For the beleaguered Washington-area housing industry, this spring has turned out to be even worse than 1981, and that was one of its worst years ever.
Sales of new and existing homes are down sharply throughout the region. New construction is depressed further than last year's low totals. And conventional mortgage rates are still hovering a shade below 17 percent.
Moreover, many builders, real estate officials and housing experts in the area do not foresee any marked improvement anytime soon, although some bravely say that the industry has reached the bottom of the slide and that things can only get better.
Sales of homes and condominiums in the Washington area dropped from 40,642 in 1980 to 32,311 last year and the figures for the first four months of 1982 do not presage a turnaround. Renay Regardie, the president of Housing Data Reports, said new home sales from January through April have dropped from 9,601 in 1981 to 8,757 this year, with 43 percent of those sales condominiums.
Local boards of Realtors, whose members handle the sales of existing homes as well as some new homes, report sales have dropped, depending on the jurisdiction, by 29 to 37 percent in the first four months of 1982 compared to the January-to-April period last year.
The average cost of a new house in the Washington area has declined slightly this year, but the typical price was still a hefty $115,900 last month, Regardie said. But boards of Realtors report that the average price of homes sold by Realtors this year has increased by about 2 to 5 percent over the first part of 1981, which is less of an increase than in previous years.
Meanwhile, local governments are issuing fewer building permits, according to the Census Bureau. Preliminary figures for the January-to-March period show that builders got permits to build 2,523 homes, a 36 percent drop from the 3,916 figure for the same three months in 1981.
Because of the high interest rates charged by lending institutions, housing industry officials say that 70 percent of existing homes sold here now involve some form of creative financing, often at more reasonable 13 percent interest rates. In such sales, the sellers become amateur bankers and hold the mortgages on the homes they once lived in. First-time homebuyers--often singles and young couples in their late 20s and early 30s--make up the only sizeable group of people who are still buying new homes, the housing experts say.
Even then, many of the new buyers find they must sharply curtail their dreams and accept the reality that their incomes and savings simply will not buy much house, or that they will commute farther to work.
"In the last year, I thought I was excluded the way the market was going," says first-time buyer Robert Prososky, a 34-year-old Justice Department freedom of information documents analyst.
But Prososky, a longtime renter, said he started looking again in the last three months, visited nine developments and now has bought a two-bedroom condominium at Lyndhurst in Fairfax for $54,500.
As it is, Prososky says, "I consider myself getting in the housing market in the last half of the ninth inning."
Developer Steven Powell, chairman of the Par Construction Co., doesn't think much of the current market either, but said he now is sleeping better at night. The reason is that his company has sold 38 of the 40 houses it had previously been unable to market.
But Par only sold the homes in Fairfax and Montgomery counties after posting large "Builder's Close-out" signs and trimming the prices by $15,000 to $20,000. Powell said the firm is not starting any new homes until the market improves.
"We've taken the attitude, get down fast," Powell said. "The guy who gets rid of them is emotionally better off. Financially, you're taking a beating, but then it's over."
The five children of the late Rep. Leo J. Ryan, the California Democrat who was killed in 1978 in Guyana while investigating the Jonestown settlement of cult leader Jim Jones, found it took them six months before they found a buyer last month for their father's Capitol Hill row house on Kentucky Avenue SE.
"It's indicative of the market," said Long & Foster real estate agent Jerry Bosiger. "The sellers are having to readjust more than buyers."
The Ryan children started by asking $142,000 for the gray painted brick Victorian house with a basement apartment, Bosiger said. But they had to drop their asking price to $135,000, then to $129,000 and finally accepted a buyer's contract for $118,700.
Several builders, such as Michael T. Rose of suburban Maryland, said they are continuing to build homes, not so much to make a profit, but merely to keep their scaled-down companies in business in hopes that someday interest rates will fall and buyers will again flock to new homes.
"We're not setting the world on fire," Rose said. "We're turning dollars. If we're lucky, we'll break even. We may make $1,000 on a $90,000 home and feel very successful, but I doubt it."
While the cost of housing here is still among the highest in the nation, buyers, sellers, builders and agents all say that the key problem is the burden of interest rates that remain in the teens. Although fixed-rate, 30-year loans are available at numerous developments, many builders are now offering graduated rate mortgages in which buyers must make increasing monthly payments during the first three to five years of their mortgages and then pay a fixed, larger amount for the time remaining on the 30-year loans.
Robert L. Mitchell, president of the Suburban Maryland Home Builders Association, said that "people are beginning to accept more and more the new financing--adjustable rate and shorter term. Most realize the 30-year, fixed-rate financing is a thing of the past."
Other builders are paying substantial fees to lenders to reduce the interest rates so that the loans will be more attractive to potential buyers. Rose said that, under such an arrangement, his firm pays a lender $9,000 to provide $90,000 loans at 12 1/2 percent, but it does not exactly please him.
"When we're offering 12 1/2 percent financing," he said, "let's face it, it's a gift."
First-time buyers Justin and Kathleen Smith, both in their late 20s, started looking for housing in McLean, but quickly realized they would have to search elsewhere.
"The cost is high and the interest charges were discouraging," Kathleen Smith said. "We started in McLean and went west."
They now are buying a three-bedroom, $61,000 town house, with an escalating Veterans Administration mortgage, in the Georgian Village section of Countryside, a new community north of Rte. 7 in Loudoun County where sales have been brisk.
Several builders and realty officials said the housing industry's fate will not improve until interest rates decline. They also discount the effect that any federal mortgage assistance program, such as is now being considered by Congress, would have here.
Longtime Northern Virginia builder Edward R. Carr said he thinks the housing market will remain about the same for another two years, although his view is somewhat more pessimistic than that voiced by others. Carr's firm is building about 300 detached homes and town houses this year, a cut of about 30 percent from two years ago.
Maryland builder Mitchell and others in the housing industry repeatedly voiced a single sentiment.
"We will benefit much more," said Mitchell, "if Congress and the president get off the dime and and solve the budget crisis."