The Pacific region added 644,000 nonfarm jobs in the 12 months ending February 2001, a strong 3.6-percent gain. California accounted for 491,000 of the new jobs in the period, a 3.5-percent increase. Job growth in the State's business services, retail, and construction sectors is offsetting the losses in high-technology sectors. The economy in the San Francisco Bay Area added 149,000 new jobs in the 12 months ending February 2001 despite recent announcements of job reductions by leading technology firms. Arizona's employment grew by 3.2 percent in this 12-month period, and Nevada recorded a 4.9-percent gain on the strength of Las Vegas's gaming and tourism industries. Gains in Hawaii remained a stable 3 percent annually. Orange County, the San Francisco Bay Area, Phoenix, and Tucson still report unemployment rates of less than 3 percent.

Data from the 2000 census show that the population in the four-State Pacific region grew by 6.5 million people during the 1990s, an 18-percent increase. California recorded the largest absolute gain (4 million people), while Arizona and Nevada recorded population gains of 40 and 66 percent, respectively.

Buoyed by a resilient regional economy and favorable interest rates, single-family production in the region (45,729 homes) started 2001 with an 11-percent gain in permits through March. California posted a 20-percent increase, with homebuilding in the San Francisco area increasing by 11 percent and Southern California recording an 18-percent gain. In the first quarter of 2001, activity in Arizona and Nevada was on a pace equal to last year's near-record volume.

Existing sales in California for the first quarter of 2001 were down only 5 percent from near-record levels in the same period in 2000, according to the California Association of REALTORS^®. However, the median sales price increased by 10 percent. In the San Francisco Bay Area, first-quarter sales declined 14 percent from the record pace of the first quarter of 2000, with weaker market conditions particularly evident in the upper price ranges. Resales in Las Vegas and Phoenix began the year at a record pace, with activity for the first 2 months of the year up 8 and 10 percent, respectively, compared with the same period in 2000. In Honolulu, resales continued to improve, showing an 8-percent gain in the 12 months ending February 2001 compared with the same period a year earlier.

Multifamily permits totaled 17,018 units in the region for the first quarter, a 4-percent gain. In California multifamily permit activity (9,800 units) declined more than 10 percent so far in 2001, compared with strong production levels reported in the first quarter of 2000. The San Francisco Bay Area remains tight with a fourth-quarter rental vacancy rate in properties of 100 units or more at 2 percent based on a RealFacts survey. This compares with less than 1 percent as of the second quarter of 2000. Rents increased 8.6 percent in the past 12 months in the nine-county Bay Area, according to the Bureau of Labor Statistics. As a result of the slowdown in the high-technology sector, rental market conditions in submarkets near technology employment centers have eased, especially in upper-end rental units. For the first time in years, concessions are beginning to appear.

In Southern California, rental markets remain balanced or tight. The Los Angeles County area is balanced overall with a reported apartment vacancy rate of approximately 5 percent. The San Diego County rental market remains tight, as are the Orange and southern Santa Barbara Counties market areas, which report vacancy rates of 3 percent. The overall rental vacancy rate in the Riverside-San Bernardino area was 8 percent as of the fourth quarter of 2000, still the highest in Southern California; however, newer and larger (100 units or more) developments are reporting vacancy rates of 4 percent or less. The Phoenix rental market is relatively balanced with an overall vacancy rate of 7 percent. Rates of 8 to 9 percent are reported in the area's submarkets, with high volumes of new units entering the market. Areawide, rents increased approximately 3 percent in 2000. However, rent increases recently have flattened as high rental production and more competitive conditions continue. Rent concessions and incentives are becoming more widespread. Although multifamily permit activity in the Phoenix metropolitan area in the first quarter of 2001 was down more than 30 percent from the first quarter of 2000, the large pipeline is expected to keep vacancy rates high for the remainder of the year.

Spotlight on Ventura, California

Situated just west of Los Angeles, Ventura County's population increased 13.9 percent from 669,016 in 1990 to 762,000 in 2001. Households increased 10.4 percent from 217,300 in 1990 to 240,000 in 2001. The county ranked 37th out of 58 counties in growth rate during the previous decade, primarily due to growth restrictions in certain parts of the county. The northern portion of the county consists mainly of national forest. As a result, a substantial portion of the area's population is concentrated in the county's southern half. The southeastern portion of the county, which includes the cities of Moorpark, Simi Valley, and Thousand Oaks, has emerged as a hub for the technology industry and has attracted numerous high-technology businesses. In contrast, agricultural production in the western coastal plains makes Ventura County 10th in agricultural production among counties in California.

Despite Ventura's emerging high-technology sector, the county's economy is heavily dependent on the defense, government, and agriculture sectors. The U.S. Navy is the largest employer in Ventura County with more than 14,000 military and civilian employees at the Naval Air Station at Point Mugu and the Naval Construction Battalion (Seabees) Center in Port Hueneme. As a result the defense sector has a $1.2 billion annual impact on the local economy. Other major employers include the county itself with 7,000 employees and the Amgen biotechnology research firm with more than 3,000 employees. The area's most recent significant economic development is the construction of California's newest State university. California State University Channel Islands is being built near the city of Camarillo. This university is scheduled to open in August 2002 with approximately 3,600 students.

In March 2001, nonagricultural employment reached 278,100, a 2.8-percent increase from March 2000. The largest employment gain was reported in the service sector. The unemployment rate in Ventura County was a low 3.6 percent in March 2001. Portions of the county serve as bedroom communities for people employed in adjacent Los Angeles County. At least 25 percent of Ventura County's workforce commutes out of the area.

The improved Southern California economy resulted in single-family permit activity averaging 3,150 units annually from 1998 through 2000. This was more than double the average annual activity from 1990 through 1997. During the first quarter of 2001, permits were issued for 752 single-family homes, a 68-percent gain over the 449 homes permitted in the first quarter of 2000. Multifamily permits averaged less than 300 units annually between 1995 and 1998 but improved to an average of 900 units annually during 1999 and 2000. Only nine multifamily units were issued permits in the first quarter of 2001. The relatively low levels of home and apartment production and building restrictions in some portions of the county have resulted in a shortage of housing, especially rental units. Currently the rental market is very tight; the overall rental vacancy rate for Ventura County as of the first quarter of 2001 was estimated to be 3 percent, one of the lowest rates in Southern California.

The low level of single-family construction activity meant a significant increase in the prices of existing homes and a decline in the rate of housing affordability. According to DataQuick Information Systems, the median sales price of all single-family homes increased to $259,500 in 2000, a 9-percent increase from 1999. Single-family home sales declined a modest 3 percent in 2000 to 15,300 homes compared with 1999. Sales in the first quarter of 2001 totaled 3,200 homes, down 4 percent compared with the first quarter of 2000. In the first quarter of 2001, Ventura County's median family income, estimated at $71,800, is the fourth highest in the State. However, according to the California Association of REALTORS^®, even with a relatively high income, only 37 percent of households in Ventura County could afford to purchase an existing home in the county, given today's prices. Growth restrictions in parts of the county, together with the lower levels of home and apartment construction, continue to keep both the sales and rental markets tight.