Evening star., 1934-11-17
UPTURN IN REALTY
PRICES FORECAST
Analyst Cites Undoubling OF
Families and Marriage
Rate.

Present rate OF absorption OF resi-
dental space, coupled with other pres
ent economic factors, indicate def
mite upturn in real estate price levels,
according to Roy Wenzlick, vice pres
ident of Real Estate Analysts, Inc,
st. Louis, who have made the most
detailed study yet undertaken of eco
nomic factors affecting real estate
trends.
Construction costs, which normally
may be expected to increase rather
than to decrease as recovery prog
resses, will act as temporary wall
against new building on any consid-
cradle scale, until rentals reach the
point where earning power of exist
ing buildings is obviously high enough
to justify new construction, Wenzlick
indicates.
AS consultant on research to the
National Association of Real Estate
Boards. Wenzlick is holding a new
type of national-lccal realtor confer
ence in connection with the New
York State Real Estate Convention, as
well as in Boston, Philadelphia. Pitts
burgh, San Francisco, Los Angeles
and Seattle.
Other Studies Planned.
Also as consultant to the National
Association, Wenzlick is discussing
with officials of a number of cities
bases for establishment of a detailed
study of the factors affecting real-es-
tate trends, contemplated by the Ma
tional Association of Real Estate
Boards to cover at least 25 metropol-
itan cities.
In his present conferences with
real estate boards. Wenzlick is citing
these factors as affecting rapid space
absorption:
(a) Undoubling of families who
have lived previously with other FAM
lilies in single residential unit.
tb) Upturn in the marriage rate.
tc) Accelerated demolition rate for
old buildings during the depression.
AS existing space is absorbed, the
wall of construction costs is bound to
force a rapid up-turn both in rentals
and in real estate selling prices. I'VE
believe, on the basis of our studies. ~
WenZlick states. that real estate
rentals and real estate values will
reach or exceed those of -depres-
sion levels"
Five to Seven Year Cycle.
The real estate cycle, according to
studies made by Real Estate Analysts,
Inc. appears to be the longest in its
swing of any of the great economic
cyclic movements. The period for one
complete revolution of the general
business cycle appears to be on the
average from five to seven years. The
period for one complete revolution of
the real estate cycle, that is to say
the length of time from one peak of
activity or one trough of activity to
the next, appears to be period of
approximately Is to 20 years.
This long swing has been accom-
panied by extremes of deviation from
a normal rate of activity, a phe-
nomenon characteristic of what we
have come to call the durable goods
industries as distinguished from in
duStries concerned with immediate
consumption goods, Wenzlick says.
Industries concerned with consump-
ton goods. as foods and clothing.
show in time of depression deviation
from normal activity of never more
than 20 per cent. On the other hand,
industries concerned with durable
goods, in which group comes the real
estate and construction industry, show
a much larger deviation. For example,
residential construction at present to-
tails only per cent of that registered
in 1927 This is falling off of 95
per cent, swing so heavy as greatly
to affect the general business situa-
ton.
Old Data Available.
Wenzlick, in the present series of
conferences, is using data recon-
structed by Real Estate Analysts. Inc,
for a number of cities to constitute
record of changes month by month
for a period of 20 to IS years. The
data includes records on sales, rental
prices. foreclosures. construction costs,
and the like. Their monthly vacancy
count for St Louis found there for
October a total residential vacancy OF
Sc per cent, with a vacancy OF 10
per cent in single family dwellings
and of 81 per cent in apartments
This contrasts with total vacancy in
October, 1888. of 10 per cent. and in
earlier months of that year Of 13 per
cent. Recent absorption has been
particularly rapid in apartment space.