LATEST QUARTERLY SURVEY OF REAL ESTATE SHOWS STRONGEST IMPROVEMENTS IN YEARS
FOR IMMEDIATE RELEASE
The latest FDIC Survey of Real Estate Trends, conducted in
late January, shows a dramatic strengthening in U. S. real estate
Each quarter since April 1991, the FDIC has interviewed senior
real estate examiners and asset managers from federal bank and
thrift regulatory agencies across the country about developments in
the local real estate markets they follow. The results of the
latest survey of nearly 470 participants show an expanded recovery
in residential markets between October and January, including some
improvement in California. The survey results also revealed the
biggest improvement in California. The survey results also
revealed the biggest improvement in commercial real estate markets
overall for any three-month period since the FDIC survey began.
Under the scoring system used by the FDIC to summarize the
results of the survey, values above 50 indicate that more
respondents thought conditions were improving rather than
declining. Values below 50 indicate the opposite. The national
composite index used to summarize the survey findings for both
commercial and residential markets surged to a record of 73 in
January, up from the 67 rating in the two previous quarterly
surveys. The previous high rating was 72 in May 1992.
"These survey findings represent good news for the banking
system and the economy as a whole," said James L. Freund, chief of
the financial and industry analysis section of the FDIC's Division
of Research and Statistics. "We've already seen a reduction in the
volume of troubled real estate-related assets at banks. The gains
reported in this latest survey could bode well for asset quality
down the road, which in turn could mean even healthier banks that
are better protected from economic shocks and better able to serve
Survey respondents were overwhelmingly positive about housing
markets. Sixty percent of the survey respondents in January
reported improvements in their local markets, and only 4 percent
observed weaker conditions. Also, the proportion of respondents
who noted an excess supply of housing in their local markets fell
to a new survey low of 33 percent.
With respect to commercial real estate trends, 40 percent said
local conditions were better than three months earlier. Only 5
percent reported a deterioration -- the lowest reading to date.
Among the other encouraging signs was the fact that the percentage
of respondents who said commercial real estate prices were
increasing rather than decreasing was the highest of any FDIC
survey thus far.
Regional results for both residential and commercial real
estate conditions indicate that improvements were most prominent recently in the South and in the West.
"The majority of the experts we surveyed in California,"
Freund said, "found that commercial real estate had stabilized,
which signals a departure from the predominantly negative reports
in other recent surveys." He noted that almost all of the
respondents were polled immediately after the recent earthquake in
California, and it is unclear if the damage had an effect on the
findings. "We will be watching future surveys carefully to see if
the stronger results in january are sustained," Freund said.
Copies of the survey are available in the lobby of the FDIC's
headquarters at 550 17th Street, N.W., Washington. They also can
be ordered from the Office of Corporate Communications.