The following summaries of housing market conditions and activities have been prepared by economists in the U.S. Department of Housing and Urban Development's (HUD's) field offices. The reports provide overviews of economic and housing market trends. Each regional report also includes a profile of a selected housing market that provides a perspective of current economic conditions and their impact on the local housing market. The reports are based on information obtained by HUD economists from State and local governments, from housing industry sources, and from their ongoing investigations of housing market conditions carried out in connection with the review of HUD program applications.
Midwest / Southwest / Great Plains / Rocky Mountain / Pacific / Northwest
Employment in the New England region increased by 101,900 jobs, or 1.5 percent, to 6,842,600 during the 12 months ending in August 1999. Connecticut and Massachusetts supported the bulk of these new jobs. However, job growth is shifting toward the lower-cost-of-living northern New England States; Maine produced the highest percentage gain, more than 2.5 percent, and New Hampshire had a job-growth rate of 2.3 percent. Maine and Vermont actually gained some goods-producing jobs, bucking the long-term declining trend. In service-producing industries, jobs increased by more than 3 percent in these two States, doubling the overall rate of job increases for the region. New England had the lowest rate of unemployment in the Nation3 percentin August 1999. Connecticut, New Hampshire, and Vermont all have unemployment rates of less than 3 percent.
Single-family home building permit activity was up 3.4 percent during the first 9 months of 1999, compared with the same period in 1998. This follows the large increase that occurred in 1998. New Hampshire and Vermont recorded double-digit increases. Connecticut, Maine, and Rhode Island had small increases, but Massachusetts experienced a small decrease. The number of multifamily housing units authorized by permits was down 22 percent compared with the same period in 1998. In much of the region, the high cost of available land, increased construction costs, and tight labor market conditions restricted production of rental housing.
The sales housing market in New England continued to show its strength by the 3.6-percent increase in annual rate of sales to 259,400 homes as of the second quarter of 1999. Increases in Rhode Island and Maine offset a small decrease in Massachusetts. Sales prices in the region were up almost 8 percent between second-quarter 1998 and second-quarter 1999.
New England rental housing markets remain strong, with low vacancy rates and pressure on rents. As the economic expansion continues, tight market conditions are being experienced at all rent levels. Jobs are being created in the most attractive markets, but housing production is not keeping up with demand. This situation has provided the impetus for public action to provide affordable housing in inner-city neighborhoods.
Through a number of funding sources, including Federal, State, local, and private involvement, the Department of Neighborhood Development in the city of Boston, in concert with neighborhood development groups, has developed almost 350 new single-family homes, and has more than 600 units in the planning stage. Additionally, nearly 4,000 rental units have been built or rehabilitated in the past several years as part of this same effort. Most units are privately financed, but land and construction costs are subsidized, counseling is provided, and these units are available only to low- and moderate-income households. These developments have been a major catalyst for revitalization of inner-city neighborhoods.
Spotlight on Barnstable-Yarmouth, Massachusetts
The Barnstable-Yarmouth, Massachusetts metropolitan area includes the 10 towns in Barnstable County that comprise Cape Cod. The area, about 65 miles southeast of Boston, is a popular vacation destination. However, recent year-round migration to the area, concurrent job growth, and unprecedented activity in the real estate market are changing the nature of this haven of quaint towns and sandy beaches.
Nonagricultural wage and salary employment increased by about 10,400 jobs, almost 4 percent annually, between 1992 and 1998. More than 90 percent of these jobs are in service-producing industries, as most of the economic growth is generated by tourism. Job growth during the 12 months ending in August 1999 totaled 2,800. From a peak of 10 percent in 1991, the unemployment rate in the Barnstable-Yarmouth metropolitan area has dropped steadily to 2.1 percent as of August, the peak of the summer season.
Through September 1999, residential building permit activity totaled 1,031 units, 8 percent behind the volume during the comparable period in 1998. More than 90 percent of the activity is in single-family homes. Housing construction levels had increased each year (except 1996) from 1993 through 1998, but most multifamily construction and an increasing share of single-family houses have been for seasonal occupancy. Zoning for an acre or more, serious environmental constraints, and a new Land Bank bill are restricting the availability of buildable land.
Through September 1999, total residential sales on Cape Cod totaled 7,100, up more than 7 percent compared with the same period in 1998. Condo-minium sales were up more than 23 percent to 1,200 during the same period. The improved economy in the Northeast has significantly bolstered the second home market. During the past 5 years, sales have increased by more than 10 percent each year.
The rental housing market on Cape Cod is influenced by the seasonal nature of the area economy. The most significant factor is the vast difference between summer and winter rentals. The recent thriving economy has exacerbated the high price of rental housing. Calls for action by housing advocacy groups have led the town of Barnstable to develop a program under which 10 percent of major proposed developments would be set aside for affordable housing. For smaller projects, assessed fees would go into a trust fund to support the development of affordable housing. Advocates hope the recent increase in the Fair Market Rents for the Section 8 existing housing program will facilitate a higher utilization of existing assisted housing resources by low-income families.