ATLANTA -- Troubled by the outbreak of war with Iraq, economic uncertainties and a real estate market suffering its worst downturn in a decade, many of the nation's home builders said this week they fear that 1991 may prove as bad for the industry as 1990.
Housing starts in 1990 totaled about 1.2 million, the lowest level since 1982, and housing industry economists predict that they will drop even further in 1991, to an estimated 1 million. By contrast, in 1986 construction was started on about 1.8 million new homes.
"The pace of home building continues to weaken. ... 1990 was a tough and troubled year for housing and 1991 holds some troubled moments as well," said Martin Perlman, immediate past president of the National Association of Home Builders, which gathered here this week for its annual convention.
Nor is a national recovery right around the corner, the experts said, although they differed on the likely length of the downturn.
While NAHB economists said they expect the recovery to begin in mid-1991, others predicted that the slowdown would continuethrough 1992. The most pessimistic forecast came from David Stockman, former director of the Office of Management and Budget during the Reagan administration, who said the downturn would last for three to four years because of the unprecedented national debt.
Even more disturbing to the nation's builders is that the downturn is occurring despite conditions that would ordinarily result in a strong market. Interest rates have fallen below 10 percent, good mortgage terms are available and sellers are ready and willing to negotiate with buyers.
The housing picture is strikingly varied, depending on the region, with some parts of the country still doing well. Home builders attending the conference from Las Vegas and such Midwestern states as Ohio were buoyant.
Many other builders have managed to retain their optimism in the face of an avalanche of bad news. More than half the builders surveyed at the convention said they expected the number of housing starts in the country in 1991 to be equal to or better than 1990, and about half expected the prices of new homes to increase this year.
But others expressed dismay with a market in which some builders are growing weaker and buyers are becoming ever more aggressive in seeking price cuts.
"Nothing prepared me for what I have been through in 1990," said F. Gary Garczynski of Woodbridge-based Long Signature Homes. "In the Washington area right now we are in a very deep recession-depression.
"The buyers that do exist are taking full advantage of the environment and are demanding significant discounts."
Many panels here -- with such titles as How to Avoid Deadly Marketing Mistakes, Moving Homes in a Slow Market and Change or Perish -- dispensed advice on how to financially and psychologically survive bad markets. In one hard-times seminar, a speaker suggested builders draw comfort from the Ten Commandments, instructed them to remember the past 10 years of "milk and honey" and reminded them to count their blessings.
Another panelist, Paul Estridge Jr. of Carmel, Ind., turned to humanistic psychology, recommending M. Scott Peck's "The Road Less Traveled." Estridge suggested builders needed to learn to "remap" their life strategies. It is not an easy task, he told participants.
"I'm an SOB -- a son of a builder," he said. "Home building is the only thing I know."
The wrenching turmoil within the industry is playing itself out againsta changed financial landscape, primarily because of problems within the nation's banking and savings and loan institutions. Especially symbolic of the transition was the prominent location near the convention center's main entrance of a booth for the Resolution Trust Corp., the federal agency that oversees failed savings and loans and has become the nation's largest landowner.
The crisis within the banking industry has also affected numerous builders more directly. Federal regulators across the country have tightened the screws on real estate lending in an effort to stanch the flow of bad loans. In some cases, they are going too far, spokesmen for the trade group said.
"We have identified the credit crunch as the number one issue for our organization," Perlman said.
"The banking industry needs to start making loans again," said builder Mark Tipton of Raleigh, N.C., who became NAHB president this week.
But the builders themselves said their biggest problem is finding buyers willing and able to purchase new homes, according to a survey conducted at the conference.
The survey showed that about half of first-time buyers find high home prices and the cost of a down payment particularly difficult hurdles. Trade-up buyers are stumped because they are unable to sell their homes and because they fear the uncertain economic conditions at the moment.
The slowdown in the market is ultimately being caused by the faltering economy, the nation's debt load and, most significantly, the end of the post-World War II baby boom, said John A. Tuccillo, chief economist of the National Association of Realtors.
"The housing market is facing a declining market because of demographics," Tuccillo said.