Evening star., 1932-06-11
REAL ESTATEHE[D
AID TO RECOVERY
Reorganization of Mortgage
Debts Is Pictured by
Herbert Nelson.

Belief that the real estate business
will prove an important element in the
economy recovery Of this country is held
by Herbert u Nelson. executive secre-
tary of the National Association Of Real
Estate Boards.
which he finds that In the field of real
estate the process Of reorganization on q
new basis has gone further than in
other fields, that the debt on real
estate has been decreased, that the
mortgage debt of real estate Is less than
that of other commodities and that dur
ing the depression period real estate
demands have been accumulating.
Owned by Millions.
Mr. Nelson gives the following argu
ments for his prediction:
Real estate Is owned by millions OF
persons. Each property stands on its
own feet. The millions Of owners can
not act concertedly. 1t is not possible to
support the real estate market artificial
ly through large credits extended by
banks or by Government, as has been
done with wheat, railroads, public util-
tiles and other commodities and busi-
nesses. Since 1927, when the real estate
market started to recede, each real
estate holding has had to meet its OBJ
legations and adjust itself to conditions.
On larger propects on which bonds were
issued the process Of reorganization in
many cities Is almost completed. In
such cases equity holders and mort
gagees have taken their losses More
over, where bondholders have taken over
the property they are In the position of
common stockholders and from now on
actual earnings will determine the value
Of their bonds.
Since 1927 institutional and private
loans on real property have been cur
tailed rapidly. During the current year
almost no money has been available in
most communities for real estate loans
During this four-year period. neces-
sarily. Indebtedness on real estate has
consistently been decreased.
Bonded Debt Is Small.
THE value of privately owned real
estate in the country Is in excess of
$3.50, 1000, 100000. The total amount of
the mortgage debt has been estimated
at $35, 900, 100000. which equals % per
cent The bonded debt of many of the
most conservative and we'll established
dllu
today exceeds 80 per cent of their pres
ent value. Many forms of business and
investment. undoubtedly. must go
through some process of reorganization
by which their fixed debts can be scaled
down before they are in q position to
resume healthful and increasing activ-
ity. Real estate, having a relatively
small Indebtedness, is in position to
lead the way.
Since 1926 steady recession in con-
struction Of now housing facilities has
continued, until at present the con-
struction industry is operating at less
than 25 per cent Of its capacity. In the
meantime many families are living
doubled up Also cities have continued
to grow. Depreciation continues to wipe
out each year approximately per cent
of our existing buildings. AS the read
justment continues and as families put
themselves into the situation where they
can maintain themselves, 1t may be as
sumed that one Of their first demands
will be for decent housing. Figures in
the possession of the National Associa-
ton Of Real Estate Boards indicate that
the doubling-up factor has reached ap-
proximately 10 per cent This alone
would absorb practically all the vacan-
cies now existing in our Cities