The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-07-02
THE REAL ESTATE MARKET.
WEEK or UNUSUAL ACTIVITY IN
TIE BROKERA(.E BRANCH.

Operators and Builders Bought Freely
In order to Forest all the Mortgage Tax
Loans Aggregated SA2 900. 900 "a
Compared with SD 900 900 Last Year.
The week just closed was of great activity
in tho real estate market. The activity.
however. was largely artificial II repre-
scented mainly business rushed through
10 cvado the new mortgage tax. which
went into effect yesterday. To what extent
it was stimulated by the change In the tax
Law may hc inferred from tho huge number
OF mortgages recorded in the Registers
Office. These aggregated $40 for Man
haitian and The Bronx, az against $50 in
the corresponding week of last year. and
the amount Of money involved rose from
50 900 900 to $42, 100000.
Some part of the increase noted in these
figures stands, of course, for mere read
justment of existing loans. Many mort
cages about to expire have been cancelled
ia order to be renewed under the old law
for longer periods The larger part OF the
increase, however, comprised new busi-
ness. Professional operators bought prop
erty freely, because. with the assistance
of loans obtained before July 1, they will
be able to carry it moro cheaply and resell
it to better advantage than will be possible
with capital borrowed after that date
For similar reasons builders committed
themselves extensively to new building
operations. Twice as many transfers were
consequently recorded during the week
as in the corresponding period year ago.
and a still greater proportion of increase
took place in building loans.
As to the immediate effect Of the mort gage
tax there can be no doubt. The principal
lending institutions have announced their
intention to add.the tax Of one-half OF per
cent. to the rates of interest. A mortgage
which was formerly obtainable at per
cent. will now cost 5la per cent This tax
means that the yearly expense Of carrying
real property in New York will be raised
by upward OF $500 900. Meantime the
additional burden will not fall equally upon
all owners Of real estate, but exclusively
upon those whose holdings are encountered
( by delt.
Holders Of this C ass are for the most
part either small investors or professional
operators. Real estate, particularly tene-
! ment house property, Is favorlte invest
ment with thrifty and prospecting memters
OF our foreign colonies. As soon as the
immigrant has saved up couple Of thou
send dollars out of his generally very meager
calnngs. his first am, itlon Is to put the
| money into a tenement house. from
some professional operator who makes a
! business Of selling to investors of his class
! he secures Il property that carries first
mortgage of. say, 10 per cent. OF the value
of the premises, held hy some title company
! or Inoneyed institui ion. For the remaining
| 80 per cent. of equity the operator accepts
,l,p~ Nrft M n n
paratively small amount OF cash. The
/ new owner, by careful management and
continued thrift, expects to pay of IN
! short time the purchase money mortgage
which carries interest at @ per cent per
| annum, while the first mortgage carries
| interest at per cent.
An increase of one-half Of per cent.
In the cost of carrying property SO heavily
mortgaged is a serious. item. The tax
will probably not only discourage invest
many owners to lose their holdings through
foreclosure of existing mortgages, There
| Is always even in growing city like New
York. deal of property which does no
more than merely pay carrying charges
and still larger quantity which. yields only
| a moderate return on the investment
| During the past couple of years of rising
rents the number of foreclosure sales
has fallen off to notable extent. The
new mortgage tax will no doubt tend
| strongly 10 ItSlDle lIlc ioliiitl NoluiiiC VI
! forced sales.
The prospect of decreased speculation
! IL less to he regretted On the other hand
the new tax may bring disaster to not
few speculative holders of property, espe-
Thousands of building sites were left in the
hands of small operators when the subway
lot boom collapsed last spring: These
were acquired at highly inflated prices
and are being carried by means of heavy
- ynptv Il thn
tax will not help to restore them, 1t is
quite possible that when these mortgages
on vacant lots, which are invariably at
+ high rates Of interest and usually for short
/ terms, begin to expire borrowers VIII
! have diG.tulty in renewing them on any
/ terms whatever.
Making every possible allowance for
| the many important influences at work
tending to encourage activity in real estate
| il seems impossible to avoid the conclusion
that the mort gage, tax VIII give at least
a temporary check TO the great realty
! movement Of the recent past. II is true
! tina, the current immigration ia unprece-
! den,ed, but it is equally true that unprece-
canted efforts have been made for its
reception, During the past six months
| Bronx and Brooklyn for sl13,0OOo0O worth
. Of buildings, compared with soc, 900 600
worth in the first half of last year. The
| bulk of the new constructions are flats and
| tenemcnts. 1t is estimated that the houses
/ under erection in Tho Bronx alone will
provide for 10000 people.
The position of the landlord has probably
never been more advantageous than it is
! lust now. At the same time, the tax is
! bound to cause some diminution of in
vestment incomes. some loss OF specula-
/ lion values and some decline Of building
construction. Its effect in these various
directions may he soon overcome, but it
would he illogical to expect an uninter-
r,lpted continuance Of the extraordinary
realty activity Of the past half year.
| Private Sales.
! SEVENTY SECOND S'TREET.-Slawson 4
! Hobbs have resod for the Atlantic Realty
| Company to nm investor the four story
| dwelling ut No lj7 West Scventy-second
| street 2oXloo, and for Mrs, u, b. Slayen
| the four story dwelling at No. 1874 West