FDIC REPORTS STRONG HOUSING GAINS IN REAL ESTATE RECOVERY
FOR IMMEDIATE RELEASE PR-39-96 5-29-96
Media Contact: Robert M. Garsson (202) 898-6993
The nation's housing markets rebounded in recent months
after a lackluster fall and early winter, according to experts polled
in the FDIC's April Survey of Real Estate Trends. The
increasingly upbeat reports on residential markets as well as
commercial real estate came from across the country.
"The ongoing real estate recovery has broadened
significantly," FDIC Chairman Ricki Helfer said. "We found a
sharp upswing in housing markets across the country, consistent
with other strong economic news. Together with the continued
improvements in commercial markets, it appears that real estate
trends have been moving solidly in the right direction."
The nationwide poll of 326 senior examiners and asset
managers from the federal bank and thrift regulatory agencies was
conducted in late April and covered developments during the prior
three months. This latest survey marks the fifth anniversary of the
FDIC's poll. Chairman Helfer described the survey as "a valuable
tool in tracking real estate cycles, which has helped the FDIC
monitor credit quality at banks for the last five years."
Reports of improving housing markets were at their highest level
in two years. Positive reports in April outpaced negative ones by a
five-to-one margin, with 45 percent saying residential markets
improved during the previous three months compared to nine
percent who detected a weakening.
Survey participants also were upbeat about both new home
construction and existing home markets. Thirty-three percent
characterized sales of new and existing homes as above-average --
the highest proportion in almost two years. Only eight percent
noted decreasing prices on existing homes, matching the survey
low of July 1994. Forty-three percent said resale prices were
rising in their local markets.
Assessments of local commercial real estate markets were
somewhat more positive in April than in recent reports.
Nationwide, 35 percent said conditions had strengthened during
the past three months (compared to 32 percent in January), while
those observing weaker conditions fell to three percent (from five
percent in January).
Only 35 percent noted excess inventories of commercial
real estate, down from 53 percent a year ago and from 78 percent
when the FDIC survey started five years ago.
The index used by the FDIC to summarize survey results
jumped sharply in April. 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 commercial and residential real
estate markets climbed to 67 in April from 60 in January. This
increase in the index is the first sizable improvement in more than
two years, due primarily to the gains in residential markets.
Regionally, the best news came from the West, where
readings of real estate markets were noticeably more positive than
in the January survey. Of note was the turnaround in California,
where observers were more upbeat about trends in both residential
and commercial markets than in the last five years.
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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. 225), or by mail or messenger (contact the
FDIC's Public Information Center at (703) 562-2200).