Housing: Ready to take the lead?
The US has climbed out of recession five times since World War II — and every recovery but one has been led by a boom in housing starts. Can history repeat?
“It’s going to be a good year for housing,” declares chief economist Micheal Sumichrast of the National Association of Home Builders. “Not a great one – like 1971, ’72, or ’73 – but a good one. We should build 1.5 million new units this year, and that’s 30 percent more than 1975. What’s more, the trend continues right into 1977. A key reason for the improved outlook is money. We have had record flows of new savings into the thrift banks. Savings-and-loan associations, for instance, received $30 billion in net new savings in 1975, compared with the previous record of $24 billion in 1972. And the savings flood should continue.
“But there are still some clouds on the horizon. Disposable personal income has not risen as fast as the cost of housing and utilities over the last two to three years. So even though there is no longer any lack of mortgage or construction funds, there is a problem with the price of the units vs the ability of new householders to pay.”