A constantly changing economic environment

By William Baugh William E. Baugh & Associates Newport Beach, Ca.

for housing and the wood industry still remain weak. The Federal Reserve has kept money tight and interest rates unbearably high, eventhough inflation has fallen to conservative levels.

Housing starts will probably approximate l.l millionin l98l andcan be expected to recover in 1982 to 1.6 million units (including factory built) due to increased second half activity.

Pent-up demand has been building during the past twenty-four months. Increased numbers of our population are entering into household formation and housebuying age but have been discouraged from buying by high mortgage rates. Once rates come down, this demand will enter the housing market causing home priceg to resume their price spiral thereby attracting more builders to create unsold starts.

As the double dip in housing arrived, uncertainty has engulfed us but long-range forecasts for overall mortgage markets indicate many factors of the system will respond to new opportunities created in the changing environment.

Story at a Glance

More favorable mortgage financing, both long and short term . 1.6 million housing units the West will have a more dramatic recovery work on your strategies tomorrow.

The national outlook for mortgage financing is becoming more favorable, both near and long-term. Although s & ls and mutual savings banks provided 54s/o of the mortgages during the first half of the 1960s, they fell to only 220/o in 198O. The overall system which involves l5 sectors supplying mortgage funds should, and is, adjusting as the cheap savings that have supported mortgages are eliminated and mortgage rates become more attractive compared to alternative investrnents, drawing capital from sectors other than the thrift industry. As a consequence, the supply of mortgage financing is likely to be considerably more available than is generally perceived at present, and should permit strong housing based support to a cyclical recovery for wood products.

In'the West, our recovery will be even more dramatic than what will be experienced nationally as our growth rates outstrip national averages. The

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