WASHINGTON - The real estate market this fall continued the slow, steady recovery that began in the summer, according to a report released Tuesday by the Federal Deposit Insurance Corp.
After a year of declining ratings, the FDIC reported the first improvement in market conditions in July. Since then, the market's ratings have held steady.
"The recovery in both commercial and residential markets is on track, which is important to our economy and to the balance sheets of real estate lenders," said FDIC Chairman Ricki Helfer.
Each quarter, the FDIC rates the real estate market by polling examiners and liquidators from the four federal regulatory agencies. Their responses are combined into three indexes: residential real estate, commercial real estate, and a composite covering both markets.
The composite index for October was 64, the same rating as July's survey. The commercial real estate market also held steady with a 65 rating, while residential real estate performance dipped to 63, down from 64 in July.
Any score above 50 indicates that more respondents saw improvements in the market than declines.
"The composite index of 64 reflects the fact that far more respondents reported an improvement in the market than deterioration," said FDIC researcher James L. Freund.
For the first time since the FDIC began the survey in 1991, a majority of the respondents - 53% - said supply and demand in commercial markets is in balance, an improvement from 47% in July. In residential markets, 63% said supply and demand is in balance, up from 61% in July. These findings suggest that the longtime surplus in the real estate market may be ending.
"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," Ms. Helfer said.
In all three real estate indexes, the Midwest and the South continued to record higher scores than the Northeast and the West. But the Northeast and West showed greater improvement in their markets from July.
The South recorded the highest composite score, 68, while the Midwest recorded a 67; but the indexes for both markets dropped two points from July's ratings. The Northeast and West continued to lag in terms of overall performance, but both markets saw improvement. The Northeast reported a composite score of 61, up from July's rating of 59, while the West's score improved to 56 from 53.
Even California, with its long-term real estate problems, reported some signs of life: 81% of respondents noted stable conditions in California's commercial real estate market, 14% observed an improving market, and only 5% saw declines.
Those numbers are tempered, however, by weak conditions in residential real estate. Though 63% of respondents reported stable conditions in California's housing market, 23 % reported declines in the state's housing market, far more than the 14% who reported improvements.
Mr. Serb writes for the Medill News Service.
