In Spring, Builders' Fancies Will Turn To Rebound In Sales

Economy, War Fears Hurting Market Now

January 13, 1991|By Kerry O'Rourke | Kerry O'Rourke,Staff writer

County builders are looking forward to spring, when the air is fresh, the flowers are blooming -- and houses have a better chance of selling.

"Spring perks a lot of things up," said Thomas H. Lentzner, avice president at Union National Bank in Westminster who handles loans to builders.

Some area builders predict the housing market, which has slowed in the last year, will pick up this spring, depending on what happens in the Middle East.

"We still have a lot of interested people, butit's difficult to get them to make a long-term commitment with the economy and what's happening in the Middle East," said Martin K. P. Hill of Masonry Contractors Inc. in Manchester. "People just don't knowwhat to expect, so they're holding tight."

Jeffrey B. Powers of Powers Construction Co. in Westminster said, "People are using the recession word now, and that affects big-ticket items like homes."

Hesaid he's been "creative" in attracting buyers for homes he's building in Eldersburg and Sykesville. He's offered up to $5,000 in free options such as fireplaces, floodlights and upgraded carpeting, and hascontributed money toward buyers' closing costs.

Powers said he also has encouraged buyers to lower the price of the house they're selling by offering to lower the base price of the new house by the same amount.

Applications for residential building permits in the county declined 74 percent during the last three months of 1990, compared to the year's third quarter. A county report shows 76 permit applications were filed in October, November and December, compared to 289 inJuly, August and September.

Builders say the decline can be attributed to several factors, including the fact that the fourth quarter of any year usually is slower because of the holidays and colder weather.

In 1989, residential permit applications declined 48 percent in the fourth quarter compared to the third, county figures show. In 1988, the decline was 38 percent.

In 1990, a proposed increase in the county impact fee also affected residential permit application numbers, builders said.

Builders applied for permits earlier in the year hoping to avoid a possible $500 increase in the fee for single-family homes, said Mike Maholchic, president of the Carroll County chapter of the Home Builders Association of Maryland.

In September, the last month of the third quarter, the County Commissioners did not approve an impact fee increase. The $2,700 fee helps pay for new public facilities needed to accommodate growth.

When they knew the feewouldn't increase, builders stopped buying ahead, said Sylvia Gorman, president of the Carroll County Association of Realtors.

"They don't want to use reserve capital for purchasing permits to build a home if they don't have a buyer," she said.

Residential building permit applications were down 6 percent from 1989 to 1990, the county report shows. The number of permits issued declined 23 percent in 1990.

With the slowdown in the housing market, builders said they won'tstart working on a new house until the buyer has sold his.

Gregory S. Dorsey, who's building homes in Eldersburg, said a year and a half ago he would've gone ahead and started building before the buyer had finalized the sale of his home and financing for the new home. That's too risky now, he said.

Maholchic predicted the county would see an upswing in the housing market this spring, but that 1991 wouldn't be a "great" year. He said he expects 1992 and 1993, "by which time the economy will have turned around," to be better.

He said he'sjust started building three houses -- one in Finksburg and two in Mount Airy -- in the $300,000 range.

Hill said if the Middle East situation is resolved, the county could see some improvement in the housing market in the second quarter of this year.

He said he has work to do through March, although not as much as before. Sixty days ago, he settled sales on four to six houses a week; now he settles on two or three houses a week.

Hill said he settled on 207 units last year, compared with 181 in 1989.

Gorman said more people usually begin looking for new homes in the first two months of the year. Colder weather forces them to spend more time inside, and they notice cracks in the walls and other repairs that need to be done and decide to move, she said.

Three homeowners called her last week to list their homes, she said.

"I like bad winters," she said.

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