Rise In Home Improvements Mirrors Recession Jitters

Uneasy Homeowners Rebuild Rather Than Sell

July 24, 1991|By June Kurtz | June Kurtz,Contributing writer

People are gaining confidence as the housing market slowly climbs out of recession, but a surge in home improvements shows that some Carroll residents remain uneasy, county builders said.

"That's kind oftypical," said Mike Maholchic, president of the county chapter of the Home Builders Association of Maryland. "Toward the end of a recession . . . people will rationalize that they're going to add on or improve their existing structure rather than buy."

People are unsure whether their house will sell, so instead they try to tailor it to their needs.

Instead of selling, homeowners often decide to add a family room, said Martin K. P. Hill, owner of Masonry Contractors Inc. in Manchester. "You always see a pick-up in remodeling when sales go down."

"Every house is a redo," said Sylvia D. Gorman, president of the Carroll County Association of Realtors and an associate broker at O'Conor, Piper & Flynn Realtors.

"They'renot building houses anymore. They're just fixing the old ones up -- engineering the product to meet the need," she said.

There were 822 home-improvement applications filed in the second quarter of 1991, up 142 percent from the 340 first-quarter requests, county records show. The number of applications is 10 percent over the same period last year.

Applications for residential building permits in the county are slowly climbing -- up 10 percent from 154 requests made in the first quarter to 170 in the last quarter.

The numbers are significantly lower than last year, down 69 percent from the 549 building requests filed in the second quarter.

"The numbers right now are reflecting the lag in the economy (and) the uncertainty of people's economic futures," Hill said. "We are still operating with a reduced work force of probably 20 to 25 percent.

"There are threats of additional reductions of the work force if (business) doesn't pick up."

Although some people sense that the economy is on a upswing, many others are still concerned about job security, said Jeffrey B. Powers of Powers Construction Co. in Westminster.

"Things are better, but we're not out of this entirely yet. There's still a tremendous amount offear," Powers said. But, he said, "we've seen the bottom, and I think we're starting to ascend."

M. Lynn Rill, vice president for residential real estate loans at Carroll County Bank and Trust, said thatwith the economy still in a recession, people are hesitant about making large purchases.

"If you don't know whether or not you'll havea job tomorrow, you're not going to go out and buy a house," Rill said. "It's simply a matter of people not being confident."

The realestate market has been slow for the last 18 months, Rill said. "Loandemand has been down this year," he said. "There's no doubt about that.

"But I think we're starting to come out of it," he added. "Allindicators point in the direction of continued improvement."

The financing rate remains a low 9 1/2 percent, Powers said.

"We've only seen single digits for a few years," he said.

As existing houses in the county are sold, the number of building permits filed will increase, Gorman said.

"This office is extremely busy," she said. "Inventory is being depleted."

"There's more activity out there," Maholchic said. But, he said, "I don't think we're gonna see the volume of activity that we saw in the mid-'80s in Carroll County for a long time."

During the summer, sales usually slow down as people takevacations, Gorman said.

"The summer is vacation time," Gorman said. "When the summer hits, there's usually a lag until September."

"Heat turns people away," Powers said. "People are on vacation. They don't focus on housing."

"I'm very optimistic that we're going to continue to slowly get back to a more pro-active mode," Maholchic said. Now, he said, builders are more reactive -- they wait to get a contract before going ahead.

But things will continue to improve, he said. "The pace will depend upon the confidence of people in the economy."

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