WASHINGTON -- Residential real estate markets improved throughout the nation last month, but commercial real estate markets continued slipping in most of the nation, according to a survey of bank examiners and liquidators released Wednesday.
The survey by the Federal Deposit Insurance Corp. was not intended to forecast real estate conditions.
NB But FDIC Chairman L. William Seidman said the findings confirm
that the overall U.S. real estate market has probably come close to hitting bottom.
Three Federal Reserve district presidents also suggested a turnaround. Testifying before a House panel, the Fed presidents said banks became tightfisted last year, creating what many call credit crunch.
Lately, however, they said, lenders appear to be loosening up a bit. And since banks have become a major source of money for real estate development, easier credit could spur new building, most of it in the residential sector.
"The credit restraint that we are experiencing in the Midwest reflects an adjustment in the marketplace" to overbuilding in the 1980s, Chicago Federal Reserve Bank President Silas Keehn told the House Domestic Monetary Policy Subcommittee. "And it is entirely possible that we are coming to the end of this phase."
Still, real estate markets aren't likely to bounce back quickly. Asked about inventories, 69 percent of those questioned in the FDIC survey said there is excess residential property on the market, and 78 percent said there is too much commercial
real estate available. Certain regions will probably also lag in the recovery. The survey detected more optimism in the West and the South than in the Midwest and the Northeast. Examiners and liquidators in the West said even the commercial real estate market was improving.
But New England has such a surplus of residential and commercial real estate that it will probably keep the six-state region in a recession for six to nine months beyond the rest of the country, Richard Syron, president of the Boston Federal Reserve Bank, told the House subcommittee.