While of new and existing houses in this area have been exceptionally strong in 1977, there now are some signs of a slight slowdown in the market that has been marked by confident undertakings by builders and developers and an almost equally vibrant response from buyers.
Prices have been escalating significantly for both new and resale houses in most parts of this metropolitan area. However, the major action has been evident in single-family houses in the price range of $70,000 to slightly beyond $100,000 and for new and rehabilitated dwellings varied suburban locations (mostly in Virginia) and also in "coming-back" areas of the District and some older close-in areas of nearby Maryland and Virginia.
In the spring of 1977, the selling market in this area hit a dynamic peak that maintained momentum into the heat of the summer. But the torpidity of July took its toll and traffic and sales of new houses dropped an estimated 15 per cent below the June level. Nonetheless, several new subdivisions opened in August and attracted remarkable interest in a month often allocated for vacationing pursuits in other parts of the land.
While buyers have had to grapple with rising prices and a tightening of the mortgage money market at slightly higher interest rates, home builders have had some of their production ebullience diminished by increasing problems with the supplies of skilled and semi-skilled labor and some critical shortages and higher prices of certain materials.
The near-meteoric rise in prices of lumber and plywood have caused costing problems of builders. And a real or pseudo crisis in the availability of insulating materials, plus rising prices, created another problem in the finishing and delivery of new and rehabbed dwellings.
Despite concern about rising prices of new and exisiting dwellings, one local housing data service reported that demand in the luxury single-family, move-up market is now "unprecedented." That price range is becoming increasingly common for large single houses-over $100,000. Only ten years ago the so-called mass luxury market in single houses started at $50,000 or slightly less and topped out the vicinity of $60,000.
As a result, two schools of housing thought have developed. One says that America is being priced out of housing ownership, except for those already own ing and wanting to "move up" in price and class. The other school points to record sales and stresses that incomes and general affluence have increased markedly. For instance, a recently married couple under 25, but with two incomes, is going shopping and failing to be deterred by prices near $80,000 for a single house in Montgomery County.
Of course, both schools have their adherents and their rationales.Obviously, many single persons and couples find it impossible, or too demanding, to save money needed for a downpayment on a new or existing house, townhouse or condomonium apartment. Even for those priced under $50,000. And there are a surprising number of resale houses and even new townhouses and condo apartments still available hereabouts in the range between $35,000 and $45,000.
Yet, the National Association of Realtons recently completed a report called the "Affordability Crisis?" that noted that a record 4.2 million house sales (new and existing) were made in 1976, with the prospect for 4.7 million sales in all of 1977 at a total market value volume of nearly $250 billion. The report from NAR's reseach and economics staff also noted that nearyly half of the buyers are under 35 year old and that half (not necessarily the same people) are renters moving up to ownership.
Further, NAR added that today's buyers are demanding more square feet of living space plus air conditioning and fireplaces - two opitons that are expensive to use these days.
Still another report-from American Standard, Inc. (maker of plumbing fixtures) - denies that rising house prices and home ownership costs will affect demand for single houses in the next decade. This view insists that the increase in median incomes of typical home-owning families is outpacing the rise in homeownership expenses and that the American desire for single home ownership is such that more families and single home ownership is such that more families and single persons are willing to spend/invest a greater percentage of their incomes on housing.
Additonally, howeger, figures cited recently by Marsh P. Trimble, publisher of Professional Builder magazine, indicated that the ratio of annual family income to the median sale price of housing was 5 per cent in 1940 but declined to 2.8 per cent in 1975. His point is that housing became much more "affordable," even though rising markedly, because incomes rose at a higher rate.
No matter how attractive home ownership may be from the point of financial investment and tax advantages, the fundamental argument for ownership against rental continues to be the "roots" and other less tangible satisfactions derived from living in an owned house, no matter how high the mortage on it.
Finally, the homeowner also learns the responsibilities of stewardship. And those include the chores of grass cutting, weed fighting, hedge trimming, touch-up painting, coping with backed-up sewers and even coming back from a vacation to find that the air conditioning system is leaking and that the refrigerator needs to be replaced.