Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-21
Financing the Building Business
BY FREDERIC J.. HASKIN.

The building business, although going
forward in tremendous volume, never
theless betrays q certain Spottiness, the
checks and halts apparently being due
In many sections to lack Of adequate
financing facilities. This has induced
real estate experts to incline TO the view
that the country will undergo revolu-
ton in the matter of sources Of funds
for construction Of private properties.
From the beginning OF an organized
construction industry, structures, from
skyscrapers to single dwelling houses,
have been mainly financed through the
first mortgage, with, in many If not
most cases. junior mortgages.
The change which has been forecast
will be to the type OF financing employ
ed by industrial corporations: that is,
issues of preferred stock. Huge con-
Germs will engage solely in the business
of handling such issues. In effect they
will be building banks. Preferred stock
will be sold to the public at large and
the proceeds lent to those desiring to
build.
This is being done to a limited ex-
tent now through the medium Of de-
bentures. There are companies which
specialize in taking mortgages on prop
critics and then issuing debentures
against them. The debentures are sold
to the public.
The lack of building capital to be
lent on first mortgages TO prospective
builders Is regarded as one Of the con-
comitants of the wave Of stock specula-
ton which has been passing over the
country for the three or four years last
past and which has caused members Of
Congress to animadvert harshly upon
the New York Stock Exchange and its
stock brokers. It has been claimed that
ADEQUATE capital for such legitimate
and deserving enterprises as the build
ing OF houses is short because the gam
bling instinct has diverted too much
money into speculative channels.
Survey Of Situation.
So the remedy proposed is for the
building industry to join III the busi-
ness of issuing stocks and avail itself
of a share of the flood of funds flowing
into stocks.
The National Association Of Real
Estate Boards has Just completed Its
semi-annual survey OF the nulioing m
dustry throughout the Nation. The
survey covers 379 cities-a broad enough
basis to furnish q fair picture OF the
national situation. The survey shows
the market TO have been more active In
40 per cent of these cities and less
active in 20 per cent. while the remain
ing proportion shows no change. In
country RTOWlng so TdpioIy 49, uio
United States, and especially the cities.
a sowing up is indicated. More than
half Of the cities show that building
has either stood still or actually gone
backward.
The slowing up can not have been
due to profiteering by real estate men,
for selling prices were reported as
higher in only II per cent Of the cities
and actually lower in 20 per cent, while
the remaining cities showed the price
situation TO be static-on the whole
downward trend.
Rents. too, were found to be up IN
ONLY II per cent Of the cities surveyed,
while they were lower in 81 per cent.
These percentages refer to dwelling
houses. Apartment houses show high
er rents in Is per cent OF the cities and
lower rents in II per cent.
Although the acute shortage IN nous
ing caused by the war has been met.
Shortages due to natural growth are
shown in 81 per cent of the cities and
oyerbuilding in II per cent. These
figures are approximately the same 1or
both single dwelling houses and apart
mentS.