The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-07-21
THE REAL ESTATE MARKET
HOW BROKERS INTERPRwf TIE
DECLINE or TRADING.
some Attribute IL TO OyerbuiIdIng and
Look for Renewed Activity Others
PoIn, out That Interest Rates Arc
Higher and Think Prices VIII Fnu

There il hardly room for any difference
ofopinion as 70 the extent and character -
the present dealing in realty. Except lp
neighborhoods where conditions favor the
erection of mex D''ns - dwellings, and two
family houses there has been a notable
contraction of investment buying and #
speculative building since the spring -
1905. TAX en- as n whole the marke; has
for more than a year been experiencing a
reaction and real estate is now perhaps IN
az meagre demand as il il possible for -
important staple TO he. Last week. for
instance, only 240% transfers were recorded
in Manhattan, as against 423 a year aru,
in The Bronx 226 tran sfers were recorded,
! as against $50, and in Brooklyn 07s, as against
1850.
However, the causes assigned for the
falling of in business differ widely One
group is of the temporary order, holding
out prospects of a more or less speedy re-
covery OF activity. The main idea repro
scented by thisg group is that the production
! Of new housing has beer in excess of inn
mediate requirements and that a short
period Of curtailed building will remove
the oversupply. According to this view
! the condition of the mortgage loan market
n Dtch bpouBht oboub ny NV h.fNi
boom, together with the incidental boom
in vacant lots, and will improve in pro-
portion as the housing situation is cor
rected.
The other group OF causes holds out
very little hope of a speedy change. Here
the emphasis is laid on the monetary pros
pect. IL is argued that the building boom
and the boom in vacant land were in a large
measure the result of cheap money. The
realty prices established during the boom
years were calculated on the basis Of low
rates OF interest on capital-rates aveyag-
ing 4 per cent. or Al per cent. For several
years after the beginning OF the boom
these we're the normal rates for mortgage
loans on improved realty.
In 1893. for the first time, the bulk Of the
loansi in Manhattan were made at "a per
cent. or less. 1t was the drop in interest
rates which started the upward movement
in realty prices, although the movement
was presently aided by rapid transit de-
velopments. The effects OF rapid transit
have now been discounted for years to come
and the discounting was made on the basis
OF low interest rates.
At present. however, the conviction is
growing thai the rates are to remain high
for an indefinite period. They are now at
the level which was regarded az normal
before 1893 and are hardly Likely to fall
again so long as the railways Of the country
are bidding for capital with which to re-
construct city terminals and enlarge their
carrying capacity generally.
A year ago il was thought that the abol,.
ton OF the tax on mortgages would tend
10 increase the supply of money available
for realty loans. This prospect has EVIL
IDENTIFY disappeared. Indeed, last week
only 81, 800, 900 was loaned in Manhattan.
as against 50, 500. 600 a year ago. Further
more the rates Of interest we're higher.
almost no money being placed at less than
5 per cent.
OF course a rise in the value of money
affects realty investments in n variety Of
ways. As soon as il is understood 10 be
permanent IL will bring about n readjust-
ment OF selling prices. 1t has already
made itself felt in higher costs for main
tenance-supplies OF all kinds and labor ARE
dearer. while taxes ave been advanced
TO meet the increased cost Of providing
new municipal improvements.
All observers Of the realty market agree
that one Of the causeso Of the present stagna-
ton 10 the mortgage loan situation. bue
there is no such consensus as TO the origin
and -permanency OF that situation.