Lower Mortgage Rates Lure Homeowners To Trade Up to Bigger and Fancier Houses
"Move-up" buyers are moving back into the housing market.</br></br>As the high interest rates that long locked them in their old homes eased this spring, homeowners who want bigger or fancier dwellings became a major factor in real-estate sales. It has been five years since such buyers have been in the market so deeply, experts say, and the trend appears likely to persist -- fueled by pent-up demand among affluent baby boomers and stable mortgage rates.</br></br>"We're clearly past the bulge as far as the . . . first-time buyer being the dominant element in housing," says Weston Edwards, a senior executive vice president of Lomas & Nettleson, the nation's biggest mortgage banker. Now, he says, "we're beginning to see their move-up process."</br></br>The return of move-up buyers could reshape the housing industry. Their moves will increase the supply of more modest homes for sale, which could depress their prices. To meet demand for higher-priced homes, builders may shift away from their emphasis on small starter houses. In wealthier suburbs, housing experts expect builders to construct more expensive, custom-built homes. And since people buying higher-priced homes tend to also want lots of amenities, the building-supply industry hopes to benefit too.</br></br>The presence of these buyers is showing up in the robust figures on new- and existing-home sales. In May, for example, newhome sales rose 9.7% to a seasonally adjusted 676,000-unit annual pace, a level expected to continue throughout 1985. Builders in Ohio, Georgia, Florida and elsewhere report heightened demand for their costlier homes or plans to expand pricey subdivisions.