Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-30
RELIEF IN HOUSING
DEPENDS ON PRICES
Building Costs Must Come
WITHIN Buyers Means, Ex-
pert Declares.

Within Buyers Means, Ex-
pert Declares.
Improvement in the housing sit
uation cannot be looked for until
new construction can be produced at
"a price which the home buyer and
the apartment investor can AFFORD to
pay. in the opinion of Leo Day Wood
worth Of New York. secretary of the
savings bank division Of the Ameri
can Bankers Association. which con-
Guided its convention in Washington
last week. In explanation of his
statement. Mr.. Woodworth said:
Housing is produced by the COM
bined use Of the 1--WE principal items
OF land. operating capital, labor, ma
terial and investment funds-the lat
ter including the amounts required
for the financing of both the perma
nent and the speculative portions Of
present, value. We might even add
management (services) of the real
estate operator. whether he be philan
thropist or speculative builder
ANY person with practical knowl-
edge Of real estate matters will
agree, that the speculative. builder
from the solution, and no reason has
been advanced as to why he will not
occupy the same prominent position
in this work as before the war. 1t
Cannot be denied that he will mar
ket his product at lower ,fg-
operates on an accurate cost system
and with expenses for engineering
and art work. AS his product is
largely sold to persons who are seek
ing better accommodations than they
had before and who: in the large
proportion Of cases. do not discrim-
mate very closely as to acual quality,
he can well afford to andersen. the
more architecturally perfect con-
struction Of the limited profit housing
corporation. -.
SfGst Get specuiator,s view.
No discussion Of this problem is
complete which fails to consider each
Of the ave or six phases Of house pro-
duetfon mentioned above. In other
words, we must view the matter ex-
actfy as will the speculative builder
and that individual will give partfcu-
lar attention to the market for COM
p1eted construction.
This brings us to the practical
viewpoint which is before the banker
at all times when he is asked to loan
on building operations or take a mort
gage on the completed property. The
banker must look to the price which
he can obtain for the property in the
event of foreclosure. and not alone
either to cost of construction or rental
value. or to present market value
The real estate brokers and mort
gage Investors. who are 50 ener-
getically seeking to stimulate con-
struction by any form of tax exemp-
ton or other government subsidy,
know the above to be facts. The ad-
vice of those persons is not altogether
disinterested when we recall that the
quick sales of the SPECTATORS are
more profitable to the middlemen than
the withdrawing of property from the
market through sale to permanent in
vestors, and tax exemptions OF mort
cages or of realty are more than Off
set by restrictive and even confisca-
tory legislation. which is either actual
or threatened.
Conditions IN New York.
ILLUSTRATION of the principles re-
ferred to above is frequent. even in
New York. where the housing situa-
ton is especially critical and where
much popular discussion that has had
and still may have destructive infiu-
ence upon the situation. is being fos-
tered by the existence of a large So
cialistic vote in that city.
"While it is intimated that many
thousands of families are unable to
find a roof. many apartments are va
cant and new houses are available to
those who will pay the price. That
price may not be regarded as reason
on this point explains why the houses
! do not sell. At what price should it
be appraised for mortgage loan?
"In order to make this property mar
ketable, shall we follow the English
precedent of paying governmen
4 no a 4
about $1,000 for a small cottage prop
er sg? s,.,, ws ,o,,ou, H..
Itrine now being preached by the Sec
! rotary of the Treasury, the Federal
/ Reserve Board and by the financiers
| of the country by allowing for hous-
! Ing q free and unsubsidized plav ri
j the laws of economics. which are
j slowly but surely squeezing out the
/ water from the prices of food, cloth
ing ana other essentials. including
4 capital?
/ Interest Rates Most Vital.
\ Finally, we cannot overlook tn.
estate finances results from an aImost
/ universal popular opinion that in.
| terest rates on real estate securities
| are standard at all times and unde,
all conditions. Even the federal gov.
| eminent has found it necessary r.
i
| 3 per cent to per cent, and it's long.
| term securities pay an even large,
rate to the investor. How MANY bor.
| rowers on mortgage security can as
pire to a credit equal to that of the
United States government?
| when real estate borrowers under.
stand that they must compete with
all other borrowers in an open credit
value of their security by the test OF
returns in value at any foreclosure
there can 6e Ben no question but thai
proportion of funds available for in.
vestment.
| I'm conclusion. it is worthy to note
| that the mutual savings banks are moi
| only the greatest source of long-tern
| funds for housing, but 1t is the one
| great source which is now function.
ing normally. the few exceptions serv.
ing to prove the rule. The recent at.
lacks upon the investment policies oil
| those institutions are as deplorable
| as they are shortsighted."