There's good news ahead for home builders, lenders - and home buyers and sellers. Whether you want a mortgage tailored to your special needs, you'd like to sell a house, or you're looking to buy, there's improvement over last year's gloomy market. By most accounts, the picture for all has begun to brighten and will continue to do so through this year and into the next.
A positive frame of mind, along with grim determination to see improvement, was very evident during the recent National Association of Home Builders convention here. If there was a catch phrase making the rounds, it was ''cautious optimism.'' Buoyed by growth in housing sales and significant interest rate declines, builders, analysts, and economists began to speak carefully about a quiet recovery from the dismal year of 1982.
Anyone in the housing business doesn't need much good news these days to cheer him up. After the boom of 1978, which saw slightly more than 2 million housing starts, production slid downhill to a low of about 1.1 million last year. Builders and consumers grappled, often unsuccessfully, with interest rates averaging 16 percent, but sometimes running as high as 18 percent or more.
While 1983 will not be a boom year, there really is nowhere else to go but up. Leonard Santow of Griggs & Santow, a New York economic consulting firm, sees it as ''a better year, not a great year,'' adding that ''we're going from awful to fair.''
Certainly lower interest rates are contributing to the emergence of the prospective home buyer. The 12 percent that was once perceived as sky-high when interest rates were climbing now appears to be a bargain on the way down.
Mortgage rates are generally expected to stay in the range of 12.5 percent, bumping up or down slightly from time to time. Michael Sumichrast, chief economist of NAHB, spoke hopefully of a Federal Housing Administration/Veterans Administration rate of 11 percent, adding that he ''can't imagine'' a rate upturn.
The declining interest rates of the past year have brought a comeback of the fixed-rate mortgage. As recently as last August, adjustable-rate mortgages (ARM) accounted for 45 percent of the total market, according to the Federal Home Loan Bank Board. In December, that figure dropped to 31 percent. Accordingly, the number of people applying for fixed-rate, 30-year FHA/VA loans burgeoned to a November record of 82,545.
Nevertheless, some alternative plans will hold their own, although there will be fewer of them. Donald Klink, a senior vice-president at the Federal National Mortgage Association (Fannie Mae), says the company is in the process of reducing the number of acceptable mortgages that flooded the market in 1982. Mr. Klink feels the five-year ARM and 15-year, fully amortized mortgage probably have a bright future.
Housing costs are another bright spot. According to the National Association of Realtors (NAR), the median selling price of a home last year was $67,700, up 2 percent from 1981. This rise is very low given a 5 percent inflation rate, as well as seller financing which can lower the cost of a home.
Because of this, NAR economist Glen Crellin asserts that now is ''absolutely the best time to buy.'' His association expects the current sluggish rise to continue for three more months, he says, as longstanding inventory is sold off, and then expects home costs to come in line with inflation.
In other markets, the outlook for renters is not as bright as for home buyers. According to Larry Yablong, an associate with Landauer Associates Inc., a New York investment counseling firm, the typical vacancy rate in large cities has dropped to a low 6.3 percent, forcing rents up.
In addition, Mr. Yablong says, rents will probably continue to rise 5 to 10 percent over this year as the economic recovery allows people who have doubled up or lived with parents to move into their own apartments and competition for space remains high.
Higher rents and lower capital costs, however, should spur more construction in late 1983 and '84. New building lagged as rentals were viewed as unprofitable and risky, thereby further diminishing the available supply of rental housing.
Office-building owners are not experiencing the good fortune of apartment owners. Starts were off 17 percent last year compared with 1981. Mr. Yablong anticipates further sharp reductions in 1983 starts as cities try to cope with serious overbuilding.
Denver, Houston, and Los Angeles are among the softest markets. New York, San Francisco, and Washington are in good shape as demand has kept pace with supply.