The Washington herald., 1921-01-30
Failure to Keep Mortgage Money
In Real Estate Investments Great
Cause of Present House Shortage

None Of the conditions result
ing from the war is causing SO
much uneasiness and such serious
discussion as the housing situa-
ton" said Walter Stabler, in charge
Of real estate loans for the Metro
polTrzn- Life Insurance Company.
by housing, mean not only places
for people to sleep and eat, but
places where they must work and
carry on their daily vocations
Dwellings, apartments, factories,
stores, once buildings, hotels-ln
fact. every class of building used
by uan-are in short supply, and
this scarcity is increasing. Enough
has been said and written in the
past two years as to many of the
causes Of this shortage so far as
the supply and costs of labor and
material are concerned. The situa-
ton in these respects has cleared to
some extent-nOt by any means
enough nor as satisfactorily as we
couId wish, but there is material to
be obtained and labor to be had, but
at Increasingly high prices. But we
must have buildings, even IL they
do cost more than has ever been
known, and we must pay higher
rents than we ever dreamed of. for
we must be protected from the ele-
ments when we sleep and work, and
we must and will adjust ourselves
to the changed conditions and make
the best of It
But the most serious shortage
in the entire situation is the short
age Of money for mortgage loans
TO finance building operations.
There Is plenty Of money in the
country, but 1t has been taxed out
Of the mortgage market into other
channels, where the chances OF
profit are greater or the income
taxes less, or where securities are
tax exempt. Money for mortgages
has heretofore come very largely
from individuals and estates, very
many Of whom preferred this very
safe and sure form of investment
to other securities of iuctuating
values. Very many conservative
of large means formerly directed
their executors to invest the funds
of their estates in bonds and mort
cages. I doubt If this practice will
be continued so long as the income
taxes on large incomes remain as
high as now.
Driven From Mortgage Field.
When a gross interest rate of 6
per cent is reduced by income taxes
to a net of to 3 per cent, the non
taxable municipal or State or coun-
ty or school or even road bonds
paying "A to per cent net are
naturally preferred. This has re-
suited in the entire removal from
the real estate mortgage market of
untold millions of money, and this
process will continue unless the
income tax laws are so modified
that investors will feel justified in
again putting their funds into
mortgages. 4ney surely cannot be
expected to leave their money in
highly taxed mortgages or make
new investments Of this kind, when
there are many other perfectly safe
securities which will pay twice as
much because of tax exemptions.
Holders of mortgages in large
sums, and estates, formerly heavy
investors In such securities, are
calling these loans as rapidly as
Ihey come due. often to the serious
inconvenience of the property own
ers. Many OF our. largest real es-
tate owners are selling their hold
lngs and requirfng payment in full
in cash The replacement of these
mortgages and the cash needed to
pay all cash for such real estate
purchases must be and has been OBJ
tanned from the savings banks and
life Insurance companies, which are
not so heavily taxed or are practl-