For the 12 months ending June 2003 nonfarm employment in the Southeast region increased by 37,400 jobs to approximately 24.3 million. Although not a significant increase, it does indicate that job losses may be slowing. Both Florida and Tennessee recorded increases of approximately 1.1 percent, and Mississippi had an increase of 0.3 percent. Declines in the other five states were 0.6 percent or less. In Florida the Miami, Fort Lauderdale, and West Palm Beach metropolitan areas accounted for almost half of the jobs added; construction, service, and government were the industries responsible for the increases. In Mississippi much of the increase occurred in the leisure and hospitality sector, which gained 1,500 jobs, or 1.2 percent, reflecting a continued strength in the states gaming industry despite a generally soft economy.
The biggest decline for the 12 months ending June 2003 was in Alabama, where nonfarm employment fell by 10,500 jobs, or 0.6 percent, compared with the same period a year ago. The loss was fueled by the manufacturing sector, which has posted a decline of 12,400 jobs since June 2002. The current 302,000 manufacturing jobs is almost 4 percent lower than last year, continuing from a decline that began in 1995 when manufacturing jobs in the state peaked at 370,300. The rate of decline has slowed, however, because of the completion and staffing of new automobile manufacturing plants by Honda, Hyundai, Mercedes, and Toyota. Hyundai is considering Alabama or Michigan as a possible location for a $240 million research and design center, which would employ 300 workers. Mercedes-Benz is also in the midst of a $600 million expansion of its plant in Vance, which could result in an additional 2,000 jobs.
In North Carolina, where manufacturing losses continue, the Governor has announced that Infineon Technologies North America Corporation is the first recipient of a North Carolina job development investment grant. The company is expected to create as many as 400 new jobs in Cary, a city near Raleigh, during the first 5 years the grant is effective and more than 650 jobs over the entire 11-year period. The company will receive grant funds tied to personal state withholding taxes each year it meets job creation targets; if the company fails to create or sustain job growth, the grant will be reduced or eliminated.
Low interest rates through the second quarter helped sustain the demand for sales housing in the Southeast region. The NATIONAL ASSOCIATION OF REALTORS® (NAR) reports that for the first quarter of 2003 the annual rate of existing home sales increased in all Southeastern states except Kentucky, where the decline was less than 1 percent when compared with the first quarter of 2002. Sales prices of existing homes were particularly strong in Florida. Sales should remain strong but the rate of increase is likely to slow if the recent rise in interest rates continues.
Building permits were issued for more than 200,000 single-family units in the region during the first 6 months of the year; at this rate 2003 will set records. The only declines compared with the same period in 2002 occurred in Georgia and North Carolina at almost 2 and 6 percent, respectively. The Greensboro, Raleigh, and Hickory metropolitan areas of North Carolina contributed to the drop.
Florida and Mississippi registered strong increases in permits for single-family housing for the 12-month period ending June 2003. In Florida permits were issued for 139,070 units, an increase of 13 percent over the 12 months ending June 2002. The building industry continues to respond to the increased demand for new homes from both first-time and move-up buyers. According to the Florida Association of REALTORS® 164,922 existing homes were sold in the 12 months ending May 2003 compared with 153,634 for the same period a year earlier, an increase of 7 percent.
Single-family building permits in Mississippi for the 12 months ending June 2003 totaled 8,299, 7 percent higher than the preceding 12-month period. The Mississippi Gulf Coast Multiple Listing Service (MLS) indicates that home sales were also up 7 percent for the 12-month period ending June 2003 compared with 2002. Sales for the first half of 2003 were up 4 percent compared with the same period in 2002. The average sales price as of June 2003 was $126,306.
The Greater Nashville Association of REALTORS® reports 2,933 closings during June 2003, an increase of 9 percent over the 2,686 reported in June 2002. For the first half of the year there were 14,518 closings, an increase of almost 5 percent over the same period in 2002.
Multifamily building activity for the first half of 2003 in the Southeast region declined more than 14 percent compared with same period in 2002. Most market areas in the region continue to have excess rental vacancies as a result of high levels of production from 1998 through 2002, a shift to ownership made possible by low mortgage interest rates and a generally sluggish economy. With softer conditions in the rental market, developers have reduced activity. At the current rate building permits for the year are likely to reach their lowest level since 1996. Georgia has recorded the biggest decline year to date at 45 percent, or 7,015 units, because of decreases in the Atlanta area, which had been one of the leaders in the nation in apartment production for several years. As apartment vacancy rates have increased to more than 10 percent, development activity has begun to slow. Through June permits were issued for only 4,555 multifamily units in the metropolitan area compared with 8,759 during the same period last year, a 48-percent decline.
Residential building activity in the Birmingham metropolitan area remains relatively strong and virtually unchanged. During the 12 months ending June 2003 permits were issued for 4,856 units compared with 4,829 units during the same period a year ago. Single-family permit activity, up 3 percent during the period, totaled 4,755 homes. Multifamily construction has played a smaller role in the housing market in Birmingham in recent years. In 2002 permits were issued for only 259 units of multifamily housing in the metropolitan area, and only 430 multifamily units were permitted in 2001. These low volumes can be explained by the relatively affordable prices and supply of existing homes, the ready availability of affordable land for new home development, and the lowest interest rates in many years.
In North Carolina multifamily permit activity declined 7 percent; however, rates of change varied widely among metropolitan areas. The number of multifamily building permits issued in the Charlotte and Greensboro metropolitan areas, the two largest metropolitan areas in North Carolina, declined approximately 5 and 45 percent, respectively, for the 12 months ending June 2003. The Raleigh metropolitan area, the third largest metropolitan area in North Carolina, registered a 28-percent increase in multifamily building permit activity.
The Charleston apartment market appears to be the strongest of South Carolinas major rental markets, and conditions have improved during the past 12 months. According to the Carolinas Real Data July 2003 Apartment Market Report, the areas apartment vacancy rate declined from 8.9 percent in June 2002 to 7.6 percent in June 2003. The area absorbed a total of 1,241 units during the past 12 months compared with the 1,029 units completed during the period. Average rents increased, and the number of complexes offering concessions declined 14 percent. With only 625 units starting construction in the past 12 months the apartment vacancy rate will continue to decline and conditions will improve.
Multifamily building permit activity in Florida during the 12 months ending June 2003 increased 6 percent to total 55,932 units. Most of the statewide increase is because of increased activity in the Tampa metropolitan area. Multifamily permit activity in the metropolitan area increased 45 percent during the 12-month period, to 8,557 units.
Residential building permit activity in Miami-Dade County totaled 13,384 units for the 12 months ending June 2003, a decline of 10 percent compared with the same period a year earlier. Most of the decrease was in multifamily activity, which fell 11 percent to 7,213 units. Annual multifamily activity has exceeded more than 7,000 units in 3 of the past 4 years, peaking at 8,232 units in 2002. The decline in multifamily activity during the past year is a result of the large volume of apartment production during the past 3 years, outpacing demand and subsequently resulting in softening market conditions. In 2000 and the first half of 2001 rents increased an average of 7 percent annually. During the past 12 months rents have increased an average of 1 percent. The apartment vacancy rate has risen from approximately 2 percent as of the second quarter of 2001 to 5 percent in the second quarter of 2003, according to data available from M/PF Research, Inc. If multifamily production for the next 12 months stays relatively low, the market is expected to improve and occupancy rates will stabilize at around 96 percent.
The Federal Low Income Housing Tax Credit (LIHTC) program, administered by the Puerto Rico Housing Finance Corporation, continues to lead multifamily assisted rental project development on the island. During the initial funding round in 2003 the Corporation allocated 908 units to be placed in service during 2004. Approximately 860 units, or 95 percent, are located in the San Juan metropolitan area.
A pilot program began in May 2003 in an effort to increase homeownership among military personnel. The Fort Campbell Federal Credit Union offered the first loans to military personnel assisted by Affordable Housing Resources, a Nashville-based nonprofit agency, which provides financial counseling and loans for closing costs. Personnel currently living in Kentucky or Tennessee are eligible for the new loans. Under the program military personnel are eligible for loans if their debt payments total 45 percent or less of their respective income, compared with a ratio of 36 percent or less under conventional programs. Military personnel are eligible to obtain no downpayment mortgage loans backed by the Department of Veterans Affairs.
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