WASHINGTON — Many people are still making nearly intolerable sacrifices to buy a house. Builders and real estate sales people--their fingers crossed--are looking forward to another good year. But in a fundamental sense, analysts say, things will never be the same.
The major conclusions of housing industry analysts surveyed by United Press International are:
--"High" mortgage interest rates are not temporary but a permanent result of banking deregulation and the recent dynamic growth of the secondary mortgage market--the mechanism for recycling most mortgage money.
--The industry's lobbyists, trying to preserve important tax advantages for housing, have united in a warning about the falling proportion of homeowners, but are several years too late.
--Builders, facing a revolt of buyers no longer satisfied with mediocre quality, are being forced to pay much closer attention to design, detail and the peculiarities and diversity of living styles in order to survive.
--Buyers are drying up in the Sun Belt as the South and West try to emerge from a painful oil-industry crisis of plenty. Houston builders can be found working in Chicago.
--Misbegotten new tax breaks and the threat that some of the old ones will be taken away have left thousands of hollow monuments--from vacant office buildings to unwanted apartment buildings, rejected condominiums and time-sharing resort units--wasted housing that will never be sold for the same billions they cost to build.
--The American housing industry is leaving the exuberance of youth, now that so many dwelling units are in existence, and entering the mature years more typical of European countries. Year-round rehabilitation, not springtime building and buying surges, are the future.
--Although agricultural land values have depreciated, living space in and around cities and towns has never been more expensive. Space, inside and out, becomes the first amenity to be sacrificed by developers and their customers.
--The ominous threat of a catastrophic collapse of housing demand remains very much alive. A higher unemployment rate later this year, a rapid decline in the foreign exchange value of the dollar, which some analysts say is already under way, or a failure of Congress to diminish government borrowing are among the possible triggers.
Threats More Credible
The sudden slowdown in the growth of the gross national product to an annual rate of only 1.3% in the first quarter made those threats far more credible.
Mrs. Charles Bunch looks out one window of her Anchorage, Alaska, home and sees the boats in Cook Inlet. Through another window are the mountains. "On a clear day you can see the tip of Mt. McKinley," she says.
The Bunch family, with three children, is moving to Washington, D.C., but selling and buying houses are challenges they do not plan to scale.
In Anchorage, the housing "supply is starting to meet demand," she says. Sellers find the sales are less automatic and more costly.
In Washington, too, it seems. There, the Bunch's real estate agent, Betty Randall, says she has never seen more houses being purchased. The northern Virginia firm she just left, just had its best month.
Caution by Sellers
But she has also never seen such caution, with sellers putting their homes on the market months earlier than the planned move, and putting up with the inconvenience of showing it to buyers on Christmas, Thanksgiving and Easter.
"They just want to make sure they sell their homes," she says.
The intuition of the marketplace is responding to a variety of new circumstances. After decades of being a sanctuary of sorts from market risk, although suffering from periodic bouts of credit starvation, the tables have turned.
Now the risks are many but the supply of credit has become stabilized at expensive levels.
Buyers and sellers still have to contend with leaky basements. But also with the possibility of drastic tax reform that will change the nature of their holdings, of an economy that keeps the best analysts on the edge of their seats, and of new shifts in the makeup of the buying and selling population.
The old formulas, quaint in their simplicity, get less useful every day.
With hardly any public discussion, the economic underpinnings of the housing industry changed radically in the last five years.
Little did homeowners and potential buyers know that money market mutual funds were the death knell for those 9% mortgages and perhaps others in the 10% range as well, analysts say.
Buyers can keep waiting for what used to be an inevitable downward cycle, but it will not happen, says New Orleans consultant John Hebert.
"The minute you let the average Joe get 8% or 9% on his money, that was the beginning of the end," he said.
Wall Street's yields for the common man soon had to be extended to banks and savings and loans. That meant savings and loans also needed higher income. The grateful saver found that credit cost more even after the inflation rate slowed.