Modest employment growth continued in most Rocky Mountain States in the fourth quarter. Colorado remained the fastest growing State and is the only one in the region with an annual growth rate that exceeds the national rate. In Utah, a slowdown in the second half of 1998 brought the growth rate down to 2.1 percent. Recent monthly gains were particularly strong in Montana and Wyoming, although the annual growth rates for both States remained weak. Similarly, North Dakota's job total is virtually unchanged from a year ago. The mining and manufacturing sectors have weakened in most States, whereas local government, primarily in education, continues to expand. The finance industry in South Dakota is adding employees as credit card processing continues to grow in importance. Utah received some positive news when the U.S. Air Force announced an expansion at Hill Air Force Base (AFB) as a result of transferring jobs from McClellan AFB in California. Regionwide the unemployment rate as of November was 3.3 percent, little changed from the same time the previous year. North Dakota's November rate of 2.5 percent was the lowest in the region and tied for the third lowest in the Nation.
The Rocky Mountain region recorded another year of increased residential building permit activity in 1998. Regionwide single-family permits were up 11 percent to 57,651 homes and multifamily activity totaled 22,204 units, a 14-percent increase. Except for South Dakota and Utah, where activity remained unchanged from 1997 levels, all other States recorded double-digit increases in the number of units permitted. In Colorado, the growth in single-family permit activity has been a strong 13 percent, and a surge in apartment building has pushed multifamily activity up 27 percent. Multifamily housing permits in 1998 in the Denver area were up 22 percent to 7,226 units, the highest yearly total in 14 years. The North Dakota multifamily sector is actually down, but this decrease has been more than offset by the expansion in single-family building. Activity in the remaining States is mixed; Montana and Utah are slightly behind last year's pace, while South Dakota and Wyoming have posted small gains.
Denver's rental housing market has remained firm throughout the surge in activity. A study by a local real estate firm indicates that Denver had the largest percentage increase in average rent (34.4 percent) among 30 major cities during the 1990s. Although much of the increase reflects a catch-up from the soft market of the late 1980s when many developments dropped rents, sustained increases have been the rule in Denver during this decade. As the large number of units now under construction are completed next year, the market is likely to become more competitive, but, on average, rents will continue to climb as new, higher priced units enter the market.
Existing home sales activity for the Rocky Mountain region in 1998 was up almost 10 percent to 167,800 over a very strong 1997. The annual rate of sales in Colorado increased 11 percent to 96,100. Denver-area existing home sales were up more than 14 percent in 1998, exceeding the short-lived record of the previous year. The average price was up 10 percent, the largest gain since 1981. The average condominium price was up more than 14 percent, the largest percentage increase of the past two decades. Sales of homes priced at more than $1 million were more than double last year's volume.
Sales activity in the Colorado Springs and Salt Lake City areas picked up steam during the fourth quarter, bringing totals for the year above last year's levels. This increase was not enough to bring the year-end totals to the record-setting pace of the mid-1990s. The buildup of inventory earlier in the year has begun to subside, while price increases have stayed in a healthy 6- to 8-percent range. The median sales prices for existing homes were $138,500 and $133,500, respectively. Both market areas should remain balanced during the coming year.
Spotlight on Sioux Falls, South Dakota
The Sioux Falls metropolitan area is the most populous area in the State, with 160,700 residents as of July 1997. It is the regional retail and service center for the southeastern part of the State. Agriculture and the meat-packing industry were the mainstays of the economy until credit card processing and computer manufacturing brought more diversity. Employment growth has averaged nearly 4 percent a year since 1990, with nonagricultural wage and salary employment reaching 108,800 as of November 1998. Growth has been stimulated by expansions of the area's largest employers, including Citibank, McKennan Hospital, Hutchinson Technology, and Gateway 2000. The unemployment rate as of November 1998 was an incredibly low 1.4 percent. Local businesses and associations concerned with the labor shortage have formed a task force to study ways of attracting, training, and retaining workers.
The strong economy has stimulated residential building. Construction of single-family homes has increased steadily since 1990, averaging more than 1,000 homes annually during the past 3 years. There have been 4,200 multifamily housing units authorized in the 1990s. Activity has declined to slightly more than 200 units annually during the past 2 years, following the high-volume years of 1993 through 1996, when multifamily permits averaged close to 700 units annually.
The increased building activity has alleviated tightness in the housing sales market. The average sales price for an existing home in 1998 was $111,000, a 5-percent increase over the 1997 average. Listings are now adequate for nearly all price ranges higher than $70,000. Homes priced in the $100,000 to $130,000 range are the most popular. Townhouses and condominiums are not a large part of the market, but units priced at less than $100,000 have sold well.
Rental market conditions have improved since the overbuilding of the mid-1990s, although there are lingering problems with tax-credit projects. Vacancy rates for many apartment developments in the area have declined from more than 10 percent 2 years ago to about 5 percent now, and some projects are increasing their rents. The average rent for existing two-bedroom apartments ranges from $500 to $600. Newer apartments rent from approximately $650 to $1,000 a month and offer underground heated parking, washers and dryers in each unit, exercise rooms, and computer centers. The recovery has been slower for tax-credit projects, the vast majority of which are 100-percent rent restricted. The vacancy rate among these projects has remained at 10 percent for the past year.
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