Creative Home Financing

October 30, 1981

Report Outline
Home Ownership: A Fading Dream
Creative Financing Techniques
Predictions for Housing Market
Special Focus

Home Ownership: A Fading Dream

Home Buyers Hurt by High Interest Rates

The dream of owning a home is fading fast for the millions of Americans who will try to buy their first home sometime during the 1980s. High interest rates, rapidly rising home prices and scarce mortgage money have ended the era of relatively easy home buying that swelled the ranks of homeowners from 44 percent of the population in 1940 to 66 percent in 1980. The housing industry and the financial institutions that support it are suffering along with potential buyers. At current interest rates — between 17 and 19 percent — there are few home mortgage borrowers, few home sales and few construction starts. According to a study by the National Association of Home Builders (NAHB), “the current housing recession is the longest running and most devastating … the industry has suffered since World War II.”

Housing starts in September fell 1.7 percent to a seasonally adjusted annual rate of 918,000 units, the U.S. Commerce Department reported Oct. 19. The September figure was 38 percent below the year-earlier annual rate of 1.482 million units. The National Association of Home Builders estimates that only about a million new housing units will be built in 1981. That would be the lowest level since 1946 and one that falls far short of the 2 million new housing units a year the association estimates will be in demand in the 1980s. Sales of existing single-family homes were down 8.4 percent in September to 2.07 million units. That figure was 36 percent below last September's sales, according to the National Association of Realtors. New mortgage loans last year were down 30 percent from 1979; for the first half of 1981 the volume was down another 11 percent. A recent nationwide survey of 400 savings and loan associations found that 31 percent of the S&Ls were not making mortgage loans at all.

The nation's home builders are going broke at an unprecedented rate. According to the NAHB, bankruptcies among builders are up 40 percent this year over last, and roughly half of its membership — which represents about a third of all builders in the country — have stopped building. “It's a disaster and it isn't over,” said the association's chief economist, Michael Sumichrast.

ISSUE TRACKER for Related Reports
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Apr. 02, 2021  Evictions and COVID-19
Mar. 02, 2018  Affordable Housing Shortage
Nov. 06, 2015  Housing Discrimination
Feb. 20, 2015  Gentrification
Apr. 05, 2013  Homeless Students
Dec. 14, 2012  Future of Homeownership
Dec. 18, 2009  Housing the Homeless
Nov. 02, 2007  Mortgage Crisis Updated
Feb. 09, 2001  Affordable Housing
Jan. 06, 1989  Affordable Housing: Is There Enough?
Oct. 30, 1981  Creative Home Financing
Nov. 07, 1980  Housing the Poor
Dec. 21, 1979  Rental Housing Shortage
Nov. 24, 1978  Housing Restoration and Displacement
Apr. 22, 1977  Housing Outlook
Sep. 26, 1973  Housing Credit Crunch
Aug. 06, 1969  Communal Living
Jul. 09, 1969  Private Housing Squeeze
Mar. 04, 1966  Housing for the Poor
Apr. 10, 1963  Changing Housing Climate
Sep. 26, 1956  Prefabricated Housing
Sep. 02, 1949  Cooperative Housing
May 14, 1947  Liquidation of Rent Controls
Dec. 17, 1946  National Housing Emergency, 1946-1947
Mar. 05, 1946  New Types of Housing
Oct. 08, 1941  Rent Control
Aug. 02, 1938  The Future of Home Ownership
Sep. 05, 1934  Building Costs and Home Renovation
Nov. 20, 1933  Federal Home Loans and Housing
Nov. 17, 1931  Housing and Home Ownership
Mortgage Loans and Home Finance