Regional Activity

Mid-Atlantic

Nonagricultural employment in the Mid-Atlantic region increased by 225,800 new jobs (1.8 percent) in the 12 months ending in March 1999. The largest percentage gains were in Delaware, Maryland, and Virginia -- at 3.2 percent, 2.4 percent, and 2.6 percent, respectively. The unemployment rate continued to fall in every State, with Virginia reporting a very low 2.6-percent rate as of March 1999. The Washington, D.C., metropolitan area continued to enjoy solid job growth, with its increasing concentration of higher paying high-technology jobs. An estimated 375,000 persons are employed in a variety of high-technology industries; 60 percent of this employment is in the Northern Virginia suburbs. As a result, the Washington metropolitan area leads the region in job formation, population gains, and housing construction. In the 12 months ending in March, employment in the metropolitan area increased by 3.1 percent, with employment in Northern Virginia up a dramatic 4.7 percent (47,200 new jobs). During the same period, employment gains in the Philadelphia, Pittsburgh, Baltimore, and Richmond areas were in the 1- to 2-percent range.

FHA single-family mortgage insurance activity was exceptionally strong in the Mid-Atlantic region in 1998. During the year, 109,457 homes (totaling $12.5 billion in mortgages) were in-sured under FHA, a 26-percent increase over 1997. FHA home sales in Virginia jumped 47 percent to 40,240. Activity in Pennsylvania totaled 29,030 (more than a 20-percent increase), and activity in Maryland was up more than 11 percent. First-time homebuyers represented 63 percent of the mortgagors. First-time FHA homebuyer activity rose more than 30 percent in the District of Columbia, West Virginia, and Pennsylvania.

The market for both existing and new homes in the Mid-Atlantic region during the first quarter of 1999 remained very strong following last year's healthy trends. In the Richmond-Petersburg area, a robust economy boosted home sales. During the first 3 months of this year, existing home sales were up 23 percent compared with the same period in 1998. New home demand was up 17 percent and demand is so strong that more than 45 new subdivisions have opened since the fall of 1998. Many existing subdivisions are opening new sections. Richmond-area builders are expecting new home sales activity to reach record levels, helped by the mild, dry winter.

The sales market in the Washington area continues to be one of the most active in the Nation. There are more than 500 home builders in over 2,500 new home communities. Resales for the first quarter totaled 20,576 homes, a 15-percent increase. Sales of new homes in the metropolitan area have also been very good, up 5 percent during the first quarter compared with the same period last year. In the District of Columbia, local sources report that the $5,000 Federal tax credit to first-time homebuyers has contributed to the increase in homeownership. Existing home sales in Northern Virginia were up 13 percent and up more than 25 percent in Loudoun County.

Home sales in the Pittsburgh region in the first 2 months of 1999 were up 8 percent from the same period last year. New listings were down 16 percent, and the average price was up 8 percent to $113,400. Sales were up significantly in Butler, Washington, and Westmoreland Counties. The move-up market has been very strong, and local sources are reporting a shortage of listings in the $150,000 to $225,000 range.

Single-family building permit activity in the Mid-Atlantic region during the first quarter reflected the continued strength of the sales market in early 1999. Permits were issued for 24,639 homes, a 12-percent gain over first quarter 1998. All States recorded increases. Virginia recorded the largest gain, 21 percent. The Baltimore, Washington, Richmond, and Tidewater markets all recorded gains.

Multifamily housing activity in the entire Mid-Atlantic region was up 14 percent in the first quarter to 5,703 units due to the big gains in Virginia, where activity was up 35 percent. Virginia, particularly the Northern Virginia suburbs, accounted for close to one-half of the activity in the region. The number of units permitted in the Washington metropolitan area during the first 3 months of 1999 was up 56 percent over 1998 volume for the first quarter, to 2,542 units.

Conditions in the Mid-Atlantic region's major rental markets as of the first quarter are balanced or tight. According to Delta Associates, Inc., the apartment vacancy rate in the Richmond metropolitan area was less than 5 percent as of March 1999.

Rental housing vacancy rates continue to fall in most of the submarkets in the Philadelphia area. According to recent reports, the vacancy rate for Class A rentals in the Philadelphia area dropped to 2.2 percent. Builders are responding to the increased demand and tight market conditions for upscale rentals. Approximately 1,600 units are under development and scheduled to come on the market in the area within the next 3 years. The University of Pennsylvania has joined forces with a local developer experienced in the conversion of historical buildings. A 6-story warehouse built in 1929 for the Pennsylvania Railroad will be converted to a 285-unit apartment building, with 95,000 square feet of office space, a 237-car garage, and a rooftop fitness center with an outdoor quarter-mile running track. The conversion will occur through a partnership between the developer and the university. The developer will have control of the building for 40 to 50 years, while the university will retain ownership of the land.

In the city of Pittsburgh, rental vacancy rates remain low as an increasing number of new residents to the metropolitan area seek rental housing close to work. The increased demand has enabled most apartment buildings in the city to maintain 97- to 98-percent occupancy rates. The Pittsburgh Urban Renewal Authority approved an agreement with Continental Communities Ltd. to build 300 apartments on the former LTV steel site on the southside. Construction is scheduled to start soon. Rents for the market-rate apartments will range from $800 to $1,400 a month. This is part of a mixed-use development that will comprise office buildings, a hotel, retail stores, and a sports/health complex.

Spotlight on Charleston, West Virginia

The Charleston metropolitan area, consisting of Kanawha and Putnam Counties, includes the State capital and traditionally has had the most stable employment base in the State. Apart from government, employment is concentrated in chemical production and the trade and service sectors. Nonagricultural employment in the metropolitan area as of March 1999 totaled 132,900, up more than 2 percent from March 1998. State and local governments currently employ approximately 21,200 persons. The chemical industry employs fewer than 5,000 individuals, down 30 percent since 1990. In the 1990s, employment has grown by approximately 9,700 (8 percent), with almost 7,200 of the jobs in the service sector. Growth in service industries is expected to continue. United Airlines and Ticketmaster announced that they will open call centers in the area.

Declines in manufacturing employment are expected to slow with the new Toyota engine and transmission plant in Putnam County. Toyota started producing engines at its plant in December with more than 200 employees. Eventually a workforce of 800 will build engines and transmissions. When the factory is completed in 2001, Toyota's investment in the finished plant will be about $1 billion for the 1.2-million-square-foot factory. The company has more than 18,000 job applications on file.

The metropolitan area has experienced little net population growth since 1990. As of July 1998 the population of the area was estimated to be 253,175, compared with 250,454 in 1990. Kanawha County has lost approximately 5,100 residents; however, the population in Putnam County has grown by approximately 8,300 persons (19 percent).

Home sales in the metropolitan area in 1998 totaled 2,278, a 12-percent increase over 1997 volume. The average sales price increased 3 percent to $117,000. In the first 3 months of 1999, home sales totaled 472, up 9 percent compared with the same period last year. The average price rose 8 percent to $120,000. In Putnam County, the average sales price for the first quarter was $136,000. Putnam County has suitable topography for development and convenient access to job centers in both Charleston and Huntington (30 miles to the west) via Interstate 64. The Teays Valley area in eastern Putnam and western Kanawha Counties is currently the hottest sub-market and is expected to remain so due to demand from new employees at the Toyota plant in nearby Buffalo.

The rental housing market remains stable. The vacancy rate for higher priced and newer units in larger complexes is about 5 percent. Manufactured homes are an important source of affordable housing. They represented about 11 percent of the available housing stock in 1990 and have made up a significant portion of the new construction since. In 1998, for example, manufactured housing represented 45 percent of the new single-family homes added in the metropolitan area.


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