The economy in the Northwest region continued to slow during the past 12 months. Nonagricultural wage and salary employment increased by 1 percent during the 12 months ending September 2001 compared with the same period ending September 2000. Idaho led the region with a 1.6-percent growth rate, followed by Washington at 1.5 percent and Alaska at 0.8 percent; employment in Oregon declined 0.1 percent. Oregon experienced declines in the manufacturing sector’s transportation equipment and machine industry groups, as well as in construction, wholesale trade, and business services. Electronic equipment (excluding computers) spurred growth in Idaho, as did health services, which exhibited strong growth throughout the rest of the region as well.

Losses in manufacturing and wholesale trade, as well as in business services, slowed growth in Washington. Boeing recently announced cutting an estimated 22,000 jobs at its facilities in Washington State due to a slowdown in the airline industry. Growth in Alaska resulted from the current vitality of the oil industry and increased employment in the Anchorage and Fairbanks areas. Unemployment in the region averaged 5.4 percent for the 12 months ending September 2001 and ranged from 4.8 percent in Idaho to 6 percent in Alaska.

The slowing economy in the Northwest has had a relatively small impact on sales housing markets throughout the region. Sales volumes and price appreciation have slowed, but market conditions remain strong. For the first 9 months of 2001, sales of existing homes and condominiums in the Seattle metropolitan area totaled 32,615 homes, a 3-percent increase compared with the same period in 2000. Existing home sales, including condominiums, were up 14 percent in the Bremerton area and 6 percent in both the Tacoma and Olympia areas. In Anchorage, home sales for 2001 through September were up 15 percent compared with the same period in 2000, and the average sales price rose 9 percent to just less than $190,000.

In Oregon’s major metropolitan areas, total new and existing homes sold in 2001 through September rose 8 percent compared with the same period in 2000. The Portland area recorded the strongest increase in sales, a 12-percent gain. The median sales price in the Portland area for the first 9 months of 2001 was $165,100, up 2 percent compared with a year ago. Median sales prices in Oregon’s major markets increased an average of 3.5 percent, with the greatest increase reported for Douglas County at 9 percent.

The sales housing market in Boise was also strong during the first 9 months of this year, with sales up more than 12 percent compared with the same period in 2000. The median sales price rose 7 percent to $123,500. Homes priced under $150,000 continued to sell briskly; only homes priced at more than $300,000 were slow to sell.

Single-family building permit activity moved upward amid strong home sales markets throughout the region. Homes permitted through September 2001 rose 6 percent to 40,288 compared with the first 9 months of 2000. In the Puget Sound area (Seattle-Everett, Tacoma, and Bremerton), building permit activity was up 7 percent to 12,423 homes. In the Seattle metropolitan area activity increased 2 percent. Single-family volume in the Portland area through September 2001 was up 10 percent compared with the same period in 2000, and the number of homes permitted in the Boise area rose 3 percent over the same time. Homebuilding activity in Anchorage rose significantly in 2001, with singlefamily permits through September up 28 percent.

Rental market conditions remained strong throughout the Northwest, although there was some easing of tight market conditions. In the Portland-Vancouver area, the rental vacancy rate rose to 5.5 percent, a 0.5-point increase compared with a year ago. Market conditions were still tight in the Eugene-Springfield area and central Oregon with typical vacancy rates of 3 percent or below. The Boise metropolitan area rental market is tight with a 4-percent vacancy rate as of the third quarter of 2001.

In the Puget Sound area, the apartment vacancy rate rose to its highest level in more than 5 years. According to the Fall 2001 Dupre+Scott Apartment Vacancy Report, the rate was 5.3 percent. However, the market is still relatively tight. Rents continued to rise faster than inflation, although almost onethird of properties surveyed by Dupre+Scott were offering concessions. The market is expected to become more balanced and vacancy rates are expected to increase to as much as 7 percent during the next 12 months as new units enter an economy with slower job growth. Rental markets in eastern Washington, Spokane, Yakima, and the Tri-Cities were generally balanced and have experienced little new construction over the past year. The Anchorage rental market remained balanced to tight with an overall apartment vacancy rate of approximately 4 percent.

Multifamily building permit activity in the Northwest region during the first 9 months of 2001 totaled 15,227 units, a 2-percent increase compared with the same period in 2000. Activity in the Seattle area fell by 28 percent to 5,532 units compared with a strong first 9 months of 2000. With more competitive market conditions, a slower economy, and an estimated 6,000 units in the pipeline, developers are scaling back. In the Portland area, multifamily activity declined 2 percent, totaling 2,442 units. Multifamily building in Anchorage continued on the upswing with nearly 800 units permitted between January and September 2001—almost twice the number of units permitted during the first 9 months of 2000.

Spotlight on Eugene-Springfield, Oregon

The Eugene-Springfield metropolitan area includes Lane County, Oregon, and extends from the Cascade Mountain Range to the Pacific Ocean. Its two largest cities, Eugene and Springfield, are located across from each other along the Willamette River. The area is the second largest metropolitan area in the State based on population. Eugene is home to the University of Oregon, which has a current enrollment of more than 19,000 students and employs 3,500 faculty and staff. The university is one of the area’s major employers with an estimated direct spending in the local economy of $395 million annually.

The Eugene-Springfield metropolitan area economy expanded by 26,270 jobs during the 1990s, an average 2-percent annual growth rate. During the period, high-technology employment became a major force with the arrival of firms producing semiconductors, disks, and software. These firms helped boost manufacturing employment from approximately 9,000 jobs in 1990 to almost 24,000 jobs in 2000.

Over the past 12 months the local economy has slowed. Total nonfarm employment increased by only 0.2 percent in the 12 months ending in September to 143,135 jobs, compared with a 1.3-percent increase during the previous 12 months. As a result of the economic slowdown and weaker export markets, manufacturing employment declined by 1,700 positions during the period. Most of the losses have been in high-technology industries producing semiconductors, display screens, and bar-code scanners. The services sector industries provided the only bright spot in the local economy, adding 1,000 jobs during the 12 months, mainly due to hiring in the health services and social services industry groups. The unemployment rate rose from 6.0 to 6.9 percent between the third quarter of 2000 and the third quarter of 2001.

Because of strong employment growth in the previous decade, the population of the county increased by 322,959 between 1990 and 2000, a 1.3-percent average annual rate of growth compared with 1.9 percent in the State over the same period.

The rate of homeownership also increased in the Eugene-Springfield area in the 1990s due to the area’s strong labor markets. Owner-occupied households accounted for 62.2 percent of all occupied households as of the 2000 census, up from 60.8 percent in 1990. According to the Residential Multiple Listing Service, sales of new and existing single-family homes totaled 2,848 as of the end of September 2001, up 2.8 percent compared with the first 9 months of 2000. The median price of homes sold rose 7.5 percent to $138,500. Sales were strongest in the Springfield submarket area, which accounted for 21 percent of all sales; the median price of a home sold in this area was $112,000. Builders responded to the solid demand for homes; single-family building permit activity increased during the first 9 months of 2001 to 937 units, up 5 percent compared with the same period in 2000.

Rental market conditions have tightened significantly in the Eugene-Springfield area over the past year and a half due, in part, to growing enrollment at the University of Oregon. As of the 2000 census, the rental vacancy rate was a reported 6.8 percent. A spring 2001 Duncan and Brown survey reported the apartment rental vacancy rate at slightly more than 5 percent. Duncan and Brown’s most recent (October 2001) survey showed the vacancy rate at just 3 percent.

The low level of new multifamily construction has also contributed to tight rental market conditions. Multifamily building permits totaled 128 units in the Eugene-Springfield metropolitan area for the first 9 months of the year. Current pipeline activity is slow with only one apartment complex under construction in the immediate Eugene-Springfield area, indicating that tight rental market conditions will prevail over the next several quarters.