The sun. [volume] (New York [N.Y.]) 1833-1916, 1907-11-10
THE REAL ESTATE MARKET
LHTGH INTEREST RATES CAUSE A
REIMBURSEMENT OF VALVES.

sLower Prices for High Grade Improved
Realty Arr Encouraging Purchaser ny
Business Houses and Wealthy Land
Holding Estates Trading Equities.
The deadlock which has long existed
inNthe,realty market has now undoubtedly
been broken as n result OF HI financial
crisis. For upward OF a year improved
realty has. generally speaking. been held
at prices which investors Of conservative
views regarded as too high.
These prices were established during
1904 and 1906. They we're based on the
Increased rentals and on III increased
cost OF construction which then prevailed.
coupled with interest rates at 4 and ~
per cent. Since then. however, the cost
Of construction has perceptibly declined.
while net. rentals. especially in the fiat
and tenemen districts. have also taken n
downward course.
The price OF brick. an important factor
in the New York building industry. was
practically cut in two in the spring Of 1900
and in the fall of that year an unusual
percentage of the common sort Of housing
remained untenanted. Last year also in
'tercst rates on improved realty went mp
permanently to S and 5H per cent.
Hence Tor n year and more the con-
ditiOns which justified the prices current
in 1905 have been greatly modified. This
fact has beer recognized by Lending in
situations. which have not only refused
TO encourage further speculative building
but have declined to accept applications
for loans on the old valuations.
Before. the panic the banks were content
e.. atInx.t awHsraA mart nm uo Lnana ~ rarruiR
undisturbed. Now. however. many such
loans are being called in. partly by trust
companies and partly savings banks. In
some few instances the demand is made
for payment in full. But the general ten
dency is to require merely n Tcadiustment
OF the loans at the higher rates Of interest
looked upon as permanent.
The result in either case IL 10 compel
m5ny owners 10 realize on their equities
andNto do it at reduced prices. Until now
builders and others have been enabled to
carry their properties on money borrowed
at low rates. The banks rave given them
at least q years time to find buyers, but
purchasers have held aloOf on account Of
the high prices demanded. H. 10 now
recognized at last by sellers al well as by
buyers that tho old rates for money will
not be restored for some time and lower
prices are consequently accepted as in
evitaOle.
At thu lower prices a fair amount Of bust
ness Of a certain kind has been done in the
brokerage branch Of the market during the
last fortnight. In that time more high
grade realty, notably mercantile property,
has been sold than in any other period of
equal length during the present year.
Since the panic there has been a decrease
Of selling only in the class of property
bought by people Of moderate means-hats,
and uptown lots. The enlarged
buying has been done by business firms,
lane holding estates and wealthy investors.
Perhaps the bulk of the dealing has taken
the form OF exchanges OF ~antiquated build
ings for modern constructions, and the
Of money that has changed hands
has probably not been in proportion TO the
value Of the property transferred. Never
theless the credit situation has beer
and investors of wealth nave
demonstrated their confidence in the sta
bility of realty. value based on the present
cost OF money. h temper which the big
have shown in the last two weeks
one to believe that the volume of
dealing will continue TO grow as the financial
improves.
The dealing will no doubt he on a lower
level OF prices than that which sellers have
to maintain since 1905, but from all
the new level will be a reason
able one based on existing interest rates,
with an optimistic Interpretation of
the other influences affecting New York
realty.