Pamphlet Boom

Under the high-powered imprint of Simon & Schuster three yellow-covered pamphlets have appeared in U. S. bookshops in the past two years amid loud fanfare. First was Major Lawrence Lee Bazley Angas' The Coming American Boom, a breezy contribution to U. S. economics which sold 27,000 copies at $1.50 each. Next was Inflation Ahead by Willard Kiplinger and Frederick Shelton, which sold 71,000 copies, at $1. The third Simon & Schuster pamphlet was Your Income Tax, a slapdash $1 handbook offered agitated taxpayers about a month before the last Federal income tax deadline. That sold 79,000. Last week another $1 yellow pamphlet appeared called The Coming Boom in Real Estate by Roy Wenzlick.

Roy Wenzlick's name carries weight with economists as well as realtors. Born 40 years ago in St. Louis, he worked for several years on the Post-Dispatch, starting a commercial research department, later serving as national advertising manager. In 1929 he went into his father's real-estate firm to start another research department. Finding that his real-estate studies had far more than local interest, he launched Real Estate Analysts, Inc. as an advisory service to banks, insurance companies, real-estate firms. Though Researcher Wenzlick says the idea for his boom pamphlet was taken to Simon & Schuster, that smart firm claims it went to Roy Wenzlick as the leading U. S. authority on real-estate trends.

Researcher Wenzlick's boom is predicated upon studies of the U. S. real-estate cycle, which is -much longer than the typical business cycle. A case history of real-estate activity in St. Louis since the Civil War shows only four great depressions: one in the 1870--5; one following a towering peak reached in 1890; one during the War after a 13-year decline; one starting in 1925. "Few men under 50 today have been in business long enough to have experienced more than one general real-estate boom," Mr. Wenzlick points out.

The same forces that brought on the last three great booms are at work today, and they are the same forces that are making for the much-publicized, longpredicted building boom. At the bottom of all this boom talk is the prospect of a U. S. housing shortage. Business recovery re-versed the short-lived back-to-the-farm trend, is now unscrambling families which doubled up for economy during Depression, has boosted the marriage rate, a fundamental real-estate statistic. The marriage rate drops far below normal in lean years, creating a "reserve" of unmarried people who hasten to the altar as soon as they can afford it. "The reserve at the present time is about three times as great as it has ever been before," says Mr. Wenzlick. "The release of only a portion of this reserve in the next five years would create the greatest housing shortage we have ever experienced."

Meantime the U. S. population has increased, available shelter has actually decreased and most U. S. citizens have completely forgotten the realities of the post-War housing shortage. In 1920 real-estate sections of U. S. newspapers were crammed with advertisements offering bonuses for vacant shelter such as this:

"Flat or cottage wtd.--To rent: 4 or 5 rooms, modern, South Side; $20 to $30 reward. Add. T 83 G-D."

In a typical real-estate boom a housing shortage is the first stage. Rents rise higher & higher. People begin to buy houses for speculation, not for use. As rentals continue to climb, it becomes more profitable to build than to buy and residential building starts to boom-the second phase. Feeding on itself, the boom creates demand for additional office space and commercial buildings, the third and final phase of a great boom. "Soon after the peak in commercial building is reached, the feverish activity of the boom will subside," says Mr. Wenzlick. "This period is probably ten years distant. Vacancies will again increase and rents will drop. All indices will again turn sharply downwards."

In the last part of his pamphlet Researcher Wenzlick suggests "what to do about it." Some Wenzlick advice:

To renters: Buy a house with a big mortgage. If a person has good reasons for not buying, he should try for a long-term lease or at least one with graduated increases and including clauses covering redecorating and repairs.

To home owners: Do not pay off the mortgage. "I think you will make greater profits by buying a second house with a mortgage on it. Rent the second house until the height of the boom, then sell it."

To mortgagees: Mortgages are now a safer investment than at any time in the past 15 years. But: "If I owned mortgages today ... I would sell them or trade them for slim equities in small single-family homes or duplexes."

To people stuck with real estate: Hold on. Also hold on to farm land, though urban property is likely to show more appreciation.

To all real-estate investors: "When everyone is convinced that real estate is the best of all possible investments, sell it and pocket your profits." That time: "Probably not until 1943 or 1944."

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