Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1922-07-15
JOHN N. MCCARTNEY
On Financing the Home Buyer

0WING to the changed attitude Of the
~ financial institutions of the city toward
mortgages on homes. the situation for the
home buyer has improved very greatly within
the last year. according to John y. Me-
Gnrvpy. chairman Of the Executive Com
mittee of the Philadelphia Operative Build
ers' Association.
Zone of the greatest difficulties which
home buyers and builders have experienced
since war and post war conditions began 10
make themselves thoroughly felt. said Alr
McGnrvcy. has been the financing of the
home buyers. There was comparatively
little difficulty for the builder to borrow all
the money he needed for the construction end
of the operation and there has not been II
time when the reputable builders could not
get all the money they needed; the trohDl"
lay in the difficulty of arranging the mort
cages to suit the needs of the purchasers of
the houses.
War Increased Money Costs
"Thcrc is no doubt that the war and the
conditions Immediately following that period
increased the money costs very materially,
due principally to the high rates OF interest
which foreign countries. nS well MS many
domestic industrial concerns. which had to
have large sums ut once. were willing I" pay
for loans This made n good return for IN"
investors but was hard on the HON" buyers.
because it so greatly reduced the amount of
available money for mortgage purposes The
logical conclusion of this conditI" was TO
warp the mind Of many of th" iinanri"rS who
specialized in mortgages before the war
period and who were then perfectly salts
fled with mortgages returning net . per
cent on the investment.
IL am firmly convinced that this stua-
tiOn in the money market was on" "t ~"
,5asic difficulties in the housing situation
which existed at that time. The public was
willing to buy then and was willing to put
the same percentage of cash into its houses
n. it had always done. but the trouble was
10 get the financial institutions TO recognize
the new basis of values.
THE housing situation is now almost nor
nal in SO far as the financial institutions
are concerned. as both the banks and tn"
savings societies have now recognized and
accepted the new basis of values as the basis
for determining the amount OF money which
shall be loaned on mortgages and the rate
of interest which shall be charged for the
use Of the money.
Public willing to Buy
AS said before, III" public was entirely
willing to buy the houses erected during
this period of financial stress AZ the new
valuation and to put up the same per-
centagc Of the money in cash on III" pur-
chase price. Suppose that house built
before the war. that ia. before 1914, was
selling at $4,000 At that time it was
easily possible to get financial institution
to carry II first mortgage OF $1,000. When
the costs Of materials and the price of labor
went SKY -TO'k'llHS hNliHs lIc VIII, InlS
same house could not be built to sell for less
than from $4,000 to $1,000.
"Thc home buyer was still willing to
purchase the house at this new price and nut
IN IN cash around $1,000. relatively the same
amount as he had paid ON the $4,000 house
He was able to do this because his own
income had advanced in the general upward
trend of things, but often II was impossible
to finance the remainder Of the purchase
pricc to suit the abilities of the purchaser
and 50 the house remained unsold, remain
ing on the builder $ hands and thus subject
10 heavy carrying changes.
There could be only one result to this
situation and it happened. The builders
stopped building because the purchasers
could not finance their purchases and then
came the shortage of houses which nudc
| the housing situation 50 critical for n long
time There were plenty of willing BUYERS
nj the new valuations, but they simrly
could not accept the terms which were of.
| fcrcd to them.
Much More Money Now
This situation existed for more than two
wears after the close of the war Th,n
| about a year ago, the financial condtions
| began to undergo II marked change TLn
| institutions recognized the new standard ~
values and by so doing opened IN n ycry
| large amount OF money available for mort.
| CAGES;
| bcrame literally flooded with buyers and il
is now taxing the abilities of the builders
to complete at once the houses which Lnve