The Midwest region added 238,000 nonagricultural jobs in the 12 months ending in November, a 1-percent increase. The unemployment rate for the region as of November 2000 was 3.6 percent, unchanged from a year earlier. Employment growth in 2001 is expected to hold steady at approximately 1 percent annually. The expanding business services sector has been a major factor in the demand for new office space in the Chicago metropolitan area. Fifty new office buildings totaling 11 million square feet are expected to enter the inventory by 2003.

Sales housing markets in the region performed well in 2000, reflecting healthy local economies throughout much of the Midwest. Existing sales for the year totaled approximately 921,600 homes, off less than 2 percent from 1999. Single-family building permit activity totaled 194,069 homes in 2000, 6 percent below high levels for the same period in 1999. New home demand remains strong in most of the region. The Building Industry Association of the Twin Cities reported that 2000 was the second most active year for local homebuilders in Minneapolis-St. Paul, and builders expect 2001 to be another good year. There was a strong turnout of potential buyers at the Parade of Homes Fall Showcase held throughout the area in November. Indianapolis-area builders also had one of the best years for new home sales since the late 1970s. New homes priced from $125,000 to $225,000 in Marion and Hamilton Counties accounted for more than half of the area’s 13,100 new sales for the year.

The Chicago Association of REALTORS^® reported another big year for existing home sales, with 110,100 homes sold in the metropolitan area in 2000. The median sales price was up 5 percent to $162,000. Local sources reported that the market for new sales housing was even stronger. Contracts were signed for a record 25,400 new homes in 2000, while the average sales price in the area reached $253,600. The city of Chicago continued its strong commitment to affordable housing in 2000 with the allocation of $259 million for an estimated 10,000 units. The Homebuilders Association of Greater Chicago expects 22,000 to 24,000 new homes will start construction in 2001.

The Ohio Association of REALTORS^® reported that existing sales in 2000 totaled 99,800, and the average sales price was up 4 percent to $137,300. Existing sales volume in the Cleveland, Columbus, and Cincinnati areas in 2000 was close to last year’s activity. In the Detroit-Ann Arbor area, existing home sales totaled 39,300 through November 2000, nearly identical to 1999’s volume for the same period. The homeownership rate in the metropolitan area increased during each of the past 4 years to a record 76 percent in 2000.

The market for all types of senior housing has been very active in the Midwest. The American Seniors Housing Association’s 2000 Construction Survey ranked Ohio, Indiana, Michigan, and Illinois in the top 10 States for construction of senior housing. Builder response has been very strong to Illinois’ new Supportive Living Facility program for frail seniors; in the second half of 2000, applications for financial assistance were received for 50 projects located throughout the State.

The year 2000 was another strong one for multifamily housing construction in the Midwest. Building permits were issued for 61,159 multifamily units, compared with 62,640 units in 1999. Activity was up in Illinois, Michigan, and Minnesota. Ohio recorded the largest drop in activity of almost 3,500 fewer units than 1999. The Chicago area rental market continues to exhibit tight conditions and strong demand for new units. Multifamily building permit activity for 2000 was up 10 percent. The Apartment Update 2000 by Hendricks & Partners reported an overall vacancy rate of 2.2 percent as of the fourth quarter, one of the lowest on record. Rents are increasing 4 to 6 percent in suburban areas and 5 to 7 percent in the city of Chicago. Strong upward pressure on rents in 2001 is likely to continue across the area, according to Marcus and Millichap’s October 2000 Apartment Research Report.

In the Minneapolis-St. Paul area, multifamily building permit activity in 2000 was up 14 percent to 5,335 units, but apartment production continues to lag behind demand. New projects rent up at a rate of 30 to 35 units a month, while rents are increasing 10 to 11 percent annually, according to the Apartment Market 2001 Report.

Multifamily production in the Cincinnati-Hamilton area was down 35 percent to 2,891 units. The decline reflects cutbacks in builder activity in response to the large number of new units that are entering the suburban market and the increasingly competitive conditions in the Northeast corridor. CB Richard Ellis’ Apartment Market Overview for the second half of 2000 showed the overall vacancy rate in the 4- to 5-percent range.

In the Detroit-Ann Arbor area, multifamily activity through December 2000 was down 10 percent; however, apartment occupancy is good. An owner of 10,000 new and existing rental units reported vacancy rates held steady in the 4- to 5-percent range throughout the year. The increased demand for housing in the city of Detroit has encouraged some builders to convert older buildings to apartments and condominium units. Developers of two projects in the downtown area reported better than expected market response for new two-bedroom units at rents of $1,000 a month.

Spotlight on Grand Rapids, Michigan

During the 1990s the Grand Rapids area had one of the highest rates of employment growth in the State of Michigan. Employment in the 12 months ending November 2000 increased by 14,400 jobs, or 2.4 percent. The unemployment rate as of November was 3 percent, unchanged from a year earlier.

The market for sales housing in 2000 was very strong. The Grand Rapids Association of REALTORS^® reported existing home sales in the area totaled 10,000 homes, approximately equal to 1999. The average sales price in the area was up 6.5 percent to $131,500. Approximately 15 percent of existing home sales in the Grand Rapids area were through the U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration. Single-family building permit activity for the year totaled 5,730 homes, 6 percent less than 1999.

The rental market is balanced overall, with a current vacancy rate of 5 percent. Multifamily building permit activity has been declining for the past 2 years. Between 1994 and 1998, activity averaged 1,700 units annually. By 1999, activity fell to approximately 1,200 units. Permits were issued for almost 800 units in 2000. Local sources attributed the drop in activity to the increased demand for homeownership and lengthy zoning and approval processes in the suburban areas.

Downtown Grand Rapids is seeing increased demand for housing. Contributing to the attractiveness of the area are the new 12,000-seat Van Andel Arena, the recently completed $60 million Van Andel Medical Research Institute, the renovated Grand Plaza Hotel, the $70 million, 25-story Lyon and Ottawa Building now under construction, and the newly expanded Grand Valley State University City campus. These additions have stimulated development of new restaurants, retail shops, and other entertainment, all of which have helped attract new residents to the area. A dozen new apartment and condominium developments totaling approximately 700 units are either under construction or being planned for downtown. One of the largest projects under development is the 350-unit Berkey & Gay Building Apartments, with rents starting at $750 a month for a studio apartment. Approximately 5,000 people are expected to reside downtown by 2005, according to the city of Grand Rapids.