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Rent Situation Babson Comments on Guarantee Bonds Babson Park, Mass., Nov. 10, i 1925.—Roger W. Babson today, in his weekly exclusive interview in this paper, discusses the rent situation in which this com munity, as well as others, is very much interested. Mr. Babson’s official statement is as follows: “Statistics from about 180 localities show that rents have declined during the past twelve months about 4 per cent. While statistics are not available for the entire country it is probably safe to say that rents today average 5 per cent lower than a year ago. On July, 1924, rents were at the highest figures for the past twenty years and aver aged 86 per cent above 1914. Since July, 1924, there has been a slow but constant decline. Where Greatest Increase has Occurred “When we compare rents to day with pre-war rents we find that the greatest increase is naturally in the most rapidly growing cities like Los Angeles and Detriot. This is not a criti cism of these cities but is the in evitable result of growth. Rents in Los Angeles are still about 130 per cent over pre-war times al though they were 160 per cent above pre-war times a year ago. £>an Francisco rents, on the other hand, show an advance of only about 50 per cent over the pre war level. It will be only natural for those cities where rents have increased the most to have the heaviest decline during the next few years. This is in accordance with the law of action and re action. What goes up highest must come down fastest. When the pendulum swings far to the right it likewise must swing far to the left. A leveling process is going on throughout the country all the time in stock prices, com modities and rents. When security prices are abnormally high in any one group investors turn to another group. When wheat is out of line with corn people try to use more corn; while abnormally high rents in any one city tend to increase the 'building in that city which ulti mately results in a surplus of houses and apartments and hence brings about lower rents than the average. Water always seeks its level in every phase of life. Where Rents Are Lowest “Statistics indicate, that from the tenant’s viewpoint, the cheap est cities in which to live are Bay City, Michigan; Billings and Butte, Montana, and Sedalia, Missouri. It is even said that a six-room house to live in can be hired for less today than ten years ago. Comparatively low rents are also the rule in Bridge port, Connecticut; Springfield, Ohio; Augusta and Savannah, Georgia; Charleston and Co lumbia, South Carolina; Daven port, Iowa; El Paso and Forth Worth, Texas; Mobile, Alabama; Flint, Michigan; Omaha, Ne braska; Portsmouth and Roa noke, Virginia; Superior, Wiscon sin; Tacoma, Washington, and Wichita, Kansas. Rents in these cities on July of this year, were not more than 30 per cent higher than before the war. “In contrast to these cities the National Association of Real Estate Boards reports that cer tain small cities have shown greater increases of rents than Los Angeles, Detroit and New York. For instance, Johnstown, Pennsylvania, rents are' near 200 per cent higher than 1914 levels, while rents in Kenosha, Wiscon sin, are 160 per cent higher, and Louisville, Kentucky, rents, are 150 per cent above pre-war figures. Of the 225 cities re ported 72 per cent at present in dicate stationary conditions, al though, with the exception of Bay City, Billings, Butte and Sedalia, all show an increase over pre-war figures. Of these "225 cities 20 per cent now show de clining rents and only 8 per cent report rising .rents. No More Building Shortage “The building shortage which developed during the war is fast being overcome, and many au thorities believe it has been fully compensated for. Only a few cities now report a shortage of dwellings, while many cities re port over-building of some form. In most cases this over-building is for business purposes, hotels, or expensive apartment houses. Where any shortage exists today it is in the six-room house and the small apartment. This over building seems to be most pro nounced in the Eastern section of the country where there is a tendency for lowering rents, especially for business offices and apartments. “The past few months the only section of the country which has shown a distinct tendency to ward higher rents is Florida. Moreover, in two or three sec tions of that state rents are truly out of reason, and no one realizes this more than the Florida au thorities who are trying to keep excessive rents down and stabil ize the situation. “Rents per room in the large cities of the country are about double the same kind of property in the small cities. Rents vary from $7.50 per room per month in cities of 25,000 population to $10 per room per month in cities of over 500,000 while in the very large cities this runs up to $15 per room per month. When it comes to apartments we find they run from $10 per room per month in the small cities to $35 per room per month in the largest cities. Rents in Canada “The best living conditions on the American Continent today are probably found in Canada. The Canadians have been noted for building substantial buildings with good sized rooms and plenty of light and air. Of course rents in Canada are greater than be fore the war but they show no such increase as do rents in the United States. At the present time no Canadian cities report in creasing rents in any type of building. Moreover, a downward tendency is evident in single family dwellings in many Do minion cities. These statements should be carefully read and understood by people who are thinking of leav ing Canada and coming to the States. When one considers the rents and cost of living here I wonder if the people of the States have any more money left at the end of a month than if they worked and lived in Canada. Moreover, there is something in life more than the laying up of money. There is a health, vigor, and freedom in connection with living in Canada which is prob ably unequalled in any other part of the world. Real Estate Mortgage Bonds “It is not my province to refer in detail to real estate mortgage bonds in this talk. Every issue is distinct by itself and it is dangerous to talk in anything but generalities. A bond issue on a certain apartment house in a cer tain city may be a secure invest ment, while a bond issue on an “SAY IT WITH FLOWERS” Crane & Hill, Inc. 1311 PACIFIC AVENUE Marine 2400 Flower* by Wire WHAT DO YOU NEEQ? Look through the Classified Ads. You’ll find many wants supplied to your door. other apartment house a few blocks away may be very ques tionable. Not only is the amount of the mortgage very important but the location of the property and the purpose for which it is to be used .should be considered. It is, however, common sense that it is much safer to purchase real estate bonds when building costs are low and rents are low than when building costs are as high as at present. Probably it is in view of this situation that real estate companies are now getting surety companies to guarantee these issues. For in stance, a well known surety com pany obligates itself to pay the face of the mortgage note with out resource to the collateral deed of trust or the primary j obligor, which means that in the remote contingency of any de fault, the holder of the mortgage (or participation certificate) is not obliged to concern himself with the foreclosure or sale of the property, but need look only to this surety company. The only reservation, is that the surety company may, if it elects, take a period of grace of twelve months for the payment of the guaran teed principal, but in the event that it chooses to take all or any part of this grace period, it is obligated to pay fuH interest at the rate of 6 per cent per annum during the interim. “I have the highest respect for these surety companies and be lieve they are doing a good thing for the holders of real estate mortgages. It, however^ is a general principle of finance that an investor should look to the signer of the mortgage rather than to the endorser. The old : investor who remembers what happened to the great mass of railroad bonds which were sold forty years ago on their guaran tees will be very shy in now buy ing bonds on guarantees which he does not know are' intrinsi cally good. However, this is not meant, to be a criticism of any special securities but a general principle of finance which all business men should keep in mind in connection with their trans actions. A chain is no stronger than its weakest link. In this connection let me add that the weakest link today in the finan cial situation of the country as a whole is the stock market. It is in a position which may do con siderable harm to business unless people quit gambling. In the meantime, with the Babsonchart at 12 per cent above normal in vestors will do well to take profits in the New York stock market and invest the same in conservative local mortgages.” MOVING with Closed Padded Vans I STORAGE in Private Rooms Carpets Cleaned in Five Hours Carpets Scoured in Three Days SERVICE Unexcelled ^ Phone 683 Marine Seashore & Hosted Express Co. Atlantic City, N. J. 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