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REAL ESTATE
AND
NEW YORK, JANUARY 2, 1915
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REAL ESTATE REVIEW AND PROSPECT
The Extreme Depression of Last Year Will Not Continue—The New
Year Will Be One of Preparation For the Return of Good Times
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IN our review of the real estate market
of last year we stated that 1913 had
been a year of almost uninterrupted and
unprecedented stagnation in the buying,
trading, loaning and building departments
of the real estate business. The same
statement holds true for the past year.
The unprecedented stagnation of 1913
has been repeated in every branch of
the real estate business, and the depres¬
sion has been more acute than it was
during the previous year.
It is unnecessary to go into the figures
which prove these statements. The truth
is notorious to everyone who is ac¬
quainted with the conditions under
which the real estate business has re¬
cently been carried on. Neither is it
necessary to enter into a very close an¬
alysis of the reasons for this continued
depression. Such an analysis has fre¬
quently been made in these columns and
at the present time practically no new
conditions have come into existence to
alter the force of what had already been
said. Real estate had been passing
through a state of acute depression,
partly because of general conditions
which prevail throughout the world,
partly because of business conditions
covering the whole of the United States
and partly because of the local condi¬
tions peculiar to New York and its im¬
mediate vicinity.
The depression is more acute in Man¬
hattan and the Bronx than in Brooklyn
and Queens. In fact, Brooklyn and
Queens have had, in some respects, a
fair year. In the real estate department
the number of transactions were not
indeed any larger than the year before,
but building has been somewhat more
active in Brooklyn and indeed in Long
Island generally.
So far as Manhattan is concerned,
however, there are no mitigating circtim-
stances. The number of transactions, both
so far as transfers and mortgages were
concerned, were smaller than they have
been for sixteen years, and the amount
of money invested in new buildings is
also smaller than any period since the
five boroughs were consolidated. Those
parts of Manhattan which were particu¬
larly depressed during 1912-13 have con¬
tinued in the same condition throughout
1914. There has been no sign of a re¬
vival of activity in the wholesale district
or in the financial district, or on the
West Side or on Washinofton Heights.
Most of the new building which has
taken place has been concentrated along
the line of Fifth avenue and along_ the
line of Park avenue. Some little activity
has also been shown in the immediate
vicinity of the Grand Central Station,
but beyond these few neighborhoods
there has been almost no building and
since the war broke out real estate of
all kinds has been extremely difficult of
sale except at prices far below its real
value.
The More Important Aspect.
The aspect of the matter in which real
estate men are most interested at the
present time is not a record of the past
but the prospects of the future. Are
there any reasons to believe that the
depression which has prevailed through¬
out the last three years will continue
during 1915? Are any of the conditions
which have caused this depression hith¬
erto becoming of less importance and
can any new conditions be expected to
come into existence which will help to
stimulate real estate activity?
It is even more difficult than usual to
answer questions of this kind. The war
has made economic predictions of, in
every branch of trade, peculiarly hazard¬
ous. No one knows as yet how long it
will last or what its economic effects
will be.
Many economists anticipate that as the
consequence of the fearful destruction
of property which is now taking place
money will be extremely dear for at least
ten years and that this scarcity of loan¬
able capital will constitute a grave hind¬
rance to business activity and develop¬
ment of al! kinds.
On the other hand, many other reput¬
able economists also believe that all
over the world the war has brought with
it an amount of rigid economy and an
indisposition to spend money on lux¬
uries which is already repairing some of
the losses which have been taking place
in the actual field of battle.
Effects of the War.
In all probability these economists are
right in claiming that the effect of the
destruction of property is exaggerated
and that if peace is restored some time
during the coming year the economical
effects of the war will not be as serious
as has been anticipated.
Nevertheless, the real estate operators
and owners in New York City have no
reason to feel complacent over the gen¬
eral outlook. Conditions will remain
abnormal throughout the whole of the
coming year. Loanable capital for any¬
thing but necessary purposes will be very
difficult to get. Business will be ex¬
tremely active in some few branches and
extremely stagnant in others. The in¬
dustries of New York City will neither
be unduly stimulated nor unduly de¬
pressed, but in neither event will busi¬
ness have a favorable effect upon real
estate.
It would be a grave mistake on the
part of real estate brokers and operators
tn anticipate a good year. They have
simply got to make the best of the bad
condition and keep up the process which
they have already begun of preparing for
a return of more favorable times.
A New Civic Spirit,
One of the most remarkably hopeful
aspects of the past year has been the
Increasing interest which real estate
brokers and owners have been showing
in the public aspects of their business.
For the first time in the history of New
York City they have become an effective
influence upon the policy of municipal
departments and it is anticipated that
during the winter and coming spring they
Avill constitute an equalh^ effective force
on behalf of sound business methods in
Albany.
During this period of business inac¬
tivity and depression they cannot do
better than devote their spare time to
these public phases of their work. They
all know that the existing depression in
real estate is probably due more than to
any other single cause to the constantly
increasing burdens of taxation which
have been imposed upon real property.
They know also that in spite of this in¬
creased burden of taxation the neces¬
sary liabilities of the city have not been
met and that during the next two years
the burden of taxation will be heavier
rather than lighter. They must realize
also that they themselves are in some
measure responsible for their own finan¬
cial misgovernment. What influence they
have had in the past they have used
rather to the purpose of securing local
improvements than for the purpose of
promoting good and economical govern¬
ment.
But at the present time there has been
a decided revival of public spirit on the
part of real estate owners, brokers and
operators and during the coming year
the leaders of this revival will be pre¬
sented with a great opportunity and a
grave responsibility. They will have to
devise some means of raising increased
taxes from sources other than real es¬
tate. That is really the most serious
problem which now confronts taxpayers
of New York City and their agents.
A Year of Preparation.
We h6pe that our readers will not in¬
fer from the foregoing somewhat de¬
pressing account of the real estate mar¬
ket and its prospects that we do
not believe there will be no increase of
activity during the coming year. Of
course, it stands to reason that the ex¬
treme depression of the last few months
will not continue. There will be more
real estate bought and sold than in 1914.
There will be more money loaned on
real estate and there will be more money
invested in new buildings, but they must
not expect that this increase in activity
will get very far or will make any pro¬
found change in the worse aspects of
the existing situation. The year 1915
will have to be a year of preparing, not
a year of gathering fruit. But that the
fruit which will eventually be gathered
has already begun to be formed is. we
believe, undoubtedly the case.
In spite of all that can be said against
the conditions that prevail in New York
real estate business and building market
the fact remains that the city is increas¬
ing in population at the rate of 150,000
each year, that 500.000 people have been
added to its inhabitants without up to
date increasing real estate values at
all, except in a few outlying districts,
that consequently, a city the size of Buf¬
falo or almost of Cleveland has been
created within the area of New York
without having any apparent effect on its
prosperity and that this process of dis¬
appearing growth cannot continue. Some
time, within the next two years, its ef¬
fects must accumulate and when they do
accumulate and become effective be¬
cause of their accumulation New York
is likely to have a return of the real
estate conditions which prevailed ten
years ago.