Please note: this text may be incomplete. For more information about this OCR, view
About OCR text.
IRecorb anb (Buibe—Hnnual flumbcv
THE YEAR JUST PAST
-IN-
Real Estate and Building
RADICAL change lias overtaken the real es¬
tate and building marivet of this city during
tlie past year. Throughout the early months
the conditions whicli prevailed during 1905
continued to prevail with increasing' rather
than decreasing emphasis. "Week by week
the total number of conveyances recorded
exceeded the large totals of the year pre¬
ceding, while at the same time the esti¬
mated cost of the buildings projected
were promising to he larger than ever before in tlie history
oi the city. But these conditions did not continue. Early in
the summer the figures, instead of continuing to increase, began
to remain about stationary, and by the time that the leaves
were falling the totals for the current year were running per¬
ceptibly behind those of 1905. For the fipst time since 1900, the
real estate market of New York had to be characterized as a
retrogressive rather than as a progressive market, and it is
a matter of some importance that the meaning and the extent
of this retrogression should be clearly undei-stood.
Between 1000 and 1905 the number of conveyances of real
estate situated in the county of New York recorded in one year
increased from about 14,600 to about 35,000. An increase so
voluminous as this was unexampled in the history of the city,
and it was due to very exceptional causes. It was not due
directly to the growth of New York in business or in popula¬
tion, because the increase in the number of conveyances in
these few years was far greater than would have heen justified
hy tlie substantial growth of the city. Neither can it be
traced to the increasingly general speculation in real estate,
although it is undoubtedly true that the speculative element in
the real estate market was enormously enlarged during these
years. If no other causes had been operating except those of
a period of an unusual expansion in business, population and
real estate speculation, the number of conveyances would not
have augmented any more quickly than they did between
1900 and 1903, during which period the average yearly increase
was about 10%. The enlargement in the number of convey¬
ances did not hecome unprecedented and extraordinary until
in 1904 and 1905, In the first of these years the increase was
33% over the preceding year, while in the second it was over
40%. This sudden jump in the totals was due to a combina¬
tion of causes as exceptional as the volutne of the resulting in¬
crease—a combination of causes which resulted in a tolerably
radical transformation in the economic aspect of the domestic
life of New York. During 1902 and 1003 there had been an
under-production of tenement houses all over New York City,
owing to the new tenement-house law; and this under-produc¬
tion of tenements w^as co-incident with an unusually large in¬
crease in the alien population. The over-crowded lower East
Side overdowed into the upper East Side, whose existing pop¬
ulation was pushed farther west, wliile at the same time Harlem
and the West Side were feeling the local effects of the under¬
production of new habitations. This suddenly increasing de¬
mand for all kinds of tenements raised rents in the different
parts of Manhattan and galvanized into life a class of building
which had been dead for some years. It raised the value of the
old five-story tenements and flats and justified the wide-spread
speculation which sprang up in these old house's. It was the
buying and selling of these old buildings which constituted the
bulk of fhe unprecedented increase in the volume of reai estate
transactions, but, of course, part of it was also due to the con¬
stant demand for new tenement-houses and for the land on
which to build them. It so happened that the new eubway
was opened for trafflc just about this time, and the land to
which it gave access on Washington Heights and the Brons
suddenly became available for improvement. The speculation
in this vacant land, and the sales incident to a large volume
of new building enterprise also contributed to swell the already
swollen totals.
The decreased volume of the real e<state transactions re¬
corded in lOOG means simply that the speculation based on
this exceptional alteration in housing conditions is now at an
end- The values of these o'-d flats and tenement-liouses have
been pushed as high as is safe. In many ca«es doubtless they
have been pushed too high. At any rate the speculation is sub¬
siding and during the coming year it will still further subside.
The conditions which underlay the speculation have changed.
Instead of the under-building of 1902 and 1903, New York City
has during 1905 and 190G been over-building. Its operators
have been erecting enough tenementrs and dwellings to accom¬
modate twice the actual increase in population, and the conse-
ciuence has been a noticeable decrease of tenement-house build¬
ing during the last five months of 190G. At the same time there
has been a considerable sliifting of population from Manhattan
to Brooklyn and Queens, owing to the increasing rents which
have to be paid in the central borough. This shifting has been
very much hampered by the miserable travelling conditions be¬
tween the boroughs, and it will undoubtedly become very much
larger as soon as some of the new bridges and tunnels actually
come into operation. Peculiar conditions in. the building 'ma¬
terial and in the money markets have also tontrihuted to the
decreasing activity of the past year. Some of the previous
speculation in old-law tenements was traceable to increased
cost of building materials, wliicii made it imposisible to dupli¬
cate the old buildings at anything like the same cost. But the
fall in the price of brick which took place early in the summer
changed all this and it tended in different and opposite ways
both to lessen speculation in old tenements and to hinder the
erection of new ones. By making the building of new tenements
cheaper it diminished the opportunities for speculation, while
it hampered the operations of builders by preventing them from
obtaining permanent loans as large as they expected on their
recently-constructed buildings. The money market also in
spite of the beneficial effect of the change in the mortgage tax
law has also acted as a check upon building and real estate
transactions.
In spite, however, of the many causes which served to check
real estate activity during the last half of 1906, the total de-
creaise from the figures of the preceding year was not very large.
Thus the number of conveyances 'Of real property situated in
New York county recorded in li)06 was 32,277, while in 1905
the corresponding number was 34,853, in 1904 just 24,601 and
in 1903 only 18,049. The decrease which has taken place in
1906 compared to 1905 was only about one-fifth of the increase
which had taken place in 1905, compared to 1904. This com¬
parison does not, however, tell the whole story. During the
last few months of 1906 the decrease frora the figures of the
preceding year amounted to fully 20%; and it may be ex¬
pected that this decrease will continue throughout 1907. Prob¬
ably the total number of conveyances recorded in 1907 will be
nearer 25,000 than 30,000, but there is no reason to be alarmed
by this prospective decrease. It will mean that the causes
which have brouglit about the decrease of 1906 will continue
to be effective, and that during the current year the real estate
market will in this respect be restored to its normal condition.
That normal condition will mean the regular transaction of a
considerably larger volume of real estate business than
that to which New York wais accustomed before 1905. In spite
of certain weak spots and of tlie strain which results from the
high prevailing rates for money the real estate market in Man¬
hattan and the Bronx is in a very wholesome condition. It
may be confidently anticipated that during the year the con¬
ditions on Washington Heights will improve and building to a
certain extent be resumed. Everything, also, point,? to a large
volume of transactions and improvements in the whole central
part of Manhattan—-in the district bounded by 14th and 59th
sts and 4th and 9th avs. That is the region in which specula¬
tion continues to be most active and is most justified. That is
the district whicli will be most benefited by the growth of the
W'hole city in population and wealth, and by the rapid transit
improvements, no matter In what direction they run, and every
new bridge, subway and tunnel will make this Manhattan,
tenderloin more available to the population of the whole city,
both for business and pleasure, and values in this district are
sure to improve steadily, no matter what may be taking place
in other parts of the city. It is no wonder, consequently, that
speculators are buying in this region persistently, and that it
is and promises to remain for the present the centre of active
and profitable real estate speculation. The activity in general
husiness promises to continue throughout the coming year, and
large numbers of new loft and office buildings will be erected.
Moreover, even after the inevitable reaction comes in general
business, local causes will continue to justify activity in this
central core of the borough of Manhattan. During the next
few years one important transit improvement alter another will