Mr. T's day in court
by Broderick Perkins
© 2008 DeadlineNews.Com
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - When the Federal Reserve Board hit the streets to collect economic information from professionals with boots on the ground, it found some anecdotal evidence of stabilization in the real estate sector.
According to the board's April 16, 2009 Beige Book, "Many Districts said factors such as home buyer tax credits, low mortgage rates, and more affordable prices led to a rising number of potential buyers. The Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts noted a modest improvement in sales in some areas."
Eight times a year, the Fed seeks out and summarizes comments about the economy from business leaders and other contacts throughout the 12 federal reserve districts. Comments are independent and not obtained from those working for the Federal Reserve system.
When those queried discussed the real estate sector, "there were some signs that conditions may be stabilizing."
The Beige Book reported:
• Even as new home construction activity fell further and inventories remained bloated, several districts, including Atlanta and Kansas City, said that inventories of unsold homes had turned down slightly.
• Home prices continued to spiral overall but in some areas prices were unchanged or declining at a slower rate, as low mortgage rates fueled some refinancing activity. "Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales."
• Commercial real estate battered by unemployment continued to deteriorate over the past six weeks as demand for commercial space continued to dry up. Reports of increases in subleases were up along with rental concessions. Conditions pressured commercial property values to fall and construction to slow. "Several districts noted increased postponement of both private and public projects. Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement."
• In banking and finance, weaker housing loan demand ruled. However, in the districts of New York, Richmond, and Kansas City, demand for residential real estate loans was on a slight upswing and residential refinancing activity remained brisk. The loan pipeline, however, was clogged with more stringent appraisals and tougher underwriting standards.
Mixed bag of districts
A closer look at individual 12 districts revealed some optimism.
• The Boston district generated optimistic comments about an increase in open house attendance and low prices.
• New York district comments included worries about a sizable phantom inventory of apartments -- new condo units that are unsold but not yet listed, especially in Brooklyn. Sales in New Jersey were attributed to properties with fairly steep price reductions. In upstate New York, prices were steadier.
• In Philadelphia's district, open house looky-loos were more common, but perhaps because of a seasonal trend of buyers watching prices drop.
• In the Cleveland district, the only positive sign was builders being less pessimistic than earlier in the year. Commenters said the region is waiting for federal stimulus money to begin construction of low-income housing as general contractors worked with skeleton crews.
• Richmond commenters reported a "modest pickup" in home sales, but a more "significant increase" in higher priced homes. Some also reported increased activity in open house events and even multiple offers.
• Atlanta district home sales remained weak, but were up in select areas on a year-over-year basis, most notably in Florida. Inventories declined slightly in March.
• Chicago district's residential construction was minimal, but with some increase in model home traffic in recent weeks. Declining mortgage rates renewed refinancing and higher demand for home equity loans
• In the St. Louis district, residential sales were down as much as 30 percent as construction continued to decline. The Fed reported no good housing news from this district.
• Minneapolis area's residential market is in a virtual holding pattern with slow residential construction and housing permits down 44 percent from a year ago. February residential permits declined in Rochester, MN and Fargo, ND as well.
• Kansas City district home sales rose slightly from the previous survey, and expectations for future sales also improved, even as activity remained well below year-ago levels. Real estate agents reported better demand for lower-priced homes and foreclosed properties. "Mortgage originations increased sharply, with home refinances particularly strong."
• In the Dallas district, housing remained week, but commenters were more optimistic about the spring selling season than they were at the end of 2008. Home sales remain well below year-ago levels, but respondents noted that home buyer traffic was better than expected. Builders endured a "painful decrease in home production," with smaller developers shuttering their doors. Outlooks "remained grim" for 2009.
• The San Francisco district revealed continued weakness, despite "sustained sales gains in some areas," attributed to price declines, high rates of foreclosures and low mortgage rates. Overall, however, the level of new and existing home sales remained very low in most areas, as did construction activity for new homes.
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© 2008 DeadlineNews.Com
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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