Regional Activity


Nonagricultural wage and salary employment in the Mid-Atlantic region was up 1.5 percent from June 1997 to June 1998, and the unemployment rate dropped from 5.1 percent to 4.2 percent. Virginia reported the lowest unemployment rate (3.1 percent) and the District of Columbia the highest (8.2 percent). Delaware led the region with wage and salary employment gains of 3.4 percent. Virginia, on the strength of increased high-technology and telecommunications industry growth, was second, reporting a 3-percent gain, or 95,600 new jobs during the period.

A major economic development in Pennsylvania is the State's pledge of $40 million in investments to fund 16 projects in the Pittsburgh area. Combined, these projects are expected to result in the creation or retention of approximately 21,000 jobs during the next 10 years. They include the development of the Airside Business Park and Cargo Center and the redevelopment of the former Alcoa Building into the Regional Resource Center. In the past year, the State has committed more than $500 million to the area, including funding for the David Lawrence Convention Center, the University of Pittsburgh Convocation Center, the Mon-Fayette Expressway, and the Southern Beltway and Findlay Connector highway improvements.

Building permits were issued for 51,395 single-family homes regionwide in the first half of 1998, a 6-percent increase over the same period last year, and for 11,447 multifamily units, a 1-percent increase. All States reported increases in single-family permit activity. Maryland and Virginia also reported substantial levels of multifamily permit activity for the first 6 months (totaling 3,410 and 3,575 units, respectively), reflecting the continued strength of the rental market in the Washington, D.C. metropolitan area. Multifamily activity in Pennsylvania, 2,975 units in the first half of 1998, has dropped to about half the volume during the same period of 1997. The decline primarily reflects cutbacks in the Philadelphia area, as the industry responds to the large pipeline of units under development during the last 2 years.

Residential construction in the Pittsburgh area continues to rise. Through June 1998 permits were issued for 593 multifamily units, a 26-percent increase over the same period last year. Single-family activity totaled 2,412 units, approximately equal to 1997 volume during the 6-month period.

From January through May 1998, manufactured home shipments to States in the Mid-Atlantic totaled 8,071 units, a 7.7-percent decline compared with the shipments during the first 5 months of 1997. All States reported declines in shipments.

Mid-Atlantic home sales so far in 1998 are far ahead of 1997, but price appreciation is lower than that of most of the Nation. Most markets are seeing price increases in the 2- to 5-percent range, with 3 percent typical. The median sales price of existing homes in the Mid-Atlantic's major markets as of the first quarter of 1998 ranged from $85,400 in Pittsburgh to a high of $163,000 in the Washington metropolitan area. The Virginia Association of REALTORS® reported that sales through May were up 23 percent, with 37,484 homes placed under contract. Sales were up in most areas of the State. Sales activity in the Richmond area for the first 5 months of 1998 was up 40 percent over a strong 1997 volume. The average sales price to date for existing homes in the Richmond area was $137,618, up 5 percent from the same period in 1997.

Pittsburgh is also reporting very strong home sales. West Penn Multi-List reported that May 1998 was a banner month compared with May 1997. In Allegheny County, the number of homes sold was up 9 percent compared with 1997, and the average sales price was up 2.7 percent. There is no shortage of inventory. In the 13-county western Pennsylvania region, there was about an 8-month supply of homes for sale at the end of the first quarter of 1998. Demand is strongest for homes in the $60,000 to $120,000 range, in which homes sell quickly. Pittsburgh's downtown condominium market is very strong. Many buyers are two-income, move-up buyers shopping for larger units in rehabilitated buildings. Prices in the downtown range from $90,000 to $170,000.

Home sales in the Philadelphia metropolitan area have maintained a good pace through the second quarter. Prices in suburban areas have seen increases of 3 to 10 percent, depending on location. Philadelphia's Center City residential market has been strong recently -- particularly the rental market, where absorption of new apartments has been very good.

In the Pittsburgh metropolitan area, apartment construction has been primarily large complexes with high rents and amenity levels. In addition to the suburban locations, the city of Pittsburgh has emerged as a prime location for apartment developers. Independent- and assisted-living communities for the elderly have also become a significant part of the multifamily construction picture in the recent years. The number of licensed personal-care beds rose 12 percent to more than 16,700 in the 12 months ending in June 1998. This segment of the market has softened recently, however, and initial lease-up periods are longer than projected. The competitive market conditions are expected to continue as long as the supply continues to expand at its present, relatively rapid, rate.

Development of assisted-living facilities is also picking up in West Virginia. Balanced Care Corporation, an owner and operator of assisted-living facilities, has started construction on a 60-unit facility in Putnam County, and there are plans for facilities in Beckley, Charleston, Huntington, and Wheeling.

Spotlight on Washington, D.C.-Maryland-Virginia

Total nonagricultural wage and salary employment in the Washington metropolitan area reached 2,537,000 as of May 1998, a gain of 59,000 jobs (2.4 percent) from May 1997, on the strength of continued strong growth in the Virginia suburbs. Employment in Northern Virginia increased by 4.1 percent during the 12 months ending in May 1998, while the District recorded a slight decline and the Maryland suburbs showed a modest 1.4-percent gain. The unemployment rate in the metropolitan area declined half a percentage point to 3.1 percent during the same period. From 1990 through mid-1996, the population of the metropolitan area grew by an estimated 8.1 percent to 4,563,123. Forecasts by the Metropolitan Washington Council of Governments project a moderate rate of population and employment growth of approximately 40 percent during the next 25 years.

Sales of new homes in the Washington metropolitan area through June are estimated to total more than 16,000 units, approximately 20 percent ahead of 1997 volume for the same period. Move-up buyers are accounting for a substantially greater part of the new sales market in 1998 than during the 2 prior years, which is moving the inventory of houses in higher price ranges.

Real estate agents anticipate a strong home market for the remainder of the year, given low interest rates and the strong economy. Local sources predict new sales for all of 1998 will top 31,000, 17 percent more than 1997 and the highest annual volume of sales in a decade. Sales of existing homes continued to be very strong through June. Resales in the metropolitan area through June totaled slightly less than 34,000 homes , a 31-percent increase over the volume in the first 6 months of 1997. Sales in the District of Columbia were up a dramatic 51 percent compared with last year.

Local real estate sources report that the sales market is becoming a seller's market. Homes are moving faster than in the past, 3 to 4 months versus 6 to 9 months a year ago, and at prices closer to list price. However, price appreciation in most of the metropolitan area is still in the modest range of 2 to 4 percent. While sales activity has picked up dramatically and the amount of inventory is down from last year, available supplies are still sufficient to hold down prices. The NATIONAL ASSOCIATION OF REALTORS® reported a median sales price for the area of $175,700 as of the second quarter of 1998, up 2 percent from the second quarter of 1997.

For the first time since 1975, a significant amount of homebuilding activity is occurring in the city of Washington's Southeast neighborhoods. There are currently 14 separate developments that involve a total of 1,128 new homes. Early market response and sales have been very promising. The developments are providing affordable new housing targeted toward middle-income wage earners in the $30,000 to $60,000 range. The developments include single-family detached homes, townhouses, and condominiums. The single-family homes and townhouses range in size from 1,000 to 2,400 square feet and are priced from $100,000 to $150,000, and the condominiums range in price from $70,000 to $85,000.

The number of single-family building permits issued during the first 5 months of 1998 in the Washington metropolitan area totaled 10,885 homes, an 11.4-percent increase over very strong activity in the comparable period in 1997. To date in 1998, the Washington area is the third-highest metropolitan area in the Nation for single-family construction. There are currently more than 90 planned communities in the Washington metropolitan area in various stages of development.

Multifamily housing building permit activity in the Washington area totaled 3,731 units in the first 6 months of 1998, among the top 10 in the Nation and on pace to equal the average of the 2 prior years. There are 4,000 market-rate apartment units under construction in Northern Virginia and 3,200 units in the planning stage. In the Maryland suburbs, approximately 1,700 units are under construction; 4,000 units are planned. New apartment units are being absorbed at a very good pace throughout the area.

The increased housing activity and accompanying commercial and retail development and their impact on infrastructure are prompting no-growth responses throughout the suburbs. In Maryland, the Prince George's County Council recently voted to charge developers an impact fee on each new unit to offset the cost of new schools. In Virginia, recent State legislation controlling planning and zoning processes is being challenged by local governments. Loudoun County is attempting to restrict development in targeted areas and impose impact fees, while Prince William County is considering limiting residential development in its rural crescent.

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