Housing industry easing into upturn
The United States housing industry is slowly but surely recovering from its acute case of tight-money doldrums. Industry leaders generally see a brighter future ahead, even as they show some wariness about the current rise in mortgage interest rates.
Sales of both new and previously owned homes are on the increase. Too, the prices of those homes are rising at an accelerating rate.
The two areas of the housing market that still show no signs of increasing activity at this point are the construction of rental units and the conversion of existing rental apartments to condominiums.
Home construction will probably not return to the vibrant pace of 1978 until at least 1983, according to the National Association of Home Builders. New-house "starts" should reach 2.01 million units by 1983, the industry trade group predicts, and rise to 2.22 million units by 1984. That reflects a whopping increase over the projection of a dismal total of 1.2 million new home units this year.
Sales of existing (previously owned) homes has been on the increase since June, after eight consecutive months of decline. In the turnaround month of June, the sales volume of homes was 7.4 percent greater than the previous month.
Existing home sales climbed by more than twice that rate in July -- 17 percent over the previous month. The July sales volume works out to a seasonally adjusted annual rate of 2.9 million homes.
These are national figures. It's interesting to note that increasing home sales have been reported since June in all regions of the country, but at widely varying rates of increase. The least increase has been shown in the Northeast; the greatest in the Sunbelt states of the South and West.
In California, the home-sales market rebounded with particular exuberance during the summer months, starting off with a 14 percent increase in sales during June.
"The market is showing a distinct improvement in this state," asserts John Seymour, president of the California Association of Realtors.
"From March to May the total volume of transactions lagged by more than 30 percent below that off the same period in 1979. It seems that housing is leading the way out of recession for California."
No appreciable increase in the construction of new rental units is expected until at least the second half of 1981. While many communities desperately need a greater supply of rental units, other areas are having problems with too many vacancies.
The vacancy problems are often sparked by more and more people moving out of increasingly expensive rentals and moving in with other members of the family. This trend reduces the number of households. In July alone, 118,000 households were dissolved nationally.
The number of rental units converted to condominiums this year will probably fall far short of earlier predictions. Many planned conversion projects have been postponed or aborted because of difficulties in obtaining financing.
The sales of single-family homes, however, are definitely on the upswing. The desire for home ownership is just as strong today as ever before.
In fact, the current problems created by inflation are showing just how motivated families really are to live in their own home. They are making major sacrifices to acquire a house.
The strong demand for housing is seen in the political arena. One of the major political issues in this election year relates to the need for housing -- and the opportunity for families to own their own home.
Both major political parties have addressed the subject directly in their official platforms.
The Republican Party platform calls for progressive steps to help the first-time home buyer, including the enactment of a "young family housing initiative" to help families save for a home of thier own. The Democratic platform places primary emphasis on government subsidy programs for low-and middle-income home buyers and renters.
The concern by political leaders for the young, first-time buyers reflects a major trend in the real-estate market. These buyers are increasingly being forced out of the home-buying market.
In fact, first-time buyers accounted for only 18 percent of all home sales last year, an all-time low. That reflects a 50 percent drop in the number of first-time buyers since 1977.
Repeat home buyers, of course, increased their share of total home buyers substantially -- from 64 percent in 1977 to 82 percent last year. They had the built-up equity in a previous home to swing the deal.
Indeed, it is widely recognized that first-time buyers do need help. Politicians and federal agencies are pressing for programs that would provide some form of assistance.