Another Expansion in the 1980s

By Belinda K. Pearson Vicc President and Asst. Economisl Seattle lrirst National tsank

li.,iT,T:; housing, trends are mixed.

Vacancy rates for apartments are still low, and rising rents should encourage a continuing uptrend in new construction.

For single-family homes, on the other hand, conditions look less propitious. The inventory of unsold homes has been steadilv build-

Story at aGlance

New housing trends mixed short term interest rate creases moderate till mid late '78, then a decline next housing cycle cou ld very mild.

ing since last February, while the monthly selling rate has come down from last winter's peak. Even in some of the hottest markets in California, it appears that the buYing frenzy is abating. Furthermore, housing completions will continue to in- crease fbr sonre ntontlis even if starts ease off, due to the large nurtlber of units "in the pipeline"; thus inventories are likely to keep rising.

, shift to a buyers' ntarket is evident in gradual easing in purchase prices.

None of this suggests a disaster next year, only a cooling in the pace tbr the (Please turn to page 40 ) be

(Continued from page 39 ) single-family component. Short-term interest rates are expected to post only modest further increases before peaking sometime next summer or fall. Nor are inventories likely to reach the oppressive levels, roughly a 17-month suppfy of houses at the end of 1974, that resulted from gross overbuilding during the boom of l9l1-13 combined with a recession-induced contraction both in household formations generally and demand for new homes specifically.

Indeed, since 1978 should shape up as a reasonable year for the economy as a whole, with real growth not too different from that achieved in 1977, housing dentand should remain healthy.

The growing numbers of young adults definitely favor high absorption of added housing for several years to come.

In this environment, the next housing cycle could be very mild indeed, with single-family starts and total housing production dipping no more than 10% or so before moving into another expansion phase in the 1980s.

AT TRAINING session (1) Cliff Smoot. Betty Foster. Bob Riggs, Bill Briqht. (2) Clark White, Les Le Guax. Paul Anderson. (3) Rich Vierra, Dave Kiser, Ray Trujillo, Larry Stevens. (4) Clark White,

Danny

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