Home sales, depressed nationwide for the past four months, are about to bounce back.
That rebound could be sharp enough in some metropolitan areas to push up resale prices in the coming six months and to strain supplies of mortgage money.
Discussions with brokers and lenders in 16 cities around the country point to an important "turn" in the resale market during the past two weeks. Brokers report increases in sales, showings of homes and listings -- except in cities that have been particularly hard hit by recession layoffs, such as Buffalo and Detroit.
They also report that interest rate reductions, easing of mortgage assumption policies and greater public familiarity with so-called "creative" financing techniques are stoking pent-up consumer demand, bringing buyers to the resale market in larger-than-expected numbers.
Oscar B. Ferebee, president of a major Norfolk, Va., realty firm, puts April's jump over March at 20 percent -- $5 million in sales -- and attributes it to renewed buyer and seller confidence. Current sales are still 8 to 10 percent below the previous year's, according to Ferebee, "but that's amazing when you consider that mortgage money has been at 16 percent and many sellers have to participate in financing their buyers."
In Washington State, the president of Seattle-King County's realty board, David Page, says his firm's $1.8 million residential sales volume in April is up 25 percent from March -- an increase that is much bigger than the usual rise between the two months.
Les Glickman, president of the St. Louis metropolitan realty board, called the first two weeks of April "the bottoming out" point for resale activity in 1980, and the latter two weeks of April "the beginning of the recovery." In March, Glickman and other brokers helped convince three out of four St. Louis savings and loan associations to permit assumptions of previously "nonassumable," low-rate mortgages by new buyers at revised interest rates of 10 to 13 percent.
The campaign -- followed by similar efforts on the part of lenders and brokers in over two dozen U.S. cities -- has contributed to April's turn in the market.
Brokers and lenders in areas as diverse as the District, Chicago, Miami, Sacramento, Boston, Philadelphia, Phoenix and New Jersey agree the early signs of recovery are visible. Some of them warn, however, that consumers' huge, unsatisfied desire for housing -- plus a coming contraction in the stock of new units caused by homebuilders' financial woes -- could bring on new problems by the fall.
With mortgage rates at 14 percent or under in the next few months, brokers anticipate a burst of activity by buyers who postponed their plans in the face of March's 16 and 17 percent rates. Rather than delaying any longer, many of these buyers could plunge into the detached-house and condominium resale market, bidding up prices in some areas.
The vice-president of Chicago's huge Quinlan & Tyson realty brokerage firm, Michael Manley, said that "there's a flood of people out there who are ready to pour into the market once rates come back to the 13 percent range."
They are owners of houses and condos who are looking to move up, as well as frustrated newcomers who simply want to get their foot in any door. They see no signs that inflation is going to be controlled by the Carter administration, and they know home prices are going up by at least 10 percent this year.
On the one hand, Manley said, "we're eager to see that flood -- because it means big sales volumes. On the other hand, we're concerned that one effect of a big gush of demand in the market could be higher mortgage rates and crazy home prices."
Mortgage lenders confirm that although the cost of money for them is now dropping -- permitting mortgage rates to drop -- any significant increase in loan demand by buyers, without corresponding increases in saving deposit inflows, could stop the declines and even send rates back up.
The resale market's 1980 recovery, in short, could carry its own Catch-22. The more enthusiastic the rebound in a brittle economy, the shorter it might last.