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Real estate record and builders' guide: [v. 95, no. 2442: Articles]: January 2, 1915

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REAL ESTATE AND NEW YORK, JANUARY 2, 1915 ■■■IWIWIIMIMIiillllilMIW^^^ 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 BHi— iiiiiiiiiiiiii m 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.