Aclear majority of home builders surveyed recently say prices of new homes will rise during 1994.
Of those surveyed at the National Association of Home Builders 50th Annual Convention and Exposition that ended last week in Las Vegas, 87 percent predicted prices will go up this year. Only 2 percent said they believe prices will decline, while 11 percent see prices remaining the same.
The survey on a wide range of new-housing issues was conducted in face-to-face interviews on the convention floor from Jan. 20 to 22. There were 561 respondents.
In rating the prospects for the economy in 1994, 18 percent felt it will be excellent, 50 percent good, 26 percent average, 6 percent poor and 1 percent very poor.
The mood of this year’s conventioneers was more upbeat than last year, when only 13 percent thought the economy would be excellent and 31 percent good.
Market conditions for the sale of single-family homes was rated better than last year by 65 percent, about the same by 28 percent, and worse than 1993 by 45 percent.
Market conditions for the sale of condos was rated better than last year by only 32 percent, about the same by 45 percent, and worse than last year by 11 percent.
What are the major problems facing first-time home buyers?
High prices, replied 40 percent of the builders; raising the cash for down payment and closing costs, 37 percent; meeting qualifying-income levels, 19 percent; uncertain economic conditions, 17 percent; high closing costs 12 percent; credit record, 9 percent; and interest rates, 6 percent.
In predicting national housing starts in 1994 compared with 1993, the builders said they will increase slightly more than last year, 39 percent; somewhat more, 30 percent; about the same, 16 percent; significantly more, 10 percent; and slightly less, 4 percent.
Of those surveyed, 49 percent said they build homes primarily for trade-up buyers; 30 percent primarily for first-time buyers; 11 percent, elderly buyers; 10 percent, empty-nesters; and 6 percent, vacation buyers.
The most significant problems builders expect to face during the year include: lumber prices and availability, 64 percent; availability of lots, 36 percent; environmental regulations, 32 percent; development and permit approval, 32 percent; workers’ compensation, 31 percent; impact fees, 27 percent; and labor availability, 24 percent.
Codes and regulations that builders said make it difficult to build affordable homes include: development and approval process, 53 percent; zoning, 35 percent; overly restrictive building codes and impact fees, both 32 percent; development standards, 31 percent; development fees, hookup fees, and wetlands, all 30 percent.
About 22 percent of the builders predicted that the cost of undeveloped lots will be significantly higher during 1994 compared with 1993, and another 58 percent said they believe the cost will be somewhat higher.
For developed lots, 27 percent said the cost will be significantly higher and 56 percent said it will be somewhat higher than 1993.
The question “Do you buy raw land for development, buy finished lots, or build on customer’s lots?” drew this response: 58 percent of the builders reported that they buy raw land, 59 percent buy finished land, and 42 percent build on customer’s lots.
The impact on home sales if mortgage interest was not deductible on income taxes? Almost two-thirds said there would be a significant decline in home sales; 25 percent, some decline; and 7 percent, no impact.
