Milford chronicle., 1958-08-22
Philadelphia Federal Reserve Bank

HOUSING PROSPECTS ARE M
PROFING-BuilderS, realtors, and
lenders look for better fall market
Housing markets in the Phila-
delphia Federal Reserve District
have strengthened since the, early
spring. Most of the improvement
in demand for new and existing
houses has come in the past six
weeks or SO and further gains ap-
pear likely in the opinion of build
ers, realtors, and mortgage lenders
in our area.
An ample supply of mortgage
money and increasing evidence that
recessionary forces in the local
economy have eased seem to have
been the principal factors prompt
ing renewed interest in home buy
ing. But it still is buyers market.
Competition is keen and price
consciousness remains very much
in evidence. Builders are proceed
ing cautiously and keeping watch
full eye on the fall market, which
they hope will permit more starts
than in 1867 when adequate fnanc-
ing was so hard to find.
There is mortgage money to supply
all f0reseeable needs
Mortgage markets have made a
complete .turnaround since the
early weeks of this year, and at
present the overall supply of funds
appears to be exceeding the demand
by a sizable margin. Some say that
Hno fn "a
bushes" looking for suitable in
vestments in mortgages. Scarcely
six months ago the expression,
tscraping the bottom of the bar
reT' was the appropriate way of
describing serious shortage of
funds available for housing needs.
In the present situation, it is a
borrowers market and would-be
borrowers are shopping for terms.
Pressure on the rate structure has
reduced the interest on convention
al mortgages to range of 5 ito 51A
per cent from an average of 51s to
5A per cent prevailing a few short
months ago. And conventional
loans, with their One-quarter to
one-third or larger down payments,
are not in very great demand today
except on higher-priced houses
those selling at $4,000 and upward.
FILA insured mortgages have be-
come most popular, especially on
the liberalized terms permitted on
properties selling up to and in
cluding $13,5O0. Many old houses
are priced in this bracket Since
they now qualify for minimum
FILA terms, this type of financing
is being used extensively. In sec
ondary markets, FHA's generally
are priced at par and in few cases
they are said to command small
premium.
VA guaranteed mortgage loans
still are not too popular with most
builders but they have been gain
ing favor slowly in our area. They
have been of considerable help in
financing existing properties, par
ticluarly in cases where an owner
has been willing to absorb the
shrinking discounts in order to
make a prompt sale. These mort
cages are accounting for a larger
proportion of all home financing
than was the case over most of
last year.
Buyers interest in new home is
returning
Builders operating in the price
ranges up to about $4,000 tell us
their sales have picked up consid-
erably since June. Some projects
above these brackets also are NOV
ing faster now, although in this
area of the market a spotty situa-
ton noted earlier this year seems
to persist. AS one builder explains
it, some projects catch on fast;
others are just plain sticky and no
one knows why. The mass market
for new housing very definitely lies
below the $13,500 level. In this
bracket are the row houses and
small twin dwellings priced more
nearly to suit the budget of today's-
price-conscious home buyers. But
with land and building costs re-
naming high not very many prof.
ects fall into this category. It is,
however, significant that more are
in the planning stage.
Demand for existing houses is
much more active
Sales of existing properties seem
to be running somewhat ahead of
the new-house market. This is par
ticularly true of houses five to six
years old, where financing on fav-