Tag Archives: Real estate

Dr HousingBubble: 4 current trends in the housing market

4 current trends in the housing market: Rents holding steady nationwide, young home buyers, bidding war trends, and going after strategic defaulters.

The big motivation for large real estate investors was the yield they could potentially receive from purchasing real estate in depressed markets.  Early adopters entered the market in 2008 and 2009 and by 2010 the market was flood by big money investors.  Today we are seeing a saturation in terms of investors and yields are not worth the time for many large funds.  For example, rents in Arizona and Nevada are down from where they were in 2010 in spite of the rapid rise in housing values.  It could be because there is a saturation of rentals in these markets or simply because incomes are weak in these areas.  One thing is certain and some investors are losing their appetite for rental real estate.  Another interesting trend involves higher inventory and subsequently and ease in the volume of bidding wars.  What are some of the trends in the current housing market?

Rental analysis

us rent prices

One interesting trend is the large rise in rents for New York since 2010.  Los Angeles rents appear to be steady or falling somewhat according to the median list price.  The rental trend in Los Angeles appears the same as it does for the nation.

What is interesting is when comparing housing values:

zillow home price index

Los Angeles is one of the markets that has turned around quickly.  The trend isn’t evenly distributed as the chart above highlights.  The big jump in New York rents is interesting since home values according to the above seem to be fairly stable.  Unlike Arizona and Nevada with falling rents and incredible jumps in home values, New York would seem to justify a move up in prices when looking at rents.

The young and in debt

Americans overall receive a large portion of their reported net worth through real estate equity.  Since many young Americans bought near or at the peak, they never really had the chance to accumulate any equity growth.  Many also bought with FHA insured mortgages or low down payment loans stretching their budgets.  Because of this, net worth for older households has largely recovered from the peak but for younger households, they are still down by a whopping 40 percent from the peak:

age of household net worth

Source:  New York Times

The main reason?  Negative equity.  The debt still remains connected to peak housing values and while stocks are near record levels, real estate values nationwide still have a long way to go to reach those previous peaks.

Bidding wars easing up

Redfin has an interesting report on bidding wars. Of course the most competitive markets seem to be in California.  Take a look at the bidding war trend:

redfin bidding wars

Source:  Redfin

The main reason for this?  The largest monthly inventory increase in three years might help to ease off some of the insanity in the current market.   This might offer some wiggle room around the country but the heat is still on in manic California:

competition markets

Look how crazy the San Francisco market is in terms of competition.  In May, over 96 percent of winning bids were over asking price!  Orange County and San Diego had very high numbers here as well.  So if you are out there in this mania and are losing out, this is probably why.

Going after strategic defaulters

A large number of people strategically defaulted during the height of the bust and many thought they were off free and clear.  Now that prices are up, banks are looking into those strategic defaults from the past:

“(WaPo) [Freddie Mac spokesman Brad German] said Freddie Mac is targeting “strategic defaulters,” which the agency defines as “someone who had the means but chose to go into default, that there were no extenuating circumstances that affected their ability to pay. If you’re choosing not to pay off your mortgage, but you’re paying other bills, we would consider that strategic default.”

In 2011, Fannie and Freddie flagged 12 percent of 298,327 properties they had foreclosed on — more than 35,000 — for deficiency judgments in an attempt to collect $2.1 billion in unpaid mortgage debt, according to an inspector general’s report released in October from the Federal Housing Finance Agency.”

Americans seemed to be shocked that data was being collected on them while they post their entire lives chronicled by the minute on Facebook voluntarily.  So it should be no surprise that our GSEs were also tracking those strategic defaulters.  Now that times are good and equity is back up, you might be receiving a letter if you strategically walked away from your mortgage and had assets in other investment vehicles.

The trends suggest that rents are tight because incomes are tight.  You also see that bidding wars might be reaching an apex in terms of manic fever in some markets.  In the end, the momentum is still on the upside but for how long?  Can the Fed continue to purchase MBS and risk inflating that $3.3 trillion balance sheet even further?  The fact that inventory is rising is a good sign for most Americans.


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JCHS: Strong Demand for Rental Housing Driving Gains in Multifamily Construction

Strong Demand for Rental Housing Driving Gains in Multifamily Construction

by Ellen Marya
Research Assistant
As the housing recovery gains momentum, one encouraging sign has been the strong return of multifamily construction. According to the Census Bureau’s Survey of Construction and Building Permits Survey, construction on 245,300 multifamily units was started in 2012, the most since 2008. (Figure 1) The surge in construction activity is only beginning to result in new supply on the market given the long lags from the time a project is conceived until construction is completed (only 166,000 units in multifamily buildings were completed in 2012, just slightly above the low point in 2011). But looking ahead, multifamily construction will continue to accelerate, as permits for over 310,000 multifamily units were issued in 2012, also the highest level since 2008.

Source: US Census Bureau, New Residential Construction.
Gains in permitting have been widespread: three-quarters of the 100 largest metro areas accelerated their multifamily permitting in 2012. Nationwide, the multifamily rebound is outpacing improvement in the single-family market. Multifamily permitting was up over 51 percent between 2011 and 2012, more than twice the gain in single-family permits and the third consecutive double-digit increase. The rapid recovery in the multifamily sector has led to speculation that some markets may be in danger of overbuilding. But while recent gains are dramatic, a longer-term view of both supply and demand indicates that such concerns are likely overblown—at least for now.
Current increases in multifamily permitting are from historically low levels. From a peak of over 473,000 units in 2005, multifamily permits decreased by more than 70 percent to 142,000 in 2009, the fewest in 25 years. In the context of these drastic swings, permitting is just beginning to return to levels in line with long-term averages. Nationwide, in 2012, nearly 81,000 fewer multifamily units were permitted than the average annual level from 2000 to 2009. Permitting in 34 of the 100 largest metros did top average levels from the 2000s in 2012, including seven of the top ten highest permitting areas (Figure 2).

Source: JCHS tabulations of US Census Bureau, New Residential Construction.
This boost in supply is occurring in conjunction with rapidly growing demand for rentals. Nearly 93 percent of multifamily units completed in 2012 were rentals, the highest level in decades. According to the Housing Vacancy Survey, the number of renter households increased by over 1.1 million between 2011 and 2012, marking the eighth straight year of renter growth. Rentership was especially strong in each of the top ten highest permitting areas, where growth in renter households outpaced overall household growth between 2010 and 2011, the most recent years with metro-level data available from the American Community Survey. In total, these ten metros added 154,000 households between 2010 and 2011, but the number of renter households increased by nearly 268,000.

Additional signs indicate strong rental markets in these highest permitting areas. According toMPF Research, vacancy rates in professionally-managed apartment complexes were near or under 5 percent in eight of these markets as of the fourth quarter of 2012. Monthly rents in the ten markets were up an average of 3.6 percent in the fourth quarter of 2012 from the same quarter a year earlier, compared to 3.0 percent nationwide. As construction timelines for multifamily buildings often span several years, market conditions will continue to develop during the lag between permitting and completion of new units. However, generally tight markets and enduring renter growth suggest that the robust return of multifamily construction currently represents a response to rising demand, rather than the formation of a new bubble.


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CR: Fed’s Beige Book: Economic activity expanded at “moderate” pace

Fed’s Beige Book: Economic activity expanded at “moderate” pace

by Bill McBride on 4/17/2013  

Fed’s Beige Book “Prepared at the Federal Reserve Bank of Dallas based on information collected on or before April 5, 2013.”

Reports from the twelve Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from late February to early April. …

Most Districts noted increases in manufacturing activity since the previous report. Particular strength was seen in industries tied to residential construction and automobiles, while several Districts reported uncertainty or weakness in defense-related sectors. Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth. Retailers in several Districts expect continued sales growth in the near term.

And on real estate:

Residential real estate activity continued to improve in most Districts, and some Districts, including Cleveland, Richmond, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco, noted increased momentum since the last report. The New York District, in particular, noted especially strong improvement in residential real estate—both in for-sale housing and apartment markets.

Home sales continued to rise in most Districts. Although homebuyer demand was high in the Boston District, low home inventories were restraining sales, keeping growth modest. Home sales were reportedly strong in both the Atlanta and Dallas Districts. The Richmond District noted low inventories were pushing up contracts to well above listing prices, and the Boston and New York Districts said multiple bids on properties have become more common. Tight inventories and strong sales led to rising home prices in many Districts, including Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco. Within the New York District, condo sales volumes strengthened and low inventories have begun to drive up selling prices in New York City and surrounding areas, while New Jersey home prices were rising modestly and inventories were shrinking with a marked reduction in the number of distressed properties. Contacts in the Boston District also noted a decline in the stock of distressed properties.

New home construction continued to pick up in most Districts, although the Richmond District said that a low supply of residential building materials had stalled construction. …

Commercial real estate and construction activity improved in most Districts. Office vacancy rates declined in the Boston District and contacts said the construction of mixed-use projects was picking up. The New York District reported that office vacancy rates continued to decline and rents rose in Manhattan.

Residential real estate “continued to improve” and this was the most positive comment on commercial real estate in some time (but any “improvement” for commercial is from a very low level). This suggests moderate growth overall …

Read more at http://www.calculatedriskblog.com/2013/04/feds-beige-book-economic-activity.html#poKSKhlkLQ0VPuj3.99

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Read of the Day: Baby booming into real estate investing – 8 Charts Highlighting the Real Estate Plans of Baby Boomers

Baby booming into real estate investing – 8 Charts Highlighting the Real Estate Plans of Baby Boomers. Will Older Americans Venture into Real Estate Investing?

The rush into investment real estate has largely been dominated by big pools of money and foreign investment.  I’m intrigued by seeing the Wall Street machine suddenly finding blue collar rental real estate as an attractive investment.  However there has been another group of potential real estate investors that has largely been hidden from view.  Are baby boomers diving into the real estate investment game?  The prospect of buying investment real estate has never been a popular one.  Most Americans own their own home but that is largely it.  Real estate in the form of investment properties is largely an active venture.  Sure, some can pay a property manager to manage their asset but this will then require a diligent process in selecting a trustworthy team.  The big dive by Wall Street funds into residential real estate is interesting because this is not a quick buck industry.  Baby boomers with low yields on fixed income might be looking into buying other real estate as an investment or hedge.  Instead of speculating on this I decided to dig deep on what baby boomers are doing when it comes to other real estate outside of their primary residence.

Owning other property

One study that I found was conducted by the National Association of Realtors.  We will also compare this data with a more comprehensive survey conducted by the Fed.  The NAR survey contacted 2,000 Americans born between 1946 and 1964 regarding their real estate plans (not exactly a giant pool but we will measure this with other data):

baby boomer real estate investment properties ownership rates

One of the first items that came out was that baby boomers have a much higher home ownership rate than the overall figure.  Baby boomer home ownership is close to 70 percent.  Another item that came out in the survey was that 10 percent were planning on buying real estate in the next 12 months.  This isn’t exactly what some were saying that a large number of boomers were going to shift the investment market game.  One interesting figure is the satisfaction with current home.  This figure will likely push more homes onto the market as many will sell to move to a more desirable place.

Baby boomer and ownership rates

So how many baby boomers own other real estate outside of their primary residence?  The survey found that 25 percent of baby boomers that own their primary residence own other real estate:

baby boomer real estate ownership

The largest segment came from land.  Rental investments are at 8 percent and vacation homes came in at 7 percent.  In other words, this is a small segment of the market.  It is hard to see how baby boomers will suddenly find a desire later in life to dive into the landlord game.  These figures have been steady over the past decade.  Given the volatility in the housing market will baby boomers be lured back in once again to risk their money at a time when time is not on their side?

Comprehensive Fed Survey – Percent of Families with Other Real Estate

One of the more comprehensive surveys on household financial health comes from the Fed’s Consumer Survey. This survey comes out every three years and has some interesting data.  First, let us see how many families actually own other real estate outside their primary residence:

percent of families with other real estate

This is interesting.  There was a jump from 2001 to 2010 in terms of how many families own real estate outside of their primary residence.  From 1989 to 2000 the figure ranged from 11.5 to 13 percent.  In 2010 it went above 14 percent.  Much of this was pulled in from the mania and easy money but from the more recent survey we examined, it looks like baby boomers in terms of rental real estate didn’t dive in fully.

Real Estate by Age

The best way to look at this is to pull data on other real estate by head of household:

real estate holdings by age

From 2000, it does look like baby boomers increased their holding in other real estate yet it doesn’t seem like it was in the form of rental property.  Maybe it came from land and also vacation homes yet that isn’t necessarily an investment more than a luxury purchase.  Short of renting the vacation home out, this is like adding a spa to your home expecting it to yield a net-net return on investment.

Younger Americans, those less than 35 do not have a big holding in other real estate and that is to be expected.  The pent up flood of baby boomers isn’t likely to be in the form of rental real estate buying but more on them selling their current homes to move up or to move out.

Investment Property Data – Value

The one group that seemed to ride out the real estate bubble in a better position is the 55 to 64 age group:

median value of real estate holdings

Every other category saw the median value of their other real estate holdings fall except the 55 to 64 age group.  This could be that this group did not heavily invest during the boom times and probably bought before the bubble ran up.  Those in the 45 to 54 range saw a dip from over $150,000 to nearly $100,000.  Those less than 35 saw virtually no gain dating back to the early 2000s.  Those claiming that a flood of investors will come from the boomer ranks are simply speculating since the data does not back this up.  The current investment demand is coming from big money and foreign funds.  The action is also coming from flippers in boom and bust markets looking for a quick profit.  I’m not sure if I see boomers rushing in to suddenly become flippers at this stage in their lives.

Families Owning Stocks

Americans have been hit hard in this real estate bust because most derive their wealth from real estate holdings largely from their primary residence.  Home prices although moving up when looked at the median price, largely distort the current trend.  What is happening is that the mix of distressed properties is falling in terms of the number of sales.  If we look at the Case Shiller home prices are up but maybe not to the levels being reflected in median home prices:

case shiller

The current standing?  Home prices are still off by 30 percent from the peak and are now up by 4 percent from the trough.  So households have a long way to go when it comes to repairing the damage from the bust.  Yet the stock market is now getting close to the previous peak.  Why are households not benefitting from this?
families with stocks
I’ve discussed this before and US households do not hold stocks in large numbers.  Those that do, may hold them through pensions (a dwindling segment) and it is nothing in comparison to the amount held in residential real estate.  That is why the recent stock market recovery has done very little for US households.  Only about 15 percent of Americans have direct investments with stocks (off from 21 percent in 2001).

Household Income

median income

Yet the most important figure to look at is household income.  This is important whether we are looking at California housing or nationwide housing.  Household income adjusted for inflation is back to levels last seen in the 1990s.  So with less discretionary funds, will more baby boomers dive into investment real estate especially seeing how volatile real estate can be?  I’m sure many realize that rental property is largely an active investment.  Do boomers have the desire to take on this new avenue of investing?  It doesn’t seem like this is happening in large numbers.  One thing that can change the market dynamics is if boomers begin selling their homes to move out and transition.  This will likely add more inventory to the market and is a more likely scenario that lies ahead.

From the overall data it doesn’t seem like boomers are going full force into the investment property market.  Even if they enter in today, they are competing with big pocket Wall Street and foreign money that is willing to over pay.  With 10,000 hitting retirement age per day, this is a segment we need to keep our eyes on.

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7 Housing Trends to Look for Going into 2013. Did the foreclosure pipeline increase last month?

7 Housing Trends to Look for Going into 2013. Did the foreclosure pipeline increase last month?

There was an interesting trend that emerged last month.  2012 has seen a reversal in the housing market yet this topic has been largely absent from all debates.  The piece of data that was released addressed the still formidable foreclosure pipeline.  Foreclosure starts saw a 260,000 increase from the previous month.  It is expected that actual foreclosures are decreasing as the pipeline is being sold and as the economy recovers, this figure will slowly move down.  Yet to see the foreclosure starts pipeline increase goes counter to everything we are hearing.  What gives?  There are a few reasons for this increase.  We also need to explore the building side of the equation and how rents have been picking up in 2012.  The flood of investors and Wall Street swarming into the rental market is a new experience.  What are the trends for housing going into 2013?

Trend #1 – Foreclosure pipeline

foreclosure pipeline data

It was surprising for some to see the earliest distressed pipeline bucket increase by 260,000 last month.  The reason this was surprising is that there has been a steady decline in foreclosure starts for over a year.  What this means is that we will be seeing more of these foreclosure hit the market in the next few months.  Why the sudden jump?  Banks are being calculating and want to sell into a positive trend for the housing market.  They see big investors over bidding and buying properties, many times without viewing the place in lots, and pushing prices higher.  Yet at some point markets do get saturated.

Economics would tell you that more rental supply on the market will likely push rents lower.  Yet many are now buying to flip thus removing property for sale (until ready for the flip) or rent.  This is one reason why rents and prices have been pushed up this year as well including the ultra-low mortgage rate.  Yet this trend is not being driven by solid economic fundamentals.  Certainly not to the level we are seeing with price increases.  The trend to look for into 2013 is how much momentum this can carry going forward.

Trend #2 – Rental Market

Rental prices have seen a nice move up in 2012:

cpi rent

Too bad incomes have remained stagnant.  That is the unfortunate reality with this push up in rentals.  More household income is now being spent on rental housing.  This usually impacts those least able to afford these price increases.  The rental vacancy rate has also been falling:

rental vacancy rate

Big pocket investors are diving into the market trying to chase yields.  Yet being a landlord is an expensive business and probably will not scale well with single-family homes.  The projections many of these investors have are too rosy and this usually is not seen until a few years of property ownership.  We have to see if this trend continues going into the new year.

Trend #3 – New home sales?

New home sales are a better indicator of a real rebound in housing since this trend is likely to put people back to work in new home construction and shows demand exceeding current supply.  This trend is barely visible:

new one family houses sold

There is a modest pickup in new home sales but it hardly registers on the chart above.  The real demand from Wall Street and many funds is for cheaper properties.  So far, we have yet to see this trend impact the new home sales market.  We are well below the annual trends going back to 1960.  All the activity at the moment is at the lower end plus a major part of the market (above 30 percent) is being dominated by investors.

Housing starts are picking up but the trend is small:

housing starts

This is another trend to keep our eyes on going into 2013.

Trend #4 – Expensive state housing

Some areas in California have seen no correction since the bubble burst.  In fact, many homes are selling for prices above the previous peak price.  Construction employment in California is still stuck in the 1990s:

construction employment

And given the sales volume and the reality that all loans are government back, you can forget about the hundreds of thousands of jobs that were dependent on housing bubble 1.0.  If housing is in such a good trend, why are we not seeing construction jobs pickup?  The reason again is investor demand is for existing lower priced homes while flippers are targeting high priced markets for used homes.  Construction employment would also see a boom if people were remodeling their homes but short-term investors are looking more for an in and out strategy.

Take a look at some recent Culver City home sales:

culver city

$700,000 for a 1,100 square foot home?  $848,000 for a 3 bedroom and 2 baths home?  You be the judge and ask whether these are realistic prices.  These prices are completely dependent on low interest rates.

Trend #5 – Prices going up

The Case Shiller Index turned positive in 2012.  Will this trend continue into 2013?  The large boost came about because of low interest rates.  Ben Bernanke has already hinted that he will be leaving in 2014.  We are already seeing the impact of low rates on the standard of living for many.  As more and more seniors become dependent on fixed incomes (the majority rely on Social Security as their primary source of retirement income) how are they going to feel about their income being stuck while food and energy prices soar?

There is always a cost to taking actions like this.  This was not organic growth.  The Fed with QE3 is buying $40 billion in MBS each month and already has a balance sheet of over $2.8 trillion.  This engineered growth will need to continue to keep the trend in housing going.  The market is already addicted to sub-4% mortgage rates.  The market is all government backed loans or big pocket investors.

The trend for prices moving up will depend largely on mortgage rates but also on how investors treat the rental market.  Will many try to sell into the current market?  We are already seeing this with flipping rates increasing.

Trend #6 – Demand for loans

Demand for loans is high:


This push was driven by lower and lower rates.  It is hard to envision rates moving any lower from here.  Rates are already in a negative scenario courtesy of the Federal Reserve.  At this point, we are simply conditioning the market to these low rates and the Fed will need to purchase $40 billion a month in MBS to maintain this path.  The Fed has never gone this deep into their balance sheet expansion so those saying they know how this will play out have no historical reference point.  The only other country that has gone this deep into quantitative easing is Japan and their economy isn’t so hot.  They also entered these agreements to save their zombie banking sector.

Trend #7 – Remember history

There are some interesting stories in the news that are worth examining:

“ From Cincinnati.com. “The costs of the housing crisis remain steep in Greater Cincinnati and across the nation, yet the presidential candidates barely touch on the topic. ‘I find it absolutely remarkable,’ said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. ‘If you look at what triggered this whole financial market seize-up, it was housing.’”

This was an interesting trend.  The entire election largely stayed away from housing even though it was at the core of our current financial crisis.  Why?  It is a losing proposition to discuss even while prices are going up.  The big winners are large money investors and flippers.  For the typical home owner, as we know many are still underwater so bringing this up in the debate might bring to surface some unwanted feelings.  Plus, who is going to address the mortgage interest deduction for wealthy households?

“Since 2006, Greater Cincinnati homeowners have joined families nationwide who’ve lost $7 trillion in home equity. One in four local families – 111,397 in all – are ‘under water’ on their mortgages. That cripples their ability to refinance at today’s historically low rates or sell their homes, leaving them vulnerable to foreclosure if their finances take a downturn.”

This speaks to my previous point.  Talking about housing brings back memories of the financial crisis.  Many across the nation, especially in crucial swing states like Ohio or Florida are deep underwater.

“Roger Davis of Fairfield, a retired police officer, is one of millions of Americans looking for answers. He has pinched pennies to keep up payments on the house he and his wife bought five years ago. Their home has lost so much value in the years since that the family is now underwater. Davis is disgusted that his bank hasn’t met him halfway by allowing him to refinance. ‘People are walking away from their homes – we’re not doing that, and we’re getting penalized,’ Davis said. ‘We’re trying to be good Americans.’”

This is another important point.  I keep hearing about well off households in California refinancing giant loans while in many other states, banks simply choose to ignore those homeowners.  This kind of selective assistance is a reason why longer-term I see the mortgage interest deduction being cut back significantly for wealthier households and this will have a major impact on a state like California.  By the way, the majority of homeowners in the US don’t even itemize so the deduction doesn’t even help but of course the lobbying arm of the industry will try to complicate the facts.

The trends in 2012 largely came from the low rate interest environment and massive investor buying.  Will this keep up into 2013?  For the investor portion, we are already seeing many turn away from places like Arizona where the market is saturated.   Time will tell but those trying to apply open market economic theory here are contending with a deux ex machina with the Fed and government policy.  This is a command control housing market being driven by policy, banking intervention, and the government.

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Fed’s Beige Book: Economic activity “expanded modestly”, Residential real estate showed “widespread improvement”

Fed’s Beige Book: Economic activity “expanded modestly”, Residential real estate showed “widespread improvement”

by Bill McBride on 10/10/2012 

Fed’s Beige Book:

Reports from the twelve Federal Reserve Districts indicated that economic activity generally expanded modestly since the last report.

Consumer spending was generally reported to be flat to up slightly since the last report. A number of Districts characterized retail sales as expanding at a modest pace …

And on real estate:

Residential real estate showed widespread improvement since the last report. All twelve Districts reported that existing home sales strengthened, in some cases substantially. Selling prices were steady or rising. Boston, Atlanta, Minneapolis, Dallas and San Francisco noted declining or tight inventories, which have put upward pressure on prices. Modest price increases were reported in the New York, Richmond, Chicago, and Kansas City Districts. New York and Richmond reported relatively strong demand at the high and low ends of the market, whereas Philadelphia and Kansas City noted relative strength for mid-range homes; Boston indicated a shift in the mix toward lower or medium priced homes. New home construction and sales were more mixed but still mostly improved: increased construction and/or new home sales were reported in the Atlanta, Chicago, St. Louis, Kansas City, Dallas and San Francisco Districts. Multi-family construction, in particular, was described as robust in the Boston, New York, Atlanta, Chicago, and Dallas Districts. Residential rental markets continued to be characterized as strong, even in the New York and Atlanta Districts where rents increased somewhat less strongly than in recent months. 

Commercial real estate markets were mixed since the last report. Office markets showed signs of softening in the northeastern Districts–Boston, New York and Philadelphia–with New York remarking on substantial new supply coming on the market in early 2013. In contrast, Atlanta, Minneapolis and San Francisco noted some improvement, while most other Districts reported stable or mixed market conditions. Industrial markets showed some strength in the New York, Philadelphia, Cleveland and Atlanta Districts, while conditions were described as sluggish in Richmond and mixed in St. Louis. Atlanta noted weakness in the market for retail space. Commercial construction activity was also mixed: Atlanta, Minneapolis and Kansas City reported some improvement in non-residential construction activity, while Richmond and Dallas noted that activity was sluggish.

“Prepared at the Federal Reserve Bank of New York and based on information collected on or before September 28, 2012.”

More sluggish “modest” growth. And more positive comments on residential real estate …

Read more at http://www.calculatedriskblog.com/2012/10/feds-beige-book-economic-activity.html

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Fed’s Beige Book: Economic activity increased at “moderate” pace, Residential real estate “activity improved”

Fed’s Beige Book: Economic activity increased at “moderate” pace, Residential real estate “activity improved”

by CalculatedRisk on 6/06/2012 

Reports from the twelve Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from early April to late May.

This is a slight upgrade from the previous beige book that reported “modest to moderate” growth.

And on real estate:

Activity in residential real estate markets improved in most Districts since the previous report. Several Districts noted consistent indications of recovery in the single-family housing market, although the recovery was characterized as fragile. The apartment market continued to improve, and multifamily construction increased in several Districts.

Home sales were above year-ago levels in most areas of the country and several Districts noted sales had improved since the previous report, although some noted that the pace was well below the historical average. In particular, the New York, Cleveland, and Richmond Districts noted a pickup in the pace of distressed sales. Residential brokers and some builders in the Philadelphia, Atlanta, and Dallas Districts said home sales were exceeding expectations. Contacts in the Richmond District said homes were being snapped up as investors become more confident in the housing recovery, and the Atlanta report noted stronger sales to cash buyers and investors in Florida. Chicago said more sales had multiple offers. Apartment rental markets improved in the New York, Atlanta, and Dallas Districts. One contact from the New York District noted rising apartment rents have made buying more attractive, contributing to a slight uptick in sales.

Most Districts reported that home inventories decreased. Overall, home prices remained unchanged in many Districts, although reports were mixed. There were a few reports that sellers were lowering asking prices, leading to downward pressure on housing prices.

New home construction increased in a number of Districts, including Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco. Contacts in the Philadelphia District said demand for new home construction eased slightly. Builders in Kansas City noted housing starts were down, but they expected an increase in the next three months. The Boston, Atlanta, and Chicago Districts reported an increase in multifamily construction, and the Minneapolis District noted numerous multifamily projects were in the pipeline.

Commercial real estate conditions improved in most Districts, and there were some reports that commercial construction picked up.

Prepared at the Federal Reserve Bank of Dallas and based on information collected on or before May 25, 2012.

More sluggish growth – but not a slow down. And a few positive comments on residential real estate …

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