Foreclosures to Continue: Bernanke

CNBC.com  Fed Chairman Ben Bernanke says foreclosures are likely to continue for a while and housing remains a key impediment to a faster recovery. CNBC's Diana Olick has details.

Dept. of Justice Mortgage Deal Settlement

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President Obama Refi Plan Unveiled

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Beige Book Report - January 2012

January 12, 2011 

Federal Reserve Districts

First District--Boston

Residential Real Estate
Home and condo sales in the First District continued to show significant year-over-year declines in November, as many contacts had expected. Respondents say the large year-over-year declines throughout New England partially stem from the extra boost in activity observed in November 2009 when the first-time homebuyer tax credit was originally set to expire. Nonetheless, home and condo sales activity remains sluggish by any measure throughout the region, with all contacts anticipating that total 2010 sales will fall short of 2009. Meanwhile, the median price of homes continues to edge up in the New England states, with the exception of New Hampshire, which observed another month of year-over-year price declines. Contacts attribute increasing median home prices to relatively higher sales of more expensive properties rather than a general upward movement in home prices. Second-home purchases continue to fare well relative to other segments of the market, as higher income buyers take advantage of low mortgage rates and a large inventory of discounted homes. Most contacts report that inventory levels are rising; they do not see this as a source of concern except for a contact in New Hampshire, where the November months of supply exceeded other states in the region.

Contacts anticipate a continuation of current sluggish activity levels into 2011, with fewer swings than in 2010. Some respondents express concern about possible tax reforms restricting the mortgage interest deduction.

Commercial Real Estate
New England's commercial real estate market was stable in recent weeks. In Boston, a steady volume of lease renewals generated significant revenue for brokers but resulted in little to no net absorption. For the year, office vacancy increased in greater Boston and, according to one contact, is currently in the high teens in the Financial District, while Back Bay and Cambridge enjoy much lower rates (below 10 percent). In Providence and Portland, modest positive absorption is cited in core downtown districts, as tenants are eager to sign deals to take advantage of low rental rates, which are not expected to persist much longer. In Hartford, the vacancy rate for downtown, class A office space was placed at 24 percent for the third quarter; there is some expectation that the city's office absorption rate will turn modestly positive in 2011. Construction remains limited across the region, with the exception of the multifamily sector, which continues to attract strong investor interest and very attractive financing terms. Based on recent sales prices, one Boston lender to commercial real estate is concerned that the city's multifamily market may be "overheating."

The outlook ranges from quite cautious to solidly optimistic. Boston and Hartford contacts expect slow growth and only limited absorption in 2011. Prospects for absorption in 2011 were more robust in Providence and Portland, and a Boston banking contact expects very strong loan demand for commercial properties throughout 2011. No contacts are predicting a "double-dip" in the commercial real estate market (nor for the economy as a whole). Nonetheless, a few are concerned that commercial foreclosures could increase in 2011, putting downward pressure on property values.

Home Builder Confidence Rises

CNBC.com:  CNBC's Diana Olick reveals the latest home building survey results.