FDIC SURVEY FINDS CONTINUING GAINS IN REAL ESTATE MARKETS
FOR IMMEDIATE RELEASE
Commercial and residential real estate markets continued
to show improvement during the early fall, according to the
FDIC's October quarterly survey. Many experts reported that
conditions in their local commercial real estate markets
were better than three months earlier, and the housing
recovery continued to strengthen after slowing a bit in late
1994 and early 1995.
The nationwide poll of 365 senior examiners and asset
managers from the federal bank and thrift regulatory
agencies was conducted in late October and
covered developments during the prior three months.
Positive assessments in October far outweighed negative ones
for commercial and residential markets, and reports of
weakening conditions were at a very low level.
FDIC Chairman Ricki Helfer said, "The recovery in both
commercial and residential markets is on track, which is
important to our economy and to the balance sheets of real
An index scoring system is used to summarize survey
results. Scores above 50 indicate that more respondents
thought conditions were improving than declining, while
readings below 50 mean the opposite. The more the reading
registers above or below 50, the greater the proportion of
negative or positive opinions. The composite index for both
commercial and residential real estate markets in October
held at 64, the same as in July. This indicates a
continuation of the renewed strength of real estate markets.
Regarding commercial real estate, a third of the
respondents in October reported gains in the prior three
months; only two percent noted weaker conditions. For the
first time since the FDIC survey began in April 1991, a
majority (53 percent) characterized supply and demand in
their local commercial market as "in balance." An
additional six percent said supply conditions were "tight."
"The fact that businesses are absorbing long-vacant space
could be the first step in a sustained commercial real
estate recovery, which would be a big plus for many local
economies," Chairman Helfer said.
As for residential real estate, improvements cited in the
July survey continued into the early fall. Thirty-seven
percent of those asked reported gains in their local housing
markets; only 12 percent reported deterioration. The level
of respondents noting average or above-average existing home
sales (78 percent) was the highest in a year. The
long-depressed apartment market showed further improvement;
a survey high of 61 percent of respondents noted
average or above-average levels of apartment and condo
construction. "The news about housing markets was quite
positive," Chairman Helfer said. "Single-family markets are
being helped by lower interest rates, and apartment
construction seems to be picking up some steam."
The October survey revealed strengthening in both the
Northeast and the West, where the weakest market
conditions were observed in previous surveys.
Participants cited solid gains in the Northeast's
commercial markets and in the housing markets of the
West, the first such increases in six quarters.
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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. 218), or by mail or messenger (contact the FDIC's
Office of Corporate Communications at 202-898-6996).