Beige Book: Real estate ‘increased solidly’ in last two months

Residential and commercial real estate activity “increased solidly with higher sales and lower vacancy rates,” in the 10th district of the Federal Reserve, which includes Colorado, according to the Fed’s most recent iteration of the Beige Book.

The book is a compilation of anecdotal evidence of market conditions in all sectors of the economy.

Residential activity improved during the most recent survey period, which included late April and all of May. Housings starts were down compared to the previous survey, but builders expected new-home construction to pick up in the next three months.

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Residential sales were improved from the previous survey, with homes priced between $150,000 and $300,000 selling well, while homes at the upper end of the price range proved to be more difficult to move.

Commercial real estate was also solid during the survey period, but there was some uncertainty about future activity. Vacancy rates fell and survey contacts expected them to continue falling over the next three months. Prices and rents remained flat, but there are expectations for increases in the future.

Elsewhere in the Beige Book, the Fed reported that the banking sector in the 10th district also saw improvement, with bankers seeing slightly stronger loan demand, improving loan quality and increased deposits.

Manufacturing activity in the district also improved, in both durable and non-durable goods. Manufacturing sources told the Fed that capital spending plans were improved and several noted plans to expand into new products and markets.

Consumer spending increased in retail, restaurants and tourism but automotive sales declined. Tourism activity increased and hotel occupancy held steady while average room rates crept up.

Large vehicles continued to be weak sellers for automotive dealers as buyers opt for more fuel-efficient vehicles.

Agriculture conditions improved, with winter wheat coming in approximately three weeks ahead of schedule and in fair condition. Feeder calf prices were high, creating strong profits for ranchers, but placing strain on cattle feedlots. Farmland values continued to rise.

Energy activity also increased, with drilling activity up. The book reports that storage reservoirs were full and an oversupply of natural gas was beginning to slow down drilling. Oil prices fell but are expected to remain steady over the next few months.