Retailers expect better times

By John M. Maflin Executive Vice President National Lumber & Building Material Dealers Association

lSBErrlFr,:' means lmprovement and that seems to be the scenario anticipated by building material suppliers for 1984. It would be great to predict that next year will be "one of our best years," but many of the underlying uncertainties affecting the current housing recovery will still remain.

Indications of a better year during '84 are that while our industry will not hit that so-called 2,000,0(n ideal start figure, we will see a more constant improvement in housing starts, less up- and-down movement in key interest rates and noticeable politically motivated efforts by Congress and the Administration to keep the economy growing, however slightly.

Housing again helped turn the economy around, but it was really a case of scmtching and clawing. Except for brief periods of under-1390 FHA-VA mortgage rates, the housing recovery was caused by pent-up demand, a "3l-Flavors" approach to mortgage financing, contractor buydowns, and, in some areas, extensive use ofmortgage revenue bond financing.

Many in the industry wore shortlived smiles during the first half of '83 when the lower and affordable mortgage rates caused a massive applica- tion assault on the Veterans Administration. Unfortunately for building material suppliers, most of the applications were to refinance, to unload fluctuation in key inteest rates...a better year, but many undedying uncertainlies .deales confident, but staying lean & mean and looking for sustained growth. the 16 and l79o mortgagesthatpeople acquired in l98l and '82. We won't have as much of that to face in '84 so when the federal mortgage rates go down again, it should mean more new construction and resales.

Efforts to control the federal budget deficit will play a great influence on housing starts and substantial remodeling projects. Any move made by Congress and the Administration to reduce the deficit will give a psychological lift to the economy. Commerce, industry, state and local government and the buying public just want-need-a sign that an effort is being made to restrain government's competition for capital.

Deficit reduction, coupled with the ability of major corporations to use greater than anticipated profits in 1983 to finance expansion, will lead to a more constant, reliable flow of mortgage money. As Individual Retirement Accounts (IRA's) and similar savings programs grow, and if the deficit is attacked to any degree, there will be avery noticeablerelief on the existing pressure in the money markets.

Building material retailers are not unlike the Fortune 500 crowd. Durine the past three years or so, new marketi were explored, management efficiencies became the order of the day, and personnel needs were examined more closely. The improvements have resulted in less dependence on any one segment of the buying audience, more