WASHINGTON (MNI) – The following is the second of two parts of the
text of the Federal Reserve’s Beige Book survey from the Richmond
district, published Wednesday:

Real Estate. Real estate activity edged up since our last report.
Several Realtors indicated that sales were picking up gradually and that
markets were more active than a year ago when tax credit programs were
still in place. Most contacts indicated that sales in the low-price
range fared much better than sales in the upper ranges. In contrast, an
agent in the D.C. area stated that sales in the $700 thousand to $900
thousand price range increased over 80 percent, and sales in the
one-million-plus price range were up over 100 percent. While most
Realtors indicated that that they had not seen any change in the
proportion of distressed sales, a contact in Greensboro, North Carolina
noticed an increase in foreclosures and an agent in Fredericksburg
mentioned that short sales were still about 50 percent of that market.
Realtors throughout the District noted an increase in foot traffic, but
sale price movements varied. Real estate agents in the D.C. and
Greenville, South Carolina areas stated that prices held steady, while a
contact in Greensboro said prices were soft. In contrast, an agent in
Fredericksburg, Virginia reported that sales prices rose about 10
percent over last year, and an agent in the D.C. area reported upward
price momentum due to lower inventory. He noted that properties in top
condition and priced at market were selling quickly and that recent
sales were generating four to five offers at full price and above.

Commercial real estate activity improved somewhat since our last
assessment. A Richmond Realtor reported a substantial increase in office
leasing (both new and renewals), and the industrial sector experienced
moderate improvements in absorption, while leasing of retail space held
steady. In South Carolina, a contact noted that a vacant plant in a
distressed industrial area had been sold to a local import business.
Additionally, an economic developer for the area stated that commercial
permit activity was increasing both in terms of volume and amounts.
However, foreclosed properties were still an issue in Maryland,
according to a contact there, while another source remarked that
available financing for projects continued to be a problem in the
Carolinas. Construction activity was little changed over the last
several months, according to a survey of construction contractors in the
District, although the few reports of at least some gain in activity
slightly outnumbered reports of declines. Most contractors reported cost
increases in a wide variety of commodities, but, compared to a similar
survey at the end of last year, a greater number were able to pass
through the increases.

Labor Markets. Labor markets generally strengthened across most
sectors in the Fifth District, with the exception of construction and
retail. Several employment agencies reported somewhat stronger demand
for temporary help in recent weeks, particularly in automotive and other
manufacturing sectors. The branch manager of a temp agency in Raleigh
and an agent in Hickory, North Carolina reported an increase in demand
for skilled workers for the manufacturing and automotive industries. In
Charlotte, North Carolina, an employment agent indicated that hiring was
on the rebound and that his firm would soon add internal recruiters and
account managers. Most recruiters expected rising demand for employees
over the next six months. However, many contacts mentioned that skill
levels of applicants often fell short, despite recent government actions
to improve education and training for displaced workers. According to
our latest survey, wages in the retail sector increased on average,
although gains were somewhat less widespread than in our last report;
the pace of wage increases picked up at services firms.

Tourism. District hotels, including resorts, reported an uptick in
bookings for April, as well as strong advance bookings for the summer
vacation season. The manager of a resort hotel in the North Carolina
Piedmont region expected a good summer season, and he indicated April
bookings were up slightly year-over-year. Our contact at a resort in
western Virginia reported an increase in dollar volume, year-over-year.
He said, “Staycations” are here for the long-haul, with many of his
advance-booked leisure guests coming from within a day’s drive. A
contact on the North Carolina Outer Banks reported that rentals were up
in most categories for the summer ahead, and good spring weather had
boosted April cottage rentals. She stated that people seemed to be
feeling a little better about the economy and were focusing on spending
time with family. A Washington, DC contact reported that early
attendance at this year’s Cherry Blossom Festival was above average and
that cooler temperatures meant that blooms would last longer, giving
visitors more opportunity to enjoy the cherry trees in bloom.

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

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