Past the Peak?

The sun shone warm in Miami last week as real-estate men convened for the 45th annual convention of the National Association of Real Estate Boards. Nevertheless, there was a slight chill in the air; the real-estate men felt that the big building boom had passed its peak, though they still looked for plenty of business. Construction statistics had not started to decline; housing starts this year were still running ahead of 1951. But from the tales the realtors swapped, the sales of new houses across the country were softer than at any time since the war. Good houses still sold well, although buyers asked more questions, demanded more concessions. Depending on the region, realtors told of sales lagging 5% to 15% behind last year.

New houses under $12,500 were still going like hotcakes. But those in the $12,500-to-$20,000 bracket were getting harder to move, and above $20,000 there were more houses than buyers. Old houses carried "For Sale" signs for months.

Empty Stores. In an upper-level Cleveland suburb, 28 new houses completed last spring still stood vacant at $38,000, although the builder had sold others by trimming prices. In Detroit, housing permits this year were 40% fewer than last year, and Portland, Ore. Realtor Charles Paine reported that his home market was "just marking time." Sacramento, Calif, and southeastern Florida, where buyers were snapping up medium-priced homes as fast as they were built, were exceptions.

In secondary business districts, empty stores were no longer rarities. Some of them had been vacant for six months. Where only a year ago businessmen fought for locations, now they were no longer willing to pay the high rents asked. Complained a Minneapolis real-estate salesman: "Shopping centers are running out of our ears."

Busy Farms. One big exception was the price of farm land; it was still rising, though more slowly than a year ago. Already, values were 24% higher than before Korea. Most of the buyers were city folk, looking for a place to farm weekends and to erect a hedge against further inflation. Many of the sellers were estates or farmers overwhelmed by a lush offer far in excess of their property's value as a working enterprise. The one exception: big ranches in the Western grasslands, where steer prices have dipped about 7-c- a pound, now bring 20% less than a year ago. Farm real estate men like Don W. Reed of Painesville, Ohio thought farm prices would continue upward in 1953, but at a slower rate.

A big cause of the housing slowdown was the shortage of money for FHA and veterans' mortgages. Though other interest rates have moved up, the FHA and VA still will only insure mortgages at 4 1/4 and 4%, rates now too low to attract much bank money. The realtors were all in favor of FHA and veteran loan guarantees, but they thought that interest rates should be set on a flexible, regional basis rather than one rate across the nation. Said Atlanta Realtor Henry H. Robinson: if VA interest rates were allowed to rise, "Expect a terrific boom in G.I. home construction."

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