WASHINGTON -- Delivering the second consecutive quarter of record-breaking results, the Federal Deposit Insurance Corp. on Monday released its survey of commercial and residential markets across the country.
The good news covered the country, extending from the Northeast to Southern California.
With its best findings on real estate in three years, the FDIC's survey solidifies the upswing in real estate markets. As these assets rebound, bank balance sheets are strengthened and future earnings should increase.
Survey Prompted by Downturn
The FDIC started its survey in early 1991 when bad real estate loans were plaguing the industry. Every three months the agency asks about 450 examiners and liquidators to gauge the market's health. A composite score covers both commercial and residential markets.
On a scale of 0 to 100, a score over 50 means examiners see real estate markets improving. Below 50 means markets are declining. The closer to 100, the more agreement there is that real estate markets are getting better.
The composite score for February through April was a record 78, up from the previous record of 73 reported in January.
'Robust Housing Recovery'
The residential index soared five points to 82 from 77 in January, breaking the previous record set in April 1992.
"These survey results leave no doubt that a robust housing recovery is under way," said James L. Freund, chief of industry and financial analysis in the FDIC's research division.
The poll on commercial property also rose by five points to a record 73 from 68 in January. The average commercial score for the first three years of the survey was 55.
"Commercial real estate seems to be turning around," Mr. Freund said. "We see additional evidence of this in terms of reductions in the oversupply of building space and improvements in the sales and prices of commercial properties."
South Is Strongest
The FDIC divides the country into four regions for this survey. Three of the four areas posted better results this quarter. And the only region with a decline, was the South, which fell one point to 83 and is still the strongest region.
The West and the Northeast both surged seven points to 79 in the Northeast and 71 in the West. The Midwest hit 77, a gain of six points from January.
The surplus of residential and commercial properties is being worked off, the FDIC reported.
During the first two years of the survey, little progress was made in chiseling the overbuilding of the 1980s. But the April survey was the third in a row to register a reduction of commercial real estate.
Just 65% of the examiners noted an excess supply of commercial real estate, down from 85% two years ago. That figure is still 94% in California, however.
With respect to residential real estate, just 29% of the examiners polled found an excess supply. In fact, the FDIC 17% of the respondents said housing supplies are "tight."
