Gains for Residential Construction Could Strengthen Lending This Year

By Mensheha, Mark | American Banker, January 20, 1994 | Go to article overview
Save to active project

Gains for Residential Construction Could Strengthen Lending This Year


Mensheha, Mark, American Banker


WASHINGTON -- Mortgage bankers could thrive in 1994 if predictions of near-record activity in housing markets by the National Association of Realtors are accurate.

According to John Tuccillo, chief economist for the trade group, banks geared up to lend to construction industry in 1993, which may translate into an increase in the rate of housing starts this spring, in turn driving the economy.

"It's housing construction, not home sales, that drives the economic growth," Mr. Tuccillo said. "If there is a strong level of housing starts, that will give a real bump to the economy."

Mr. Tuccillo, who is also a senior vice president at NAR, said that despite uncertainty on the outlook for long-term interest rates, the impetus of low, short-term rates for construction loans should continue.

That could mean an even bigger year in residential real estate. Mr. Tuccillo said sales of existing family homes may top 3.9 million in the coming year, while housing starts could approach 1.4 million -- both increases from 1993.

Mr. Tuccillo attributed much of the drop in homeownership rates in the 1980s to a decrease in buying in the 18-35 age group. But the increase in home sales in 1994 will be driven by younger buyers returning to the market, Mr. Tuccillo said.

"These households didn't drop off the face of the earth," he said. "They were closed out of the market by double-digit interest rates and rapidly escalating home prices.

"These people are now older, they've saved their income so they have more money, and interest rates continue to go down. They came back in droves in 1993 and that will continue in 1994."

This impact will be enhanced by younger buyers who feel they can't miss out on the "interest rates of a lifetime," Mr. Tuccillo said.

In the commercial real estate market, Mr. Tuccillo projects a continuation of the present difficulties. Many of the facilities built in the optimism of the 1980s remain vacant today, and improved technology will make these buildings hard to fill, he said.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Gains for Residential Construction Could Strengthen Lending This Year
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?