Often this arrangement in which the dealer is also the builder has lowered construction costs.