Pent-up demand to explode in '97, company predicts

SMART MOVES

May 09, 1993|By ELLEN JAMES MARTIN

It's called "pleasure revenge," and the people at Brain Reserve Inc. in New York expect it to hit in 1997.

That's when pent-up demand to buy anything from a bigger house to higher-fat food is expected to be fully released.

"There'll be another real estate explosion," predicts Melinda Davis, creative director for Brain Reserve, a New York-based firm that tracks consumer trends and counts among its clients several dozen Fortune 500 corporations.

While not specialists in real estate per se, the folks at Brain Reserve -- including founder Faith Popcorn -- gave themselves a reputation for trend-watching by predicting in the early 1980s that many Americans would "cocoon." By that, they meant people would retreat to the safe haven of their homes, rather than pursue more exciting, away-from-home activities.

These days, Ms. Davis says, "cocooning has moved into a new, more advanced phase we call burrowing." Troubled by fears about the U.S. economy and therecognition that President Clinton won't be performing any economic miracles, many Americans are still retreating from financial decisions, she says.

But many of those occupying themselves with gardening, home fix-ups and VCR upgrades today will be doing more adventuresome things with their time and money in the late 1990s, if the Brain Reserve people are correct. Presuming the economy settles, they'll be back doing serious home shopping -- satisfying long-delayed housing desires -- before the end of the decade.

Housing economists are divided on whether the burrowers will come any time this decade. After all, the aging of the baby boomers means more people are settling into the conservative ways of middle age. Against that, however, could be the almost insatiable appetites of a materialistic population, economists say.

At the Legg Mason Realty Group in Baltimore, President Robert Kleinpaste says he agrees with the Brain Reserve contention that pent-up demand for better housing will occur. But he argues that many Americans will begin making long-awaited home purchases before 1997.

*

If you're a would-be homebuyer caught between the desire for financial safety that comes with staying put and the quest to buy a first, second or third home while taking advantage of currently low mortgage rates, these pointers from realty specialists could prove of value:

* Don't let the national mood affect your current homebuying plans if you think a stronger market or higher mortgage rates are ahead.

"Fear is really ruining the communal mood right now. It's stopping people where they stand," says Ms. Davis of Brain Reserve.

Is staying put in your present home or rental unit the right choice for you? Is the desire for fresh paint on your bedroom walls or a new deck on the back of your little ranch-style house really the issue? Or is the issue that your family has outgrown its current quarters and will want to move in the future regardless?

No one knows for certain what's ahead for the real estate market. But if your best personal forecast is the market will strengthen in the late 1990s -- pushing up home prices -- then the time to move could be now.

* Carefully compare the options of renting vs. buying.

In an era when the prospect of home appreciation is iffy and homes are tougher to sell than before, the freedom and flexibility of renting is more appealing than before. That way your landlord, rather than you, bears the ownership risk.

But renting has its disadvantages, points out Norman Flynn, a past president of the National Association of Realtors. A fixed-rate mortgage on a home you own gives you a large measure of control over your housing costs. On the other hand, you are likely to have little future control over rental rates in your community.

"Ownership represents control, strength and commitment," Mr. Flynn argues.

* Soul-search your way to your personal housing objectives.

Housing choices are quite variable to individuals.

You could have a pocketbook thick with $100 bills and yet a preference for a small condo -- allowing yourself the discretionary funds for international travel. Or you could have a thinner pocketbook and a willingness to be "house poor" in order to get the big house with the majestic two-story foyer and the spiral staircase.

If you're seeking to crawl out of your burrow but are confused about housing choices, then it's wise to jot down a list of your personal housing objectives.

"Ask yourself what the buying of a house represents to you," suggests Mr. Flynn. "Is it a move in status? Is your family growing and you need more bedrooms? Or are you "re-sizing" to get a smaller, more carefree housing unit?"

If this written list indicates you have solid reasons for buying a home, but your emotions make you fearful of a move from your current abode, then Mr. Flynn suggests you try another paper-and-pencil exercise to clarify your thinking.

Divide your paper down the middle and itemize the pros and cons of making a home purchase on each side. Then star those factors on both sides of the sheet that have a rational rather than purely emotional basis. This could help give you solid grounding for your home-buying decision. If you're worried about personal economic disaster, for example, ask yourself whether apprehensions about losing your job are realistic.

If your plan to buy a house seems sensible and reasonable yet you still have anxious "What-am-I- getting-myself-into?" feelings, admit to yourself that it's normal for stress to accompany any major life decision like the one to buy a house, Mr. Flynn said.

(Ellen James Martin is a columnist for The Sun.)

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