One of the country's leading builders today disputed predictions of a future slowdown in single family home construction, accompanied by higher longterm interest rates.
Speaking at a convention of the Metropolitan Washington Savings and Loan League, Michael M. Prine, chairman of the board of Ryan Homes, said demand would continue unabated until about 1985 when the declining birth rate will finally affect new housing. He said he feels mortgage rates will rise only on a short-term basis.
Earlier this week George A. Christie, chief economist of McGraw Hill's housing information system, forecast a 100,000 to 200,000 drop in single family home construction in 1978. He warned that this type of construction, being cyclical, tends to fade as the economy heats up.
Prine also took issue with those who contend soaring housing prices are shutting people out of the market. He called the $48,000 median sales price of a new detached home - the figure most often cited by critics - misleading because it is pushed up by sales of $200,000 houses in California and elsewhere, house filled with "exotic appliances" for the affluent. "When those people really do feel shut out they'll make a choice," he said, "and we can build (cheaper) houses for them."
The reason housing is so expensive in the Washington area, Prine explained, is because sewer moratoria have raised the price of land. The same plots that cost $6,000 in Cincinnati or Louisville cost $25,000 in Fairfax County, he said. Labor and materials costs are no higher in Washington than elsewhere.
Another optimistic speaker was Preston Martin, a former Federal Home Loan Bank Board chairman who now heads PMI Mortage Insurance Company in San Francisco. His firm, one of 15 private mortgage insurers in the United States, currently insures $18 billion in mortages.
Martin declare, "Tremendous interest rates are not in the cards for the end of 1978." He also predicted inflation could be held to 5 or 6 per cent this year.
When asked about redlining, the practice of refusing to lend money for homes in undesirable neighborhoods, Martin replied. "We've got to find a way to get into established (ethnic) neighborhoods. You (thrift association officials) won't get a good rate of profits out of it, and we won't get insurance out of it. But there is no other way to house these people without using existing stocks."