Property ManagementLatest FDIC Survey Shows Slowdown In Real Estate Market
The latest results of the FDIC"s Survey of Real Estate Trends
indicated that conditions generally remained favorable in the nation"s real
estate markets during the second half of 2000 but there was some
deterioration, especially involving single-family homes and local retail
properties. The nationwide poll, which was conducted in January, asked about
developments in local commercial and residential real estate markets during
the six-month period of July through December 2000.
Survey respondents were asked if general conditions for U.S. real estate
markets (as characterized by vacancy rates, market prices or the pace of
sales) had changed in the last six months of the year. The percentage of
respondents reporting no change was high across all property markets:
single-family (56 percent), multifamily (75 percent), office (69 percent),
retail (75 percent), and industrial (76 percent). However, reports of
slight deterioration in conditions were more frequent than those of
improvement for all property markets except industrial. This development
was in contrast to the previous six months, when reports of improving
conditions outnumbered those of worsening ones.
Single-family markets had the highest proportion of respondents noting
somewhat worsening conditions, 27 percent versus 17 percent seeing better
conditions. Observations of deterioration in local retail markets were, at
18 percent, more than double those of better conditions (7 percent).
Respondents reported a more even split between better and worse conditions
in multifamily markets (12 percent versus 13 percent) and office markets (14
percent versus 17 percent) and, for industrial markets, saw better
conditions somewhat more frequently than worse conditions (13 percent versus
11 percent).
The FDIC"s survey focuses on changing conditions for a six-month period in
single-family, multifamily, office, retail, and industrial real estate
markets in metropolitan areas across the country. The survey polled FDIC
senior examiners and asset managers as well as bank examiners of the Federal
Reserve System, the Office of the Comptroller of the Currency, and the
Office of Thrift Supervision. The latest report summarizes the opinions of
265 respondents.
Although respondents continued to observe improvements in many areas, the
survey indicated fewer gains than reported previously. Residential
construction was viewed as less robust than six months earlier, particularly
in single-family markets (42 percent of the respondents). In addition, the
pace of home sales slowed for both existing (36 percent) and new homes (38
percent). Vacancy rates in multifamily housing were widely reported as
unchanged.
While home sales and residential construction were slowing, sales prices of
single-family homes were on the rise, according to a high proportion of
respondents. Forty-three percent observed higher sales prices for existing
homes and 47 percent for new homes.
Sales prices also maintained a positive momentum in all commercial markets.
Respondents noted price gains far more frequently than price declines for
office (21 percent), retail (16 percent), and industrial (19 percent)
properties.
Commercial markets were characterized as in balance by the vast majority of
respondents. However, where market imbalances were observed, reports of
excess supply outnumbered those of tight supply, particularly in retail
markets (35 percent). Respondents on retail markets also noted more often
that retail rental rates had decreased.