Housing in America: the shape of things to come

Housing in America may never be the same again.

So say housing experts who are peering beyond the depressed state of the building industry and trying to make sense out of where housing is headed after the United States climbs out of the recession.

The experts disagree on whether housing prices will level off or keep spiraling upward. They even disagree over the basic question of whether there is a housing shortage. But they do agree that far-reaching changes are under way, even while the recession has virtually stalled real estate sales and construction.

Changes in housing forms and styles expected by experts include:

* Increased density. As land costs rise, the common ground concept--as seen in condominiums--will become even more widespread.

* More no-frills homes, including more houses built on a slab, and smaller rooms.

* Wider use of mobile homes.

* Dividing single-family homes, despite local zoning battles. Opponents of such divisions often fear property values will drop as density increases.

* More developers are expected to sell just the house shell, leaving homebuyers to finish off the interior at their own pace.

* More people are prepared to pay for homes built of lower quality materials.

* Fewer houses will be built on speculation, but will be built only on specific buyer demand, predicts Ray M. Broughton, economist for the First Interstate Bank of Oregon.

* More shared ownership, both single roommates and two sets of married couples.

''As the housing industry regroups and reorganizes, there will be a significant change in the nature of housing,'' says Brian Berry, dean of the School of Urban and Public Affairs at Carnegie-Mellon University in Pittsburgh. ''After each previous major recessionary interlude, the housing industry has embarked on a new course where new housing styles have come to the fore.''

''We'll still see lots of traditional single-family houses on their own lots, although the houses and the lots will be smaller than in the 1970s,'' says Mr. Berry. ''We'll see a more rapid increase in the condominium townhouse kind of developments. Condo living removes much of the responsibility of caring for the house and grounds, which is especially important for families with two wage-earners where there's much less time for domestic pursuits.''

But aside from questions of form, questions of finance also loom large when the issue of housing in the US comes up.

Congress, alarmed at high unemployment in the construction industry--19.4 percent in April--and the 32 percent dip in housing starts from a year ago, is putting together a subsidy program that will shave points off the towering interest rates that have kept prospective homebuyers out of the market. According to the Federal Home Loan Bank Board, the average US market rate for a 75 percent, 25-year mortgage is currently 17.39 percent.

Although a final compromise has yet to be pounded out between the House and the Senate, congressional sources say the final measure is expected to cut mortgage rates for low and middle income people buying new homes to as low as 9. 5 percent. The cost to the US Treasury is pegged at $5 billion over the next five years. The bill passed in the House last week 343 to 67. The Senate version survived a filibuster May 27 to emerge as an amendment to an Urgent Supplemental Appropriations Bill.

Sen. Richard D. Lugar (R) of Indiana, a sponsor of the Senate bill, claims it would create jobs for 700,000 people and spur the building of 400,000 new single-family homes. But the Reagan administration adamantly opposes any form of industry ''bail-out,'' saying it could open expensive floodgates in other ailing industries such as steel and automobiles.

Another bill in the House would give first-time homebuyers a $5,400 tax credit. And in March, President Reagan announced a five-point program of relaxed regulations designed to stimulate the sale of houses and to help lower what he called ''nightmare'' mortgage interest rates.

Despite these short-term efforts, however, experts almost unanimously agree the long-term answer always gets back to lower interest rates. Since interest rates skyrocketed in 1980, innovative real estate agents and homebuyers have been finding ways around the problem by a seemingly endless number of ''creative financing'' schemes. But the luster may already be fading.

''The creative financing boom is ending,'' says Michael Johnson, assistant professor of consumer economics at Cornell University in Ithaca, N.Y.

Most of the schemes involve some way of holding on to a low-interest mortgage loan, or of getting the seller of the house to make a low-interest loan to the buyer. But, writes John T. Reed, an editor of the Real Estate Investing Letter, ''offering a low-interest loan is really just another way of reducing the price to fair market value . . . Seller financing is nothing more than a self-delusion.''

Creative financing may distort prices and values in the marketplace, but it's often easier, says Mr. Johnson. If contortions to offer low-interest loans were sacked in favor of simply lowering the price, it would mean hefty price cuts.

''All other things being equal,'' up to 20 percent could be lopped off the price of a house, he says.

''People realize that's true, but they're afraid to start (acting on it),'' says Johnson. No one wants to be the first to puncture the myth. ''You don't want to start a round of price-cutting on what you make your livelihood at.''

''Seller financing inflates the apparent price above market value,'' continues Mr. Reed. ''The seller really got less than it appears for his property. But when it comes time to pay sales commission or taxes, the phony, inflated price is the one that's used.''

''Creative financing will play itself out in the near future,'' says Johnson. ''But the new mortgage instruments--the variable rate mortgages--are here to stay once the creative financing works its way out of the system.'' No longer will savings institutions and depositors subsidize low, flat-rate 30-year mortgages that Americans once took for granted, he says.

Yet creative financing is about to become safer than ever. MGIC Investment, a Milwaukee-based home mortgage insurance underwriter, just started offering insurance for sellers who provide their own financing for homebuyers.

''The solution is lower interest rates,'' writes Reed. ''There is no sleight of hand, no trick with mirrors, no magic 'creative financing' technique that can whisk away the high-interest-rate problem.''

One fundamental change that may have to take place before housing prices stabilize involves the current attitude toward homebuying among many in the US.

Housing will become more affordable when America removes it from the realm of investment and back to the realm of shelter, says Johnson. No longer is buying a home the risk-free investment it was in the 1970s, when it was virtually certain that you could sell a house for a lot more than you paid for it, he says.

While Johnson says a change in homebuyers' attitudes would keep house prices level, urban geographer Peter Muller of the University of Miami says house prices will keep spiraling upward because of the pent-up demand among thousands of young people and families who have delayed buying a home due to high interest rates.

Mr. Muller, author of the book ''Contemporary Suburban America,'' says the high cost of housing is having another effect: The once free-wheelingly mobile US society is slowing down.

''People are going to overwhelmingly decide to stay where they are,'' says Mr. Muller. Instead of facing the steep cost of moving to a new house, they will spend their money improving the house they already have. They want to sink roots in their neighborhoods. And two-career families can mean twice as many ties to an area.

While Mr. Muller says the trend means that housing stock will be improved, and people will put more effort into their communities, he warns of the dangers.

''The tragic side of it is that Americans are turning inward more than ever before, and it'll be harder than ever to bring about social change,'' says Mr. Muller.

Although obvious answers and clear-cut solutions are scarce, patterns of change are becoming clearer. Says urban geographer Muller: ''If we understand housing, we can understand where this country is going.''