Enthusiasm lacking

By William E. Baugh William E. Baugh & Associates

As we focus on lumber and other building materials we will continue to see the results ofover production which will cause short cycles of price volatility and occasional dislocation of inventories. Inventory accumulation at points of production and distribution and management's desire to control them will contribute to price confusion.

There is a strong possibility that

Story at a Glance

Weak economic indicators over production of lumber will affect prices as will inventory accumulation . . . higher interest rates. . . healthy building and remodeling active, competitive market.

interest rates will be on the rise. Interest rate sensitivity and its impact on home buying psychology will no doubt continue to rule many purchase decisions. However, it is likely that inflation fears will be helpful in offsetting buyer resistance. We also have learned a lesson from the automobile people regarding the creation of sales through so-called "bargain" interest rates. If things slow down, builders will again "buydown" mortgages and offer low interest rates as a stimulant to closing.

Building and remodeling should continue to be healthy except for three or four isolated areas. As homes are built our industry will continue to be active and competitive.

For those managers who can

(Please turn to page 68)

XPENDITURES for residential alterations and repairs appear headed for another new record in 1987. Dollars spent for this purpose have increased every year for the last 20 years except in 1982. Last year they topped $80 billion and should reach at least $82 billion in 1 986.

The outlook for 1987 is a 6% to 7olo increasebringing the total market close to $88 billion. Some significant changes are taking place in this market. While spending is up across the board, there has been greater emphasis on maintenance and repairs and somewhat less on additions and alterations.

Several studies have shown that repair and remodeling expenditures are concentrated in the first few years of residency ln a home. Existing home sales have been edging up