Washington area home builders and real estate sales professionals are predicting a strong spring sales market based on January figures, which have been the best since 1978 for some builders and sales agents.
"We are experiencing an unprecedented boom. The floodgates are open. It is like somebody turned on the spigot at the first of January," said Gary Garczynski, president of the Northern Virginia Builders Association and head of Signature Homes.
Buoyed by good January sales, low interest rates, and what realtors and builders said they perceive to be bipartisan efforts by Congress to tackle the deficit problem, agents are predicting strong home sales for the next five months.
Even though the current market and predictions for the coming months are good, the rise in the numbers of buyers is not likely to change the policies of most local builders, who sell units before constructing them, rather than by building large inventories of readily available homes or town houses on speculation.
Neither agents nor builders are willing to make projections about the market beyond June, however. Making projections about the second half of the year is like playing "with a crystal ball," according to Mike Canizzo, regional vice president of Ryan Homes operations in suburban Maryland.
"The first six months will be very strong," predicted Ed Pagett of Pagett Realty, which has offices in the Alexandria-Mount Vernon and Springfield-Burke areas.
The current market "is great. We have doubled last January's sales figures. Things seem to be strong. There is a lot of pent-up demand, a lot of people who have sat on the sidelines" in the bad markets of recent years, he said.
Agents agreed and complained that inventories are running low in parts of Fairfax County, particularly in the Great Falls-McLean area.
"If you know anybody who wants to sell, this is the time," said one McLean agent who asked not to be identified. "I have had my best month in years."
However, Pagett and others said inventories in other parts of Northern Virginia remain strong.
He predicted that many houses that have been in the rental market in the past three years could go on sale now that would-be sellers are seeing a healthy market.
Agents agreed that the tendency of sellers to set higher-than-market prices for their homes seems to be slacking off. "Sellers who tried to sell in the past two years and could not get a contract are more realistic about the price they can get," said one Fairfax agent.
Sellers also know that a house priced higher than the competition in a geographic area will sit on the market longer than those that appear to be better deals, several agents explained.
"Sales in 1985 will set new records for the number of single-family homes but not for the rampant appreciation in home prices that contributed to the sales slump during 1981 and 1982," said William (Kip) Laughlin, vice president of the Northern Virginia Board of Realtors.
The homes currently on the market are owned by seriously motivated sellers who truly intend to move this spring, he said.
"Interest rates are better than since 1979," he noted.
"You are looking at the best interest rates in the first and second quarters of 1985 of any interest rates so far in the 1980s. I am cautiously optimistic that the leadership of Congress is ready to make the necessary sacrifices to bring the deficit under control and convince large institutional investors that inflation really has been brought under control."
Garzinsky agreed. Fresh from a national home builders convention, he predicted a bipartisan effort to "do something about the deficit" based on briefings by Republican and Democratic leaders who addressed a convention session.
Dwight Schar, president of NVHomes, and Ryan's Canizzo said more people were out looking for homes in January than they had anticipated. Ryan in Maryland had "as good a January as they have experienced in the last five or six years," Canizzo said.
"This year, the buyers came right out in the first week in January," he said. That sparked Ryan to begin its 1985 advertising campaigns here a few weeks earlier than had been scheduled.
Canizzo said that he is delighted with the pace of sales, which he considers to be a direct result of lower interest rates. "I like to sell houses, not interest rates," he said. "It is better for a home buyer to shop for a good house rather than for a good interest rate." He said traffic and sales at Ryan's 50 subdivisions in the Metro area are going well.
Traffic at Signature Homes' nine developments in Northern Virginia is up 50 percent, and "we have had 48 sales since Jan. 1," Garzinsky said.
Schar is predicting a 10 to 15 percent increase in sales for NVHomes over last year during the spring months.
He said January was stronger than last year. "More people were out looking," he said.
NVHomes, Ryan and Signature are not considered speculation developers. They generally sell a unit before they build it. Ryan even gets loans approved before starting a home.
"We have never been a speculation builder. We build for the individual. We take orders," Schar said.
"The buying community has come to accept a delivery date of 90 to 120 days." He conceded that the lack of inventory could result in his company being unable to sell to those who need immediate housing.
Realtors and builders who were interviewed agreed that few builders are willing to go out on a limb in spite of good predictions. Because many local builders were drastically hit by the economic disasters in the market in 1972 and 1973, they have been reluctant to build up inventories.
"The lessons of the 70s will stay with us," Garzinsky said. However, he said he wished he had been a little bolder this year, adding that a small inventory would have been beneficial.