Better But Not Great

Next Article

I,tte don't play anound with lumbershipments *@

By Pete Niebling Executive Vice President North American Wholesale Lumber Association

THERE IS a ! consensus among wholesalers that homebuilding will come out of its 1980 slump by the middle of the second quarter of 1981. Many of them feel that, near term, it will be a long, tough winter, and they are not referring to weather.

Our own view is that new home starts will improve in 1981, but that the indusry will be experiencing new and basic transitions: producers, distributors and retailers will be exposed to both new opportunities and new problems next year. The potential problems lead us to conclude that housing will recover in l98l but on a very gradual basis.

Our war on inflation has not as vet been successful. Our battle with

Story at a Glance

Any housing improvement highly regionalized housing starts 1.45 millioh, up from '80's 1.2 million overall industrial markets to improve gradually, remodeling up 10"/" in demand, exports off substantially in '81.

the inflationary spiral is being conducted with the weapon of interest rates. Not only are they high, but their course is unpredictable. It is perhaps this latter problem that will affect our industry and the housins indusfry the most. The home buver-mav we'll be able to adjust to higher hortgage rates, but he will likely defer purchases if those rates "yo-yo. " At the same time, the lender will be reluctant to commit to long-term fixedrate mortgages. The various variable rate financings can only provide part of the answer; perhaps the shared equity mortgage will help. Regardless, the problem of fluctuation of interest rates will put a damper on demand.

Improvement in housing next year will be highly regionalized. Although this is nothing new, regional variations will be more pronounced. As housing starts increase, there will be little or no improvement in some sections of the U.S. The outlook in Canada is much the same.

The legislative reform of hansportation will be a factor. The question of whether deregulation of truck and rail is good or bad won't be answered in a year's time. The fact that it is there will provide opportunities for some and obstacles for others.

Politically, the government will be sensitive to employment, but no matter how large the homebuilding indusfty is, as long as it continues to improve gradually, there will be a minimum of pump-priming.

It is reasonable to conclude that 1981 will be a better year for housing, but mediocre when compared to the boom years of 1.8 to 2.0 starts.

Other forest product markets, with the exception of overseas export, should also improve, and the industrial market will be enhanced somewhat by the overall economic re-

(Please turn to page 85)