Abstract

The underlying trends revealed by the author's hypothetical housing inventory model and the actual housing market situation in California suggest that this market is due for a strong recovery from which the savings and loan (S&L) would benefit. The housing and mortgage markets have been in the doldrums in recent months-nationwide, starts were down some 50 per cent in 1966 from the 1963 level. This decline has affected the entire economy, but certain sectors have been hit especially hard-the S&L industry is such a sector. Their problems have stimulated the S&L associations and their regulators to take a hard look at the industry and the environment within which it operates. This article synthesizes several of these efforts and gives a general picture of some long-run factors which have influenced and probably will continue to influence the industry. The first section describes the forces leading to S&Ls' dramatic growth during the 1950s and the early 1960s; it emphasizes, particularly, the likelihood that these same forces will continue to operate during the coming years.