Evening Star Newspaper, March 2, 1935, Page 17

REAL ESTATE. INFLATION EFFECT ONREALTY VIEWED Debtors and Renters Seen Best Served if Value of Money Falls. Defining inflation as a very consid- erable increase in the general price level with a corresponding decrease in the purchasing power of money, Milan V. Ayres, Chicago economist, makes a somewhat detailed analysis, at the request of the National Asso- ciation of Real Estate Boards, in answer to this present active invest- ment question: If we have inflation what will be its effects on real estate? “If we do have inflation, it will be the first to be produced deliberately and intentionally by Government ac- tion. It will be the first to have its beginning in time of peace. It will be the first, except one, to occur any country having an abundant stoc of the precious metals,” Mr. Ayres points out. “If the Government suc- ceeds in its objective of producing a controlled inflation, an inflation which is successfully stopped at or about a predetermined point, it will be the first of that character in all history He adds, therefore, “Many condi- tions will be so different from those existing in previous inflations that it is hazardous to attempt to draw an historical parallel.” Land Ideal “Hedge.” He states these things, homever as fairly certain: “Ownership of good land should be one of the best hedges against infla- tion, provided the owner is going to be in a position to hold on throughout the inflation period. The selling price of land will not rise as fast as the general price level during an inflation, but ultimately it will adjust itself to the new final value of the dollar. ‘Therefore, a land owner who can hold on long enough will not have lost his investment. It will be unfortunate to have to sell while the inflation is in process. “Rents will not rise as fast during inflation as the general price level dloes. “Taxes won't rise so fast, which will be some offset. Payments Easy. “Mortgages will be easy to pay off during an inflation, and the further the inflation has gone the easier it will be. Thus, it will be profitable for the owner of a piece of real es- tate to put the largest possible mort- gage on it before the beginning of the inflation, with the proviso that it would be payable at any time at the option of the mortgagor. Then he should pay it off when he thinks the dollar has gone as low in value as it is going to go. “Buildings will not be so good on | investment as land, with the excep- tion of a building used for your own residence or for your own business. ‘That, of course, follows from what I have already said about rents. “The most important rule of all for such a period is not to have any of your wealth in money or in bank accounts, or in bonds, or in any- thing payable in & sum of money. On the contrary, you should invest all the money you can lay hands on in land or in commodities or in equities. Farmers Must Produce. “Farm owners living on and op- erating their own farms, especially if they produce most of their own food requirements, will weather an inflation period very well. Some of them will be able to pay off heavy mortgages very easily and will be benefited. “Some one has asked what will happen to interest rates. This is a difficult question. I think they will behave somewhat like the man who mounted his horse and galloped off in all directions. I think interest rates may become erratic and variable and dependent upon the state of mind of the lender and borrower.” HOTELS TO SPEND ABOUT $75,000,000 2000 to Install Soundproofing, Air Conditioning or Other Improvements. Two thousand hotels in the United States will spend $75,000,000 during 1935 in a “battle against obsoles- cence,” Ralph Hitz, president of the National Hotel Management Co., pre- dicts. Air conditioning equipment manu- facturers stand to benefit materially as well as many building trades dealers as the hotels take up the program of modernization and repair, as advocated by the Federal Housing Administration. “Recent surveys,” Hitz said, “indi- cate that the hotels will spend more than $32,000,000 for new construction materials alone, with an additional $2,500,000 for new soundproofing and insulation materials. The purchase for bedrooms and sitting rooms will take an aggregate appropriation of at least $22,000,000. Another $12,000,000 will be spent for dining room furnish- ings, and at least $4,000,000 for new kitchen equipment.” Cafe construction in hotels and the fitting of new bars is also a field, according to Hitz, which “much remains to be don Only one left of this group of six lovely Bungalows 4817 Leland St. Price $7,250-00 Don’t delay seeing this new home. The last we shall have at this price for some time to come. Decide before it’s too late. Built by Alfred T. Newbold. Directions—Out Wisconsin Ave. to Leland St., left to Property. CYRUS KEISER, Jr. 5211 Wis. Ave. CI. 5371 either, i r THE EVENING STAR, WASHINGTO This home of English farm house type of architecture was recently completed at 708 Dorset avenue, Kenwood, Md., by Cooper Lightbown & ' Sons, builders, and sold to Mrs. Nathan Hazen. The land was acquired HOSTATES ASSIT Enabling Laws Put Thrift and Finance Groups in Federal System. Forty States have enacted laws en- abling eligible thrift and home- | financing institutions to join the Fed- eral Home Loan Bank System and take advantage of its long-term credit facilities, according to the February number of the Federal| | Home Loan Bank Review. The system now includes 3,140 in- stitutions, located in every State, Hawaii and the District of Columbia, and is the largest mortgage reserve | institution in the world, with mem- |ber resources approximating $3,- | 400.000.000. Membership in the system gives a | thrift and home-financing institution a more liquid position for the benefit of its shareholders, who may wish to withdraw or resell their shares, and amplifies its loanable funds for the benefit of present and potential bor- rowers for the refinancing, repair and | construction of homes. Usefulness Impeded at First. When the Federal home loan bank act went into effect late in 1932, its| full usefulness to the institutions which it was designed to help was impeded by restraining provisions in [ the existing laws of most States, the Review says. In carrying out their responsibilities to the investing pub- lic, many States, for example, had | prohibited building and loan associa- tions from investing in curporate' stocks. Since membership in the| system requires a stock subscription in | the regional Federal Home Loan Bank, | special amendments were necessary to permit development of the system. In addition, the usefulness of mem- bership was seriously impaired by limitations in various States upon the power to borrow money. Some States provided that associations could not obtain a loan for a period longer than a year. Others narrowly defined the percentage of total assets up to which loans could be made to the institutions. In many States, laws prohibiting the associations from pledging their notes and mortgages as collateral made 1t impossible for them to obtain long-term advances from the Federal Home Loan Banks. “State Legislatures have displayed a fine spirit of co-operation in re- moving these impediments and enact- ing enabling legislation,” the Review states, “and as a result member build- ing and loan associations in all States are now authorized to borrow from a Federal Home Loan Bank to some extent and to pledge collateral.” Fire Detector for Home. Attached to the door bell circuit, @ new, small, home fire detector con-| tains a fuse which melts at 150 de- | grees Fahrenheit, causing the bell to | ring. Several can be attached to the | same wlrlng Pre-Showing.’ First oflcnng Sunday for your inspection, an attractive Colonial-type Home . . . $9,450 Others under constr: tion as low as $7;‘5% Charming brick home near the Washington Golf and Country Club in smart Country Club Grove— a carefully restricted home community in the beautiful Virginia hills—15 minutes from downtown Washington. ~Center-hall plan —6 large rooms ~Recreation room ~Spacious floor plan =2 Wood-burning fireplaces ~Finished inside Garage =2 large porches ~Furred walls ~Terraced wooded lot winding brook at r‘:.r.'“. Country Club Grove Drive out Canal” Road to Chain Bridge, cross bridge and straioht ahead up Glebe Road ome mile to Country Club Grove. Turn left at Forest Lane. HOMELOANUNITS| FINANCE OUTLOOK GOOD FOR HOMES, LEADERS DECLARE d_From First Page.) Federal Housing Administration. A report of a special League committee, adopted by the Executive Committee, reads as follows: “In that the committee believes that the premium requirement under Title II is excessive, it recommends that either the act be amended so as to reduce the premium or that the rules and regulations of the administration be changed, so that the insurance feature will result in full insurance and not burden the mortgagee in event of default with the expense of foreclosure and loss of income dur- ing the period that the foreclosure proceedings are in progress. Risk Held Premium Basis. “The national housing act requires as annual premium for insurance 1 | per cent of the total amount of the original loan notwithstanding the | fact that the loan is constantly re- duced and the risk is reduced ac- cordingly. Whereas the service charge allowed to mortgagees by the administration is computed upon the reduced amount, notwithstanding the fact that the labor involved may be just as great in the twentieth year | when practically nothing is received as in the first year. This should be | reversed. The premium for insurance | should be based on the amount at which risk is being reduced and the service charge be based on the i service to be rendered which con- tinues until the loan is repaid.” A section of the report suggests amendment of the Federal Home Loan Bank Act to “facilitate operation™ of | the mutual mortgage insurance plan under Title II of the housing act. | It is as follows: “It has been proposed that the Fed- | eral Home Loan banks might 1ac|h-v tate the early and effective operation | | of Title II of the national housing act | pro\'idmx for mutual mortgage insur- || ance by using some of their funds for | making advances to approved mort- | gagees on the security of insured mortgages. Section 10 of the Federal Home Loan Bank act as amended provides broad powers under which | each Federal Home Loan Bank may make advances to its members se- cured by such mortgages up to 9@ per cent of the unpaid principal of | such insured mortgages. In order | to assist in relieving the real estate credit stringency and to invite fur- ther funds into the long-term amortized mortgage field, it is pro- posed that the Federal Home Loan barnks be authorized to advance money to non-member institutions up to 90 | per cent of the unpaid principal of such insured mortgage loans. This would give employment to idle funds now in the Federal Home Loan banks and facilitate the F. H. A. program. New Section Suggested. “It is therefore proposed that the | Federal Home Loan Bank. act be | amended by adding a new section 10b | immediately following section 10a m[ read as follows: “‘Sec. 10b. Each Federal Home || Loan Bank is authorized to make ad- | New Home Exemplifies English Farm House Type from the Kennedy-Chamberlin Development Co. The house, which con- tains nine rooms and four baths, is now occupied by Mrs. Hazen, her daughter and son-in-law, Mr. and Mrs. Ralph S. Nagle. vances t0 non-member mortgagees approved under Title II of the national housing act. Such mort- gagees must be chartered institutions having succession and subject to the inspection and supervision of some governmental agency, have a com- bined unimpaired capital and surplus of not less than $100,000 of which at least $50,000 is unimpaired capital and their principal activity in the mortgage field must consist of lending their own funds. Such advances shall not, be subject to the other provisions and restrictions of this act, but shall be made upon the security of insured mortgages, insured under Title II of the national housing act. Advances made under the terms of this section shall be at such rates of interest and upon such terms and conditions as shall be determined by each Federal Home Loan Bank, but no advance may be for an amount in excess of 90 per centum of the unpaid principal of | the mortgage loan given as security.' ” Associations Advised. ‘The committee report to the Execu- tive Committee urged all building and |loan associations to apply to the| | Federal Housing Administration for | | approval as mortgagees under Title II. | So far none of the associations in the District have applied for this ap- proval. This section of the report is as follows: “Your committee recommends that savings, building and loan associa- | tions, co-operative banks, and home- | stead associations co-operate with the Federal Government by becoming ap- proved mortgagees under Title II of | the national housing act, inasmuch as this act is a sincere attempt to in- duce the flow of private capital into the home mortgage field as opposed to direct Federal lending. Further- more, your committee believes that | the use of the features of Title II of the national housing act on the part of the institutions will prove advan- tageous from the standpoint of de- veloping and conservatively managing their business, as the following dis- cussion will dxsclose % | INVESTIGATE! | THIS OUTSTANDING HOME VALUE ‘ 6129 | BROAD BRANCH RD. | CHEVY CHASE, D. C. e on e tor e mores i This delightful property orig- inally sold for many thousands | | more than the price now asked. Eight large rooms, two baths, first floor lavatory and toilet, (§ servants’ room and bath in | basement. Beautifully land- | scaped lot fronting 100 ft. on | Broad Branch Road. Open, Lighted, Heated 9 AM. to 9 PM. J. Wesley Buchanan, Inc., 916 15th St. Realtors A New Home D. €, SATURDAY, MARCH 2, 1935. REAL ESTATE. 6 BLLIONS SEEN [HONE OWNERSHP INDURABLE G00DS SPUR SEEN N GOLD Retarded Potential Market|Investments in Land and| Charts $26,000,000,000 Due Building Arts. The Nation-wide potential market for durable and semi-durable goods is estimated to be $46,000,000,000 by Herve Schwedersky, economist, in a recent edition of the Annaljst. This total accumulated demand 1s divided as follows, according to Mr. Schwedersky: Durable goods, $38,- 000,000,000, semi-durable goods, $8,000,000,000. These es are further broken into the following di- visions: Residential construction, in- cluding repairs, $14,000,000,000; other construction, including repairs, $12,- 000,000,000; consumers’ durable goods, $5,000,000,000; producers’ durable goods, $7,000,000,000; consumers’ semi-durable commodities, $8,000,- 000,000. Mr. Schwedersky explains that his figures are based upon the findings of Dr. Simon Kuznets of the National Bureau of Economic Research and estimates by Leonard Kuvin, another authority. Home Shortage Seen. Mr. Schwedersky observes that the theoretical shortage suggested by the figures “may not necessarily always be cumulative over a period of years, since a certain amount of that po- tential business is undoubtedly lost.” He further states that “they do mnot provide adequately for the natural growth of the country and its popu- lation.” The theme of Mr. Schwedersky’s observations is that the study of the situation gives rise to the belief that the greatest potential demand for durable goods lies with the individual and not the corporation. There are 16,000,000 private homes in need of repairs by his estimate, 3,000,000 of —Hessler-Henderson Photo. SAN DIEGO BOOMS, PREPARING FOR FAIR 5,000 Workers Building Palaces to House Exhibits for Pa- cific Exposition. San Diego, Calif, is witnessing a miniature building boom, now in progress in historic Balboa Park, where approximately 5,000 workmen are now engaged in the construction | of the 100 or more Spanish Colonial palaces, which will house the exhibits | of the $100,000,000 California Pacific | International Exposition, to be offi- | cially opened May 29. Activities in preparation for the ex- position, the first world's fair on the West Coast in 20 years, have the Pa- which “are beyond rehabilitation and should be rebuilt.” There is, in addi- tion, he observes, a shortage of 2,000,000 homes to absorb population increases in recent years. Mortgage Money Needed. “Because of the low purchasing power of large groups, however, it is probable that during the next five years only a portion of the demand will be filled.” The large groups re- ferred to include thousands who are eligible to obtain modernization or mortgage loans under the terms of the national housing act. ‘The article emphasizes the deed of employment (for those who must fur- nish the demand for durable goods), savings and cific slope humming as far north as “access to mortgage Seattle and southward to Lower Cali- | money at low rates of interest.” fornia. The outstanding civic, gov- o- ernmental business and industrial or- ;. . | ganizations of the West, organized as Cabinet Below Wash Basin. Extra storage space is provided in | 8 non-profit enterprise, without stock | or bond issues, are unanimously pro- | the bath room by a new lavatory unit moting America’s Exposition 1935 as | which has a cabinet below the basin. an international demonstration to | Other features are a recessed base (to speed the recovery of the Pacific | provide foot room) and a towel bar | alongside. Coast. BEECHWOOD in CHEVY CHASE JUST COMPLETED 6412 Meadow Lane We ask that you compare the construction, equipment and environment of this home with any other in the city at a similar price. DETACHED CENTER HALL 4 BED ROOMS AND 2 BATHS ATTRACTIVE WOODED LOT Curtis: Millwos OPEN DAILY W. T. Galliher & Bro, AND SUNDAY Drive out Conn. Ave. past Chevy Chase Circle to Thornapple St., turn left 1 square to Meadow Lane, turn left to property. Five Other Homes Under Construction G. F. MIKKELSON & SON OWNERS AND BUILDERS MILTON F. SCHWAB, Sales Curtis Millwork “Gruver Built”-In Glover Park { 3019 FOXHALL RD. Beautiful 8-room home fast nearing completion. Constructed of brick and stone, containing latest building inno- vations, including “Stran Steel” fram- ing, fire-safe cement flooring, modern insulation, etc. About 14,281 square feet of beantiful grounds. Exceptional value. Open daily and Sunday. 3110 44th Street N.W. Priced for Quick Sale A 3bedroom house, large lot, fine trees, lovely house. Reasonable cash payment. Easy terms. House open daily and Sunday. 4413 Klingle St. N.W. Here’s an exceptional opportunity for the young couple to obtain a lovely home in Wesley Heights, priced for im- mediate sale at $10,750. Open for in- :'pemon Saturday afternoon and Sun- ay. W. C. & A. N. MILLER 1119 17th Street DIst: 4464 Rents Tnsurance Loans Model Home 2454 39th Street N.W REASONABLY JLOCATED in historic GLOVER AR one of the city’s finest sections, high in elevation, and 10 minutes’ drive to Du- PRICED pont Circle, these homes assure their own- ers the GREATEST value for their money, "ERMS as any owner of a GRUVER-BUILT hmnrel can testify. FOUR real bed rooms an Loty TWO MAGNIFICENT baths, 20-foot ALL- & ® ’ BRICK, insulated with JOHNS-MAN- Furnished by the | VILLE rock wool, copper-screened, weath- Hecht Co. er-stripped . . . large kitchen with latest type Oxford cabinets and extra cupboard [ space . . . new model electric refrigerator Modern Gas Appliances . . . gas furnace . . . also library on first e ”"“‘{;‘fl{; floor . . . spacious recreation Toom . . . Gas'LiGHT built-in garage . . breakfast nook . . . within a square of a splendid school. Drive out Wisconsin Ave- nue to Calvert Street; turn left to 39th Street and Homes. B. H. Gruver Open Daily and Sun- day Until 9 P.M. Investment Telephone Building Owner and Builder Niicaa i1 e ' ' l l 1 Improvement Held Pro- | tective Step. The Supreme Court gold decision | may prove indirectly a more influ- | ential factor in stimulating public de- | mand for owning homes than any of the Government measures daslgned specifically to encourage this demand, according to 1. Priedlander of chton | ‘Tex., president of the United Stntes; Building and Loan League. Pointing out that investment m| land and improvements is one of the | surest ways to avert the drastic losses sometimes occasioned by inflation, he said that as soon as the renting fam- \ ilies of the country realize some of | the possibilities of the new decision they will hurry to avail themselves of | the home-ownership anchor against depreciation of their life’s savings. ““These people, if their economic guidance is good, will hurry to buy and build their homes now while financing is plentiful, while all kinds of home-lending agencies are seeking borrowers, before any untoward ef- fects of the court decision operate to discourage the investment of funds in this field,” he said. “The man who borrows now has the added advantage that if, as and when inflation does B3 come, he will be the gainer, not only because he has a home, but because his debt will be a fixed charge ig proportion to the Home value and will not rise in accordance with the rise in the price of property.” DIVIDENDS @ In year 'round comfort ©® In better health @ In fuel savings @ In the added value of your home INSULATE Your fuel saving willl cover the cost of this| modern weather protec- || tion. HUDSON SUPPLY & EQUIPMENT Co. 7th & T Sts. N.E. POtomac 1412 Corner Exclusive Washington Heights Individually Built 1928 Belmont Rd. N.W. Brick Eight Rooms—2 Baths—Built-in Garage Suitable for Doctor or Dentist because of its adaptability and its con- venience to street cars and bus. Originally cost $20,000. Has hardwood floors, screens, weather strips, maid’s room and bath, oil burner and built-in garage from 20th St. Lot 30 feet wide facing the beautiful grounds of St. Teresa's and School of Sisters of Notre Dame. NEW-HOUSE CONDITION—$13,500 Open Today and Sunday L. T. GRAVATTE 729 15th St. N.W. Realtor National 0753 DAHLIA TERRACE L. E. Breuninger & Sons Development FURNISHED BY D. S. POOL 7121 8th St. N.W. Homes designed. constructed and cauivped such as these {wo remaining homes. in this restricted. convenient subdivision, have nmever been offered in the cify within this price ranee. Containing 6 rooms (3 bed rooms): 2 baths (shower); breakfast nook, rece reation room; large. deep lot; ‘bev offer fD!nlruclmn features such as sll-brick "walls, siate roof. copper flashings, Da Waterproofe imaaisted with aiuminum foll: Batented Tock cellings. insulated with roll rock wool; screens, weather strips. caulking, oil burner: latest kitchen equipment. Briefly. these homes contain everyt that is modern. A large construction model. showing the detailed method of construction, on_aitplar This construction model will be of interest fo any Drospective home builder or buser. d o 55 Drive out Sunday, or any day and see what you may_ex in & modern home. Open until 9 P.M. daily and Sundas. Directions: Drive out Georgia Ave. io Dahlia St.; turn left at 8th and Dahlia Sts. 5 Breuninger S Sons Architects—Builders Investment Bldg. NAt. 2040 Wardman’s Offering IN BEAUTIFUL CHEVY CHASE $13.500 to $15,000 WE WILL CONSIDER YOUR HOUSE IN TRADE ©® 8 Rooms, 3 Full Baths ©® New Neo Angle Tub @ Marble Fireplace Weather-proofed ‘Weather Stripped Delco Oil Burner @ Concealed Radiation @ Large Closets @ Herringbone Oak Floors @ Step-down Living Room @ Spacious Screened Porches @ Ideal Kitchen @ Furred Walls @ Copper Gutters @ Heated Clubroom ©® Built-in Garage Come out today and inspect our furnished home. 6209 Melville Place To reach this home: From Chevy Chase Circle out Brookville Road, 1 block past East Bradley Lane, to Raymond St.; turm right 2 blocks to houses. HARRY WARDMAN, Inc. (AGENT) 1512 K STREET DIstrict 3830