The Mid-Atlantic economy continued to slow in the fourth quarter 2001. Nonagricultural wage and salary employment increased by only 0.9 percent in 2001, well below the 2.3-percent annual rate of 2000. The rate of employment growth dropped 1.5 percentage points in Delaware, Maryland, and Penn-sylvania. Virginia led the region with a 1.6-percent increase, or 55,450 jobs, compared with a 2.8-percent growth rate in 2000. The gains were the result of strong economic activity in Northern Virginia. Job rolls in Northern Virginia increased 4.2 percent in 2001, generating nearly 90 percent of the new jobs in the entire State. This area has not been adversely affected by the recession compared with other high-technology areas. Although thousands of high-technology workers in this region were laid off in 2001, many found employment with government contractors or other firms.

Despite the slowdown in the national economy and the large number of layoffs in the high technology sector, employment in the Washington metropolitan area still managed to increase by 2.7 percent in 2001, compared with 5.9 percent in 2000. The outlook for the Washington area economy remains quite favorable. The annual rate of employment growth in the area is forecast to increase to 3.5 percent in 2002. The unemployment rate in the Mid-Atlantic averaged 3.9 percent in 2001 com-pared with 3.6 percent in 2000. Unemployment rates increased but were still below 3 percent in the Washington, Richmond, and Tidewater metropolitan areas. The unemployment rate remained unchanged in Baltimore but rose in Philadelphia and Pittsburgh.

With strong demand and low interest rates offsetting the slower economic conditions in the region, homebuilding for 2001 remained healthy. Single-family building permit activity for the year totaled 104,865 homes, almost equal to last year. Increased homebuilding in Delaware, Virginia, and West Virginia was offset by declines in the District of Columbia and Maryland.

The demand for existing homes remained robust throughout the Mid-Atlantic region during 2001. According to the Maryland Association of REALTORS^®, sales in the State increased 10 percent in 2001 to 78,423 homes. The median sales price for the year was $152,159, up 6 percent. The Baltimore sales market, with its affordable prices and plentiful inventory of homes for sale, was very active. A total of 35,235 homes were sold in 2001, a 13-percent increase over 2000. The market was also very strong in Virginia. The Virginia Association of REALTORS^® reported that 103,160 homes were sold in 2001 compared to 93,990 in the previous year (an increase of nearly 10 percent). The median sales price in Virginia rose 6 percent in 2001 to $137,029. Nearly all areas in the State reported increases, led by Northern Virginia. Sales in that area totaled 31,501 homes, a 7-percent increase. Sales prices have in-creased significantly as well. Driven by strong demand and dwindling inventory, the median sale price increased 13 percent during the year to $234,489. Given the slower economy, home sales in the greater Washington metropolitan area were remarkable in 2001. According to the Metropolitan Regional Information System, new and existing sales in the area totaled 124,904 homes in 2001, a 3-percent increase compared with 2000.

Multifamily building activity continued at a strong pace in 2001. Apartment construction, as measured by building permits, increased 17 percent for the region. Activity in Virginia was up 29 percent for the year to 10,917 units, due to substantial increases in the Richmond and Tidewater areas and continued strong activity in Northern Virginia. Building permit activity rose 45 percent in Pittsburgh but declined 8 percent in Baltimore.

The apartment market in Philadelphia remains one of the tightest in the region. Class A highrise apartments in the center city continue to report vacancy rates below 1 percent. Rents for these units increased 9 percent in 2001 compared with 2000. The market is also tight in the suburbs. With strong population growth and limited supplies, the apartment vacancy rates in Chester County (Pennsylvania) and Burlington County (New Jersey) fell to below 2 percent.

Tight rental market conditions in the Washington metropolitan area eased in 2001 as the largest number of units in the past 10 years entered the market. According to Delta Associates, the vacancy rate for Class A apartments increased from 1 percent at year's end in 2000 to 3.5 percent at the end of 2001. The vacancy rate ranged from 4.2 percent in Northern Virginia, where most of the new units were built, to 2.3 percent in suburban Maryland.

Spotlight on Wilmington-Newark, Delaware-Maryland

The Wilmington metropolitan area, traditionally associated with manufacturing and the chemical industry, is now recognized as a major banking and credit card center, which adds diversity to the economy. Services and finance, insurance, and real estate account for 43 percent of employment in the metropolitan area. Manufacturing represents approximately 14 percent of total employment. One of the world's largest credit card issuers, MBNA Corporation, is the largest employer in the metropolitan area with approximately 11,000 employees. E.I. DuPont de Nemours Company remains the area's second largest employer.

Nonagricultural employment in the Wilmington area steadily increased at an average annual rate of 2.3 percent, or 6,800 jobs, from 1992 through 2000. In the 12 months ending December 2001, job growth slowed to 0.5 percent, or 1,800 jobs, because of a 7.5-percent decline in manufacturing, the result of layoffs in the automobile and chemical industries. Nonagricultural employment averaged 329,267 people during 2001. The unemployment rate has been relatively steady during the past 24 months, averaging approximately 4 percent during both 2000 and 2001.

With growth in the financial and banking sectors over the past 10 years, office vacancy rates in the Wilmington area have fallen steadily from almost 30 percent in 1991 to an overall vacancy rate of nearly 9 percent in the first half of 2001. However, as chemical, insurance, and credit card firms scale back employment, Wilmington's office market is expected to become softer in 2002.

Two major developments currently are under way in the Wilmington area. AstraZeneca is constructing a 1-million-square-foot addition, to be completed this year, to its new headquarters in the suburb of Fairfax, Delaware. In addition, a 12-story, $130 million courthouse for New Castle County is under construction. When completed in 2003, the courthouse will be the largest public building in Delaware.

During the 1990s, the population of the Wilmington metropolitan area increased more slowly than in the previous decade. As of 2000, there were 586,216 persons living there, an annual increase of 1.4 percent since 1990 compared with a 1.6-percent annual increase from 1980 to 1990. In-migration accounted for approximately 40 percent of the increase. Approximately 85 percent of the population resides in New Castle County, Delaware. During the decade, the population of the city of Wilmington increased slightly to 72,664 persons in 2000, or an annual rate of increase of 0.2 percent from 1990 to 2000. This was identical to the annual increase from 1980 to 1990. The fastest growing part of the metropolitan area has been the Maryland suburbs. Cecil County, Maryland, an established bedroom community for Wilmington, recorded a 2-percent rate of growth. More than one-half of its residents commute to jobs outside the county, many to employment centers in the Wilmington area.

Since 1990, single-family construction in the metropolitan area, as measured by building permits, has been relatively consistent, averaging approximately 3,000 single-family homes annually. Building permit activity for 2001 was up more than 8 percent compared with 2000, to 2,571 homes. Homebuilding has centered along the Interstate 95 corridor, southwest of Wilmington, in the Elkton, Maryland and Newark, Delaware areas, as well as near the new Route 1 Expressway in Middletown, Delaware (a 20-minute commute to downtown Wilmington). Starting prices of new single-family homes average approximately $200,000 in Cecil County and $250,000 in New Castle County. Prices for townhouses start at approximately $95,000 in Cecil County and $150,000 in New Castle County. Existing sales in the first 9 months totaled 17,000 homes, an increase of 9 percent compared with the same period of 2000. The median sales price for existing homes increased 7 percent during 2001 to $136,500, according to the NAR.

With an increasing demand for rentals due to growth in the banking and finance industry, multifamily construction increased significantly in the second half of the 1990s. Multifamily building permits averaged approximately 500 units annually from 1996 through 2000. During that period, approximately 175 units were located annually in Cecil County, primarily in Elkton. New Castle County accounted for an average of 330 units annually, with Newark and Wilmington accounting for approximately 10 percent each. Multifamily building permit activity for 2001 totaled 788 units throughout the metropolitan area, down 1.5 percent compared with 2000. The Wilmington area rental market is currently balanced. As of the end of 2001, the overall rental vacancy rate was estimated at approximately 6 percent. Two-bedroom apartments rent for an average of $800.

Wilmington's downtown renewal has slowed recently with the State abandoning plans to restore the trolley line; however, work continues on rehabilitating vacant buildings in the Ships Tavern District and the Nemours Building into apartments. To preserve declining neighborhoods and provide needed affordable sales housing, the city also is proposing a unique solution to address the persistent problem of vacant properties. Wilmington plans to give approximately 1,400 vacant properties to developers with acceptable plans and sufficient financing to rehabilitate the homes for sale. The city currently is reviewing proposals and expects by early March to select grantees to receive the first 10 buildings and 98 vacant lots. A second round is planned for fall 2002 and is to include more existing structures in need of rehabilitation.