Real estate market expected to improve under Clinton

December 06, 1992|By Marsha Kay Seff | Marsha Kay Seff,Copley News Service

The real estate market will improve in 1993 because Bill Clinton's election will boost buyer confidence, speakers at the recent National Association of Realtors' convention predicted.

"Change is a confidence builder," Dorcas Helfant, the national association president, told the nearly 20,000 sales agents and their spouses who gathered here.

Industry experts said things aren't so bad and are going to get better. Although third-quarter sales were down 5 percent from last year, September sales were up more than 5 percent from September 1991.

"The situation is absolutely serious, but not hopeless," said Sol Rabin of TCW Realty Advisors.

Housing prices will keep up with inflation, but won't exceed it, predicted Robert Van Order, chief economist for Federal Home Loan Mortgage Corp. (Freddie Mac), who said the economy will be "pretty mediocre."

He also believes that there will be fewer regional market differences.

John Tuccillo, chief economist for the national Realtors' group, estimated an economic growth rate of 2.9 percent for 1993.

Mr. Rabin predicted that although the realty market will begin an upward climb in 1993, the growth process will be slow. The country, he said, will be faced with several years of recovery "that will feel like a recession."

The long-term outlook -- five years or so -- is very favorable, he said.

David Lereah, chief economist for the Mortgage Bankers Association, pointed out that housing, which traditionally leads an economic recovery, is doing so -- "but doing a pretty bad job."

James Smith, a professor of finance at the University of North Carolina, said he is the most optimistic of the lot, adding that he believes the recession was over in the spring and that even the "recovery" period is over.

"We're now in a new expansion," Mr. Smith said. He predicted that mortgage interest rates will fall to less than 5 percent by 1994 or 1995.

The forecasters based their predictions on the following assumptions:

Consumer confidence is bound to return.

L Mr. Clinton is expected to make housing a national priority.

His emphasis on jobs is good for real estate.

Record-low interest rates that have been inching up will stabilize or even drop slightly. Low down-payment loans will be more difficult to get and more expensive.

The Clinton administration is expected to loosen the availability of credit for commercial loans. And inflation will increase slightly.

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