SURVEY FINDS FURTHER SLOWING IN HOUSING RECOVERY BUT COMMERCIAL MARKETS STRONG
FOR IMMEDIATE RELEASE
The FDIC's latest quarterly survey of real estate trends
continues to report widespread gains in local housing markets, but the
proportion of respondents who found improving conditions was the
lowest in two years. In contrast, commercial real estate continued
to receive high marks for the third consecutive survey.
Since April of 1991, the FDIC has asked senior examiners and
asset managers from federal bank and thrift regulatory agencies across
the nation to report on developments in the local real estate markets
that they follow in their work. For the latest survey, just over 430
participants were polled during the last two weeks of October about
developments during the prior three months.
The FDIC uses an index scoring system to summarize the results
in which values above 50 indicate that more respondents thought
conditions were improving than declining. The higher the reading, the
higher the proportion of positive assessments. The October composite
index covering all types of real estate fell to 67 from 72 in July.
This is the second consecutive decline in the index.
FDIC Chairman Ricki R. Tigert said: "We can trace the less
positive October results directly to weaker housing markets. Our most
recent opinion survey picked up new indications that higher mortgage
interest rates are adversely affecting potential homebuyers and,
ultimately, home sales and construction."
Specifically, 41 percent of respondents in late October reported
improvements in their local housing markets during the past three
months, while 13 percent reported worsening conditions. The
comparable figures six months ago -- before higher mortgage interest
rates had time to become fully effective -- were 69 percent and three
percent, respectively. As was the case in the July survey, the
proportion of positive assessments declined in all regions of the
Regarding commercial real estate, 44 percent of the examiners
and asset managers polled in October reported improved conditions.
Less than one percent noted deterioration. Further, survey
respondents indicated more progress has been made in reducing the glut
of commercial properties. Fifty-nine percent of the respondents
reported excess supply in their local markets -- the lowest proportion
in the 3 1/2-years that the survey has been taken. Another positive
sign is that only nine percent said that commercial real estate prices
were still falling, also a new survey low.
"Considering the depth of the problems that have plagued
commercial real estate markets, the continued strong survey results
are very encouraging," Chairman Tigert said. "The decline in the
excess inventory is especially positive news."
While commercial real estate conditions were found to be
improving across the country, respondents in the South continued to
report the most positive developments. Just over 60 percent there
noted further gains in commercial real estate, with no reports of
weaker conditions. By way of contrast, 85 percent of California
respondents reported unchanged conditions and only 13 percent noted gains -- among the least positive in the survey.
The latest results, contained in the Survey of Real Estate
Trends, are available in the lobby of the FDIC's headquarters at 550
17th Street, NW, Washington and from the Office of Corporate