Evening star., 1925-10-31
1925 TO BE BUILDING PEAK.
BANK REPORT INDICATES
Construction in 1926 to Reach Level Com
mensurate With Conditions Normally
Affecting the Business. H..

! used as a basis the value of permits
issued in the single year 1914. a figure
apparently much below either the level
of 1913 or the average of the years
1904 The employment of too low
"A base figure reduces the estimated
amount of shortage in later years
Trend of Building.
As to this question, from an inde-
pendent study of the trend of con-
struction from 1913 to 1925 as evil
denced by building permits in sc cities.
the bank concludes that apparently:
There remained in the United States
at the end of 1924 shortage of over
three billion dollars. OF necessity.
such a figure is the toughest OF eSti-
mates. Furthermore. II is a total for
! the country and cannot be interpreted
as meaning that requirements had not
anywhere been made up. Doubtless in
many cities and towns there was no
shortage at that time, while in some
there may have been an excess of
building. Assuming that the balance
of 1925 continues at the rate of the
first nine months, however, the excess
of construction in 1925 over the nor
NAL level will eliminate most Of the
shortage existing 1T the end OF 1924.
THE general rent index for the
Ginning moderately since September.
1924. \ decline of rentals is certainly
an evidence of the approaching end of
the housing shortage. However, care
must be used in interpreting the trend
of such an index. and In drawing from
its movement conclusions respecting
the future activity Of construction. AS
rents are dependent primarily on local
conditions, there ere wide variations
f,itN To nif nd fr-ny
ton of city to another. Reports
from individual cities indicate that
where rents are declining 1t is usually
in one particular class Of residence,
most frequently in the high-priced
class. A decline i'll one class reduces
the average, but has comparatively
little effect on the rents in other
classes where high rents show that
further construction is needed inn
peratively.
Material Important.
''As demand for building and con-
struction returns to normal, prices
Of building material and of wages Will
become increasingly important factors
in determining the amount of new
building 10 be undertaken. both direct
ly and because of their influence on
the availability of capital. A return
on investments ir any line based on
costs materially higher than the gen.
eral price level is a reasonable ex-
pectation only when demand is alb
normally high in relation to supply.
1t seems a safe assumption that under
existing conditions further increases
In wages or prices of building ma
terialS would drastically curtail build
ing for a time. for such advances
would make the earning power of
capital invested in buildings increas-
ingly doubtful.
"a downward movement Of costs.
while it might occasion temporary
let-up In activity, would probably tend
to stimulate the long-run volume of
building. tor lower costs and lower
risks would permit investment Of
capital in the low rent type of resi-
dence structures for which there Is
an unsatisfied demand.
I'm summary, the tremendous build
ing activity throughout the past four
years has nearly satisfied the cumula-