WASHINGTON (MNI) – The following is the second and final part of
the text of the Federal Reserve’s Beige Book survey First District
summary, published Wednesday:

Commercial Real Estate

Contacts in Hartford, Boston, and Portland describe commercial
leasing activity as flat in recent weeks, while a Providence contact
describes activity as healthy, notwithstanding some seasonal slowing in
recent weeks. Lease renewals and relocations resulted in net negative
absorption across the region as businesses continue to consolidate
operations. Investors continue to bid aggressively for low-risk
properties, while demanding steep discounts on distressed assets.
Contacts in Hartford and Portland both are increasingly pessimistic
concerning the outlook based on weak forecasts for job growth, while a
Providence contact sees potential for significant positive absorption in
the downtown office market based on deals currently under discussion.
Also on the bright side, loans are flowing to new condominium
conversions in core Boston neighborhoods based on increasing buyer
demand.

Residential Real Estate

New England contacts report large year-over-year declines in home
sales. In July, the greater Boston area reportedly had the fewest sales
in over a decade while other parts of the region also experienced very
weak sales. Nonetheless, contacts observe relative calm among realtors
regarding weak sales activity. They understand that the home-buyer tax
credit moved sales forward in time, leaving fewer buyers in the market
following the expiration of the incentive. Some contacts are optimistic
that a recovering economy and low interest rates on mortgages,
particularly for buyers with good credit, will draw buyers into the
market in the near future.

The number of homes and condos on the market increased around the
District. A couple of respondents in Massachusetts expect the increased
inventory, and resulting greater choice, to lure more buyers to the
market; conversely, a New Hampshire contact is concerned about the
excess supply of homes. The median price of homes and condos moved up in
most parts in New England. Such moves are attributed to a greater
fraction of sales coming from higher-end properties rather than to a
general increase in prices. The only exception to this trend is New
Hampshire, where prices fell 1 percent year-over-year. Contacts expect
prices to remain stable in the coming months, although they anticipate
slower sales for the rest of year due to the expiration of the tax
credit and perceived lack of job security.

(2 of 2)

** Market News International Washington Bureau: 202-371-2121 **

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