The Building Situation

November 18, 1929

Report Outline
Growth of Building Since the World War
The Rise and Decline in Residential Building
Business Building and Public Construction
Special Focus

At the series of White House conferences summoned by President Hoover “with a view to the coordination of business and governmental activities in concerted action for continued business progress” principal attention will be given to plans for providing an immediate stimulus to construction of all types. Revival of building activity on a large scale is regarded by the President as the most promising means of warding off any threat of business depression, following upon the recent crash of prices in the stock market.

Throughout 1929 to date, building construction-one of the country's basic industries-has shown a definite lag. The value of contracts awarded last month was smaller than in any October since 1924. In comparison with the boom year 1928, every month of this year, except July, has shown a decline in the volume of building contracts. The total for the first ten months of the year is 11.6 per cent below the January-October total for 1928, and is smaller than the total for any similar period since 1925. The following are the monthly figures reported by the F. W. Dodge Corporation for the last five years.

The decline in building during 1929 has been widely attributed to the absorption of credit by stock market speculation and the relative scarcity of credit for other purposes. Increases in all classes of interest rates during the course of the bull market in stocks reflected this condition. Rates charged on open market commercial loans rose more than 2% in two years. Banks charged their customers from ½% to 1½% more for ordinary loans in 1929 than in 1928 in most of the leading cities. No dependable quotations on the cost of real estate loans are available, for legal maximum rates are in force in most of the states, and the rates are exclusive of varying expense charges, commissions, and bonuses. A recent investigation by the National Association of Real Estate Boards resulted in a statement that rates charged on first mortgage loans had increased by only .05% last year and rates on second mortgages not at all, but quotations equal to the legal maximum were given in almost every case indicating that the quotations fell far short of reflecting the actual cost of borrowing. Scattered information indicates that the total charges for borrowing on real estate have been very high relative to a few years ago. The Standard Statistics Company in its October 16, 1929, issue of the Standard Trade and Security Service, said:

ISSUE TRACKER for Related Reports
Economic Development
Regional Planning and Urbanization