There’s a lot of good news for the economy in the Fed’s July beige book update, particularly when it comes to real estate.
The bottom line is that many regions across the country are seeing a building boom in either residential or commercial real estate or both. In addition, housing prices are increasing in a lot of places.
This is what a good economy looks like.
Beige book reports tend to be anecdotal, and there weren’t booming reports from every district, but there was a definite positive outlook to both residential and commercial real estate to this report, particularly in urban areas.
Here a few excerpts from the places where real estate is looking good:
From Boston: “Contacts report that office rent growth is accelerating in greater Boston, especially in urban submarkets. One contact describes Boston’s office leasing market as the strongest in 50 years.”
From New York: “A local real estate contact notes that new development, which has been predominantly rentals in recent years, is shifting back towards condos. New construction starts, as well as the amount of space under construction — for both office and apartment buildings — reached their highest levels in more than a decade.”
From Chicago: “Construction and real estate activity increased modestly over the reporting period. Most builders reported steady demand for residential units, and noted that new construction was primarily concentrated in urban areas… Business loan demand and pricing were flat. The commercial real estate market was an exception, with multiple contacts reporting growth and some expressing concern that the market
From Minneapolis: “In Minnesota, May home sales increased 13 per cent, the median sales price increased 8 per cent, and inventory decreased 8 per cent, compared with a year ago. … In northwestern Wisconsin, real estate agents reported ‘the busiest spring in 10 years.'”
From San Francisco: “Contacts reported continued growth for residential and nonresidential construction and sales, with particularly rapid growth in
metropolitan areas with large technology sectors. A few contacts noted a rising influx of foreign investment in commercial real estate, which drove up property prices in some metropolitan areas.”
In addition, Deutsche Bank’s Joe LaVorgna had good things to say about the housing market in his morning note Wednesday:
We expect the July NAHB housing market index to reach a new post-recession high. The NAHB index is highly correlated with the trend in housing starts — the June data are reported tomorrow. The former leads the latter by two quarters. A simple linear regression of housing starts on the NAHB index points to starts in the vicinity of 1.5 million, roughly a 50% improvement from their May level. This is especially important for the labour market, as residential construction payrolls have risen by roughly +130k over the past 12 months, which has more than offset the -44k decline in oil and gas extraction and support activities for mining
Hear that? That’s the sound of a solid housing market recovery in the wind.
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