| The following summaries of housing market conditions and activities
have been prepared by economists in the U.S. Department of Housing and
Urban Developmentís (HUDís) field offices. The reports provide overviews
of economic and housing market trends within each region of HUD management.
Also included are profiles of selected local housing market areas that
provide a perspective of current economic conditions and their impact
on the housing market. The reports and profiles 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 support of HUDís programs.
Albany-Schenectady-Troy, New York /
Units Authorized by Building Permits, Year to Date: HUD Regions and States
In the 12 months ending June 2003 nonfarm wage and salary employment in New England declined by 74,400 jobs or 1.1 percent, an increased rate of job loss from the past several quarters that was almost entirely accounted for by losses in Massachusetts and Connecticut of 52,100 and 20,200 jobs, respectively. Massachusetts job losses were evenly spread between goods- and service-producing industries, with manufacturing declining in 28 of the past 30 months and business-services losses showing evidence of weakening in Internet systems and computer service businesses. In Connecticut manufacturing accounted for a significant, disproportionate share of goods-producing losses, and government accounted for most of the service-producing industry losses. The other states had marginal changes in employment, with Maine and New Hampshire posting small losses and Rhode Island and Vermont having small gains. All states lost jobs in goods-producing industries as orders for manufactured goods remained sluggish. Construction employment also declined. Only Massachusetts and Connecticut recorded job losses in service-producing industries. Other states in the region recorded small gains in service industries. As of June 2003 the unemployment rate in New England was 5.2 percent, up from 4.9 percent in June 2002. New Hampshire was the only state to register a decrease in the unemployment rate, 4.0 percent, down from 4.8 percent a year ago.
Although there is significant optimism throughout the region that the economic downturn is bottoming out, some New England markets remain questionable. In Maine there is concern about the effect of new do-not-call regulations on the telecommunications industry. Maine call centers employ an estimated 25,000 people statewide and have been a source of significant job growth. In Burlington, Vermont, there is concern over IBM, the states largest private employer, reducing overtime hours after the loss of 1,000 jobs during the past year.
Residential building activity throughout the region, as measured by building permits, was down almost 6 percent during the first half of 2003 compared with the first half of 2002. Only Connecticut had an increase in total activity during the period, attributed to multifamily units almost doubling. Rhode Island had a 27-percent reduction in permit activity with significant decreases in both single-family and multifamily activity. Overall multifamily activity was up only 2 percent in the region. The trends varied widely, from a 93-percent increase in Connecticut to a 67-percent decrease in Vermont. Most of the new multifamily construction in Connecticut is located in the Hartford and Stamford-Norwalk metropolitan areas.
In a recent release of data from the Census Bureau Rhode Island, Massachusetts, and Connecticut ranked 50th, 47th, and 45th, respectively, in the nation for the rate of growth in housing from April 2000 to July 2002. All New England states were ranked in the bottom half, reflecting constraints on residential development such as limited availability of land and state and local regulatory controls on development, as well as a lower rate of growth in demand compared with other regions. The lower rates of construction in the region have contributed to tight market conditions and record price increases.
Excluding Vermont and New Hampshire the annual sales rate of existing homes in the New England region declined 7 percent in the first quarter of 2003 compared with the first quarter of 2002. Sales were flat in Maine and were down 10 percent in Massachusetts and Connecticut, according to the NATIONAL ASSOCIATION OF REALTORS®. Although sales have declined, prices continue to increase, according to the Office of Federal Housing Enterprise Oversight (OFHEO). As of the first quarter price appreciation in Massachusetts and Connecticut reached 10 and 8 percent, respectively, compared with the same period in 2002.
According to the Greater Hartford Association of REALTORS® sales of homes priced at less than $200,000 were down 24 percent in the first half of 2003 compared with the same period in 2002. Sales of luxury homes priced more than $500,000 were up 15 percent during the same period. The lower end of the market has been most affected by the weak labor market.
The increased value of residential real estate in Massachusetts over the past decade has had a positive influence on foreclosure rates. Foreclosures have been relatively flat for the past 3 years, approximately 4,500 statewide. Low interest rates, refinancing, and equity buildup have offset the effects of the sluggish economy and weak labor market.
Rental markets in New England appear to be tightening again after achieving more balanced conditions because of the economic slowdown. In addition a shift to homeownership combined with lower interest rates has contributed to reduced demand. For the past 2 years segments of rental markets have been characterized by increasing vacancies and rent concessions. To some extent the market remains relatively balanced but there is evidence that the markets will begin to tighten, such as the anticipation of an improved economy and the low level of construction to date. Although building permits have been issued for 8,500 estimated multifamily units in the Boston metropolitan area since 2000, approximately 70 percent of that total has not yet been built because of the sluggish economy, city/developer negotiations, and problems obtaining financing. Conditions are more balanced and stronger in suburban markets. The rental markets in Portland, Maine; Southern New Hampshire; and Providence, Rhode Island, appear to be improving from the weaker conditions recorded during much of the past 2 years.