Money rates crucial

By Harlan Hummel Secretary National Lumber & Building Material Dealers Association

I lOOf towards the coming year with mixed feelings ! of apprehension and optimism concerning the future of the independent retail lumber dealer. The changes occurring "on the Hill" as the new adminstration moves tna.., & in ruill nlrrrinrrslrr hqrre q srcet irnnect in will obviously have a great impact on not only the retail lumber dealer, but on the entire country. As the l0lst Congress begins, there are several key factors which I feelwill in part determine the success of retailers across the country.

One important key to the independent lumber dealers' market in 1989 will be interest rates. Obviously, the key player to watch here will be the Federal Reserve Board. While

Story at a Glance

Interest rates crucial for independent dealers. housing policies of the 101st Gongress will be important. . . repair & remodefing a growth area... material costs to rise.

Another key ingredient to the success of the independent lumber dealer is the action that the l0lst Congress takes to lessen the burden of the large Federal deficit. Higher taxes may indeed be one solution to the debt criiis, if the funds are used in the appropriate manner. However, higher taxes are also likely to inhibit consumer spending. '

The housing policies of the 101st Congress will be important. It would appear that the.move will be towards encouraging new low to moderate income level housing projects, as well as the renovation of existing vacant buiiOings. While the current proposed policies are a positive move in the fight for the homeless, the bureaucratic "red tape" that may be involved could be too burden- some and costly for some independent lumber dealers.

It is clear that housing has become less affiordable for the average American family. A sector of the population which has been notedly affected is the first time home buyer; homeownership has dropped close to 1006 for households in the 24-35 age group. Tax incentives for the first time home buyer will become an important issue for the industry in the coming year.

With the increased cost of housing comes the growth of a second and valuable market for lumber dealersrenovation and remodeling. This is clearly a growing opportunity for the independent dealer, and one which should not be overlooked.

It would seem to me that the cost of building materials will continue to rise, particularly in regards to dimension lumber. The recent disastrous forest fires, coupled with the proposed environmental programs to limit the depletion of certain federal forest land, could result in lower supply.

Although it is doubtful that we will see tremendous growth this year in the building material industry, the ingredients are there for a strong and steady year. The actions of the l0lst Congress willundoubtedly be critical to the overall success of the industrv. However. with effective marketing strategies, financing, and qualiiy service, the independent retail lumber dealer should continue to command a dominant share of the building materials market in 1989.