Thursday, September 9, 2010

The Beige Book on real estate and construction

The Kansas City Fed released its Beige Book for the district today. The district includes Colorado. The section on construction and real estate reads:

Real Estate and Construction

Residential real estate activity dropped sharply in late July and August, but the downturn in commercial real estate activity lessened somewhat. Housing starts declined, with several builders noting continued financing difficulties. Expectations for future homebuilding remained weak, although one Colorado contact believed a floor seemed to be forming in that state. Residential construction supply firms also reported a drop in sales. Home sales plummeted from the previous survey, especially for higher-priced homes, and home inventories rose across the District. Real estate agents blamed the steep drop in home sales on expired tax credits and increased customer uncertainty, and most expected little improvement in the near future.

Mortgage lenders reported that overall mortgage demand improved slightly from last month, primarily due to a continued rise in refinancing loans. The downturn in commercial real estate stabilized somewhat in late July and August, but most contacts expected little improvement in coming months. Vacancy rates and leasing activity were flat compared to the previous survey, while construction fell further. Office prices and rents also continued to decline. Many commercial real estate contacts cited continued financing difficulties and high economic uncertainty among customers.