Further gains in the nation's real estate markets were noted
in the FDIC's quarterly poll of experts in late July. The survey
results mark the second consecutive quarter of improvement,
indicating that the loss of momentum in real estate markets during
the fall and early winter has been reversed.
The nationwide survey of 316 examiners and asset managers
from the federal bank and thrift regulatory agencies was conducted
in late July and covered developments in local real estate markets
during the prior three months.
"Based on the gains we noted in April and now in July,"
FDIC Chairman Ricki Helfer said, "it seems clear that many real
estate markets across the nation improved during the first half of
1996. The findings of continued progress, especially in the
commercial sector, are encouraging."
The FDIC survey showed positive developments in both
residential and commercial markets, most notably in the Northeast
and the West.
Readings of local residential markets continued to be
favorable, with 45 percent of respondents reporting gains. That
observation was reinforced by positive views of home construction,
with 44 percent citing above-average levels of home building
compared to 38 percent in April. As for existing home sales, 51
percent reported increasing prices and 42 percent observed above-
average sales. Both percentages are the highest in more than two
Thirty-eight percent saw improvements in local commercial
real estate markets, while only one percent reported deterioration.
Assessments of increased demand for office space were the most
positive since the FDIC began conducting the survey in April of
1991. Nationwide, 83 percent cited sales at average or above-
average levels, up from 73 percent in April. The 40 percent
reporting increasing sale prices was the most favorable reading of
any survey to date. Lastly, only 30 percent of respondents noted
excess commercial supply, down from 82 percent three years ago.
"With demand strengthening and sales activity on the rise,"
Chairman Helfer said, "conditions in commercial real estate markets
nationwide are showing substantial improvement."
Although the index used by the FDIC to summarize survey
results increased only slightly, the level was the highest in two
years. Under the FDIC's system, scores above 50 indicate that
more respondents thought conditions were improving than
declining, while readings below 50 mean the opposite. The more
the reading goes above or below 50, the greater the proportion of
positive or negative assessments. The composite index covering
both residential and commercial real estate markets edged up to 68
in July from 67 in April.
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Congress created the Federal Deposit Insurance Corporation in 1933 to
restore public confidence in the nation's banking system. The FDIC
insures deposits at the nation's 12,000 banks and savings associations
and it promotes the safety and soundness of these institutions by
identifying, monitoring and addressing risks to which they are exposed.
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Copies of the Survey of Real Estate Trends are available on the Internet
(via the World Wide Web at http://www.fdic.gov/bank/analytical/survey/index.html), by fax (dial 804-642-0003 on
your fax machine and follow the voice prompts to request Document
No. 228), or by mail or messenger (contact the FDIC's Public Information
Center at (703) 562-2200).