Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 19, 1992 TAG: 9201200246
SECTION: HOMES PAGE: C-5 EDITION: METRO
SOURCE: By ELLEN JAMES MARTIN
DATELINE: LENGTH: Medium
HOUSING DEMANDS MAY BE WEAK IN '90S
The expected 1992 rebound in home sales will not be the usual locomotive of economic recovery. Economists say to expect only a slow-wheeling bicycle and predict that housing demand from the so-called "baby bust generation" will be weak in the 1990s."Housing probably will be a leading sector in the recovery, but it won't be nearly as strong as it has been in the past. Instead of being an engine of growth, it will probably be a bicycle," said Mark Obrinksy, senior economist with the Federal National Mortgage Association.
"We simply have fewer people out there forming new households and looking for housing space," said Lyle Gramley, chief economist for the Mortgage Bankers Association.
The number of Americans in the prime home-buying age group, 25 to 34, peaked at 44 million in 1989, says Richard Hokenson, a demographic economist at Donaldson, Lufkin and Jenrette, a New York investment firm. By 1995, there will be fewer than 41 million in that category, he says.
The so-called "birth dearth" generation will be bad news not only for the housing industry but for other sellers of big-ticket items, such as car dealers and appliance manufacturers, says Jeffrey Kosnett, senior associate editor for Kiplinger's Personal Finance Magazine.
Mortgage rates are at their lowest level in more than 14 years, Kosnett notes. "But most people taking advantage of the low rates will be refinancing their mortgages or buying houses that are already standing.
"That won't do much for construction workers or the people who sell accouterments for housing - like Sears and Hechingers."
To be sure, not every housing specialist buys into the notion that housing demand will be weak as the economy moves into the predicted economic recovery in 1992.
"I think it's a silly argument," says Lynn Michaelis, chief economist for Weyerhaeuser Corp., a forest products and homebuilding company.
He contends that there is still a large amount of unsatisfied housing demand among the "baby boom" generation, especially among those age 35 to 44.
High housing costs kept many of the baby boomers from buying the houses they wanted during the 1980s, according to Michaelis.
In 1980, 74 percent of those in the age group 35 to 44 owned their own homes, but by 1990 the figure had fallen to 67 percent, he says.
Also disdainful of what he calls "the missing baby-boomer theory" is Peter G. Miller, author of several books on residential real estate.
"We have tremendous pent-up demand for housing in this country and households forming at a faster rate than we've built homes," Miller insists.
Mortgages are now available at 8 percent and housing prices have settled, if not dropped, in many U.S. communities in recent years.