Sales of new and existing houses in this area are now so torrid that some veteran builders and developers are suppressing the normal tendency to wear ear-to-ear grins because they recognize that the market is so good it's almost unreal.
The reason is simply that public demand for home ownership has broken out in epidemic proportions in the past 90 days.Confidence has returned to the consumer scene and the combination of relatively attractive interest rates and available mortgage money has provided its usual magic in the residential marketplace.
So one question becomes obvious: How long will it last?
The market looks strong for new houses through the strong for new houses through the end of this year, according to several housing economists who gave their views at a recent conference here. Single house starts are expected to hit a national record at the 1.4 million level and the area performance should be similarly high. In the metro area, sales are strong in nearby communities and subdivisions.Many have sale deposits and contracts ahead of completions.
In the city, several new projects are selling well and the appetite for in-town rehabilitation has astounded seasoned professionals. In the past 30 days there's also been a notable upturn in the sales of some garden and condominium apartment developments that were depressed or relatively dormant into February. The market really broke loose after the record January freeze.
But the fact that the residential market has been unusually vibrant tends to suggest that something, foreseen or unforeseen, will occur to upset the applecart.It could be a change in the mortgage market. Kenon V. Rothchild, president of the Mortgage Bankers Association of America, recently told and MBA group in San Diego that long-term interest rates are poised to go higher. "The next major move will be up," he said. "But no one knows the exact timing."
And that is adding fuel to the current market, which is producing a resultant heavy demand for mortgage funds at a time when inflows into savings and loan associations have tapered off. Rothchild said: "This would appear, then, an excellent time for home buyers to make their choice."
That's exactly what they seem to be doing.
Yet, there is also considerable concern about rising housing prices for both new and resale dwelligs. As yet, the high prices have not created buyer resistance. But many of us ask: How much higher can prices go? Much of this impetus in the market is correctly attributable to the preponderance of current home owners "buying up" to take advantage of accumulated equity and unusual dollar appreciation in their current homes.
However, there's another factor to be considered. The heat of the market on the West Coast has brought investor-speculators onto the scene. They are buying as investments - to make money by having a dwelling that will be resold at a higher price before going to settlement. That's called making a "fast buck." No one is certain how widespread it is. But astute observers know that bottom fell out of the Ocean City, Md., condo market when the speculating buyers pulled out a few years ago.
Another form of housing speculation is really investing in residential structures. Individuals and groups buy new or resale houses with the goal of holding on to them for several years as rental property and then selling at much higher prices to take advantage of early-year appreciation.
Meanwhile, several housing economists have agreed that an increase in short-term interest rates and a tightening of mortgage money in 1978 will cause a downturn in production of new single houses.
On the Washington scene, Charles A. Veatch, a 35-year-old developer who has been in housing since he was 18, has started construction of 57 town houses on a lakefront tract in Reston. He's optimistic about the site, the designs, his energy package and available financing for the dwellings, which range in price from the $60,000s to the $80,000s. He counted 27 sale deposits before the start of construction. Yet, he has some misgivings.
Veatch is concerned that the market has become unreasonably "overheated." He's young and naturally optimistic but he recalls vividly that the hot 1972-73 market cooled off - "almost overnight" - in May, 1973. It came back slowly in 1974 and 1975 and then began a new takeoff in mid-1979.
"We do not need any more of these boom-bust cycles created by an oversupply of available money for investing and biying and the natural greed of everyone - and that means everyone, including buyers - in the market to make out when they can do it," he said.
However, most prospective home buyers are shopping for houses that they will occupy. And astute observers rate Washingon house-seekers as among the most sophisticated in the nation. They visit and revisit subdivision, communities and condominium developments. They make noteson prives and room sizes and amenitis. They ask about warranties and taxes, plus schools and shopping. And now they want to know about energy efficiency. The costs of heating and cooling are uppermost in the minds of house shoppers since utility costs rose dramatically.
As a result, many builders now feature their energy-conservation measures and materials as part of the sales pitch. Already there is buyer interest in solar systems to heat hot water and to provide some of the heat required in winter months. As the technology becomes commercially available, more builers will be installing fuel efficient systems.
Already, builders are telling buyers about additional insulation in walls and attic ceilings. Some use unsulation under the first floor and others put insulation on the inside of basement walls. Additional emphasis is being placed on double and even tripleglazed windwos, air-tight metal doors with insulated fillers and more intensive caulking and crack-filling. And look for fenestration to be decreased soon, because windows leak heat and cold.
In retrospect, it must be noted that looking for a dwelling to buy in this area is a considerable chore. The marketplace ranges from Frederick, Me, to Fredericksburg, Va., and from Annapolis to Manassas. There are now nearly 500 new home developments vying for public attention. And choices available at Reston, Columbia or Montgomery Village are probably more varied, in terms of prices and styles, than those in Kokoma, Ind., or Elmira, N.Y.
The current trend ahs been to the development of more subdivisions with fewer dwellings. Some builders, such as Ryan Homes and the Ryland Group, are building in two score locations in this area. And many builders have adopted the Ryan-Ryland practice of starting housse only when a buyer has signed on the bottom line.
As a result, the inventory of unsold new houses available for quick occupancy has decreased considerably. Inevitably, too, when a certain subdivision has a big buyer response, some new owners may have to wait six months or more for occupancy. Some area builders are already sold out of the full 1977 production of single houses and now are taking orders for 1978 completion.
A few years ago, a survey made by Professional Builder magazine found that 93 per cent of the new home browsers interviewed wanted, eventually, to won a single'family house. But most young persons and couples, moving into the ownership market for the first time, recognize that their entree is limited to condominium apartments and small town houses, where they can expect to accumulate some equity and appreciation over the next three to eight years before moving up to a single house.
Indeed, if any one thing is more apparent in this housing market than another, 1977 seems to be the Year of the Move-up.