The u rban ization factor

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

w[?itei:the urbanization trends that have become evident in the past 20 years there comes a realization that the historic patterns of geographic growth are undergoing change that is affecting the housing picture. As an example, about half ol California's population now live within 60 miles of downtown Los Angeles.

Today, urban population growth is rocketing upward at a rate of 6.590 per year. This single statistic means a doubling of urban populations with- in 1l years. Buildable land that will serve these centers will continue to become dearer causing affordable housing to become smaller in size.

In the 1970s most first time house buyers bought the smaller homes built in 1950-65 and new houses were bought by older and wealthier households which were upgraded by size and amenities. If and when mortgage rates approach the I I 9o range the upgrading syndrome will appear again. In the meantime the housing recovery will be a slow process and the mix will probably be a predominance of smaller and attached homes based on current affordability.

The shift of population that has occurred into the West and Sun Belt areas will probably cause them to capture as much as 70Vo of the total national housing starts. This presents building materials sales opportunities due to increased market share in a 1.3 million national start year.

Chicago. Attractive rail car rates compete with comparable truck rates, giving shippers another transportation option for their forest products shipments.

We're working with the plywood industry to increase bundle size, which will increase car capacity by as much as 2090. We're selectively disengaging from business that we cannot haul efficiently or economically.

We've the freedom to adjust rates more quickly-as the marketplace demands. For instance, last April we announced truck-competitive rates on lumber, plywood and particle board shipments that we feel saved shippers an average of $400 per carload.

High interest rates and a nationwide recession have devastated the U.S. construction industry, which last year weathered its fourth consecutive year of depressed prices and slack demand-some say its longest and deepest recession since the Great Depression. Recovery won't come overnight.

If interest rates remain at current levels, we expect a slight upturn in April or May, as construction gets underway.

Housing starts this year could reach 1.3 million, although much of that will be the smaller housing units and condominiums. We expect a gradual recovery in the industry for 1983, as lower interest rates prompt a release in the pent-up home building market.

Commercial and industrial construction activity will be less robust in 1983 until vacancy factors decrease and capital investment programs increase which are dependent upon a general improvement in the overall economy.

We have had and will be in a con(Please turn to page 5 5 )

Story at a Glance

Increased urbanization means less buildable land; its higher costs dictate smaller houses .. . changes in historic geographic pattems .. old markets will require new approaches.