Evening star., 1923-11-10
BY ROGER w. BABsON.
pecial Dispatch to The Star.

Special Dispatch to The Star.
WELLESLEY HILLS, Mass, No
vember 10. The day of the small
house is dawning.
There is no question that some day
the cost OF building will be much
less than it is now-the same as II
is now about 15-2OT less than it was
in 1920. The time will come When
instead of talking about the poor
tenant our sympathies will be enlist
ed in the cause of the landlord.
Every student of fundamental bust
ness statistics recognizes this situa-
tion. The point. however. which is
important is whether or not this
movement will come about suddenly
or whether X will be spread out over
q period Of years. My own studies
strongly suggest the longer and more
gradual movement There are two
principal reasons:
x Finds Dwellings Too High.
The first is that with all the new
dwellings, built during the past four
Years the greater part have been
priced far out of reach of the great
majority OF people. In fact. some
figures worked out by my organiza-
tion show that less than 109o of the
people can afford to buy the so-called
moderate priced dwelling built to-
day. Some, to be sure. have tried to
and may get along all right until
they strike reverses. The average
family. however. cannot afford to
give more than one weeks pay out OF
every month for rent. Less than lo%o
of the heads Of families in the United
States make more than $50 a week
Check up the cost OF the houses
H~,,tI 1ot H., ~ n
see how many of them can be rented
profitably for less than $50 a month.
Hence when one talks about the sat
uration point in dwelling houses he
zones considered. The saturation at
present prices apparently is rapidly
being approached. but as soon AS an
other 1870 or 20So cut in building
costs Is put into effect an entirely
new group of prospective home own
ers is reached.
Building Costs Can he Cut.
The next point is that building
costs can be reduced when the neceS-
sity arises. The only reason prices
of building materials and building
labor did not decline as much as the
average of other things was because
the demand was sufficient without it.
That is merely the natural working
of economic law. No one should be
blamed for not charging less than the
necessity arises the cost of building
can and will be cut. If prices today
were al an irreducible minimum and
demand were falling off, there would
be more for the building industry to
worry about!
The chance of sudden crash either
in building costs or real estate val
ues, therefore, is small. The move
ment, on the contrary, will be far
more likely to carry out the appear
ance of series of steps. We had
one big step down in 1921, followed
by a partial advance. Before long
another step probably will be in
order General business as reflected
in the Babsonchart is running at 16
per cent below normal. The idea.
however, that building values are
suddenly going to drop to pre-war
levels seems as improbable as the
view that they will always continue
at present high prices.
Gives Hint to Builders.
1t is highly important. however.
that those who are interested in new
building recognize the trend and
work with 1t. The greatest oppor-
tunities during the comipr year will