Wednesday, November 30, 2011

Beige Book: real estate in Kansas City District remained "sluggish"

The Kansas City Fed released its Beige Book today for the Fed's tenth district which includes Colorado. In the District, residential and commercial real estate remained sluggish, while overall growth "edged higher."

Sections of interest:

Real Estate and Construction
Residential and commercial real estate activity remained generally sluggish in October and early November. Housing starts dropped from the previous survey, with construction of higher-priced homes particularly weak. Expectations for future homebuilding remained slow, and materials were generally available. Sales at residential construction supply firms improved somewhat, driven in part by an increase in remodeling as more consumers updated existing homes. Home sales picked up slightly but remained weak overall. Expectations for future home sales were more positive than in previous months, and home inventories drifted lower as home prices continued to ease in most areas. Mortgage lending activity was positive and remained above year-ago levels, though some contacts reported continued buyer financing difficulties. Commercial real estate activity edged higher from the previous survey, but remained sluggish overall with little further improvement expected. Vacancy rates dropped slightly, though they were expected to rise somewhat in future months. Office prices and rents increased but remained below year-ago levels, and expectations were flat. One contact in Joplin, Missouri noted considerable building activity as a result of the devastating tornado in that area last spring.

Most bankers reported steady or stronger loan demand, stable or improving loan quality, and increased deposits compared with the previous survey. Overall loan demand increased marginally as demand for commercial and residential real estate loans strengthened, demand for consumer installment loans declined, and demand for commercial and industrial loans weakened slightly. Credit standards remained largely unchanged in all major loan categories, and deposits increased for the seventh straight survey. Bankers generally reported loan quality as steady or improving compared to a year ago, with even more improvement expected for the next six months.