The Careful House Hunter

When housing does well, so do a lot of other industries: steel, lumber, glass, appliances and furniture. So far in the '60s, housing has proved a disappointment. As the spring home-buying season opened in earnest last week, the figures for housing starts in January and February showed only a 3% rise over the same months last year, a disappointing gain that is being blamed on a hard winter. But there are portents of better things to come. Permits for future building jumped 8% in the two months, and FORTUNE'S semiannual survey reports that builders plan to put up 17% more houses and apartment units this year than last, or 1,670,000 altogether.

One stimulant to increased homebuilding is cheap and plentiful mortgage money, largely the result of a 14% rise in savings deposits in Federal Reserve member banks in the past year. Overloaded with savings that they must put to work, bankers in the past four months have cut mortgage rates by 1/4% or 1/2|%; in many places, rates are the lowest in five years. At 5 1/2% or 6%, almost anyone can get a 25-year mortgage covering 75% or more of his cost. Says Lynn Stiles, housing expert of the Chicago Federal Reserve Bank: "Lenders aren't quite as particular about location and style of construction these days. They are also less exacting as to qualifications of the borrower."

Builders report that most of their prospects are second-time and third-time buyers who are trading up to better houses, know precisely what they want and demand more for their money. What many want is two-story houses, which are better buys than rambling ranches because they occupy less land (prices for lots have jumped an average 190% since 1947). Buyers are also less eager these days for picture windows, which add to bills for heating and draperies.

New housing construction is particularly strong in Philadelphia, Baltimore, Washington. D.C.. and San Francisco, has also picked up in Atlanta, New Orleans, Detroit, Phoenix and Seattle. In many places, builders try to attract customers by offering free one or more come-ons that they used to charge extra for: wall-to-wall carpeting, fully equipped kitchens, swimming pools and. in San Francisco, even sauna baths. This is largely in response to the challenge from apartment builders, who woo potential homeowners with such inducements as free moving, a bonus of trading stamps, several months' free rent or even free furniture. Too many new apartment houses have been built in many areas, but apartments are still expected to account for one-third of 1963's housing starts.

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