Economic expansion in New York and New Jersey during the 12 months ending in August 1999 proceeded at a slower pace than during the comparable period in 1998. Employment in New York State increased by 137,000 jobs, or 1.6 percent, between August 1998 and August 1999; employment in New Jersey was up 65,200 jobs (1.8 percent) during the same period. New York's unemployment rate was 5.1 percent in August 1999, down from 5.4 percent in August 1998. New Jersey's unemployment rate increased slightly to 4.7 percent in August 1999 from 4.6 percent a year earlier. Employment in New York City increased by 95,900 jobs (2.7 percent) between August 1998 and August 1999. The unemployment rate in August 1999 was 6.9 percent, down from 7.8 percent a year earlier. In its annual review, the Port Authority of New York and New Jersey forecast moderate employment growth of 1.2 percent in 2000 in the New York/New Jersey Metropolitan Region (New York City, Long Island, Rockland and Westchester Counties, and eight counties in Northern New Jersey).

Residential building permit activity in New York State during the first 9 months of 1999 totaled 31,550 units, up 13 percent from the same period a year ago. New Jersey single-family activity totaled 19,293 units, up 7 percent from the same period a year ago. Multifamily permit activity in the State during the first 9 months of 1999 totaled 5,919 units, 65 percent greater than the same period last year and slightly more than the volume for all of 1998. A significant part of the increase was due to permits issued to a number of new large developments in the Newark and Jersey City metropolitan areas. Residential building activity in New York City continues to be constrained by the high costs of construction and available land. A recent report commissioned by New York City concluded that residential construction has not kept pace with demand because of its high cost.

The high cost of new homes and limited available land in Westchester County are spurring residential construction in Dutchess County. There are currently 18 developments of 20 or more units currently under construction. The largest is Dalton Farm, a 504-unit development of townhouses and detached homes in the town of Beekman. Townhouses range in price from $140,000 to $205,000 and single-family, detached homes are priced from $162,500 to $300,000. At Vasser Oaks, a 150-unit development in the city of Poughkeepsie, two- and three-bedroom homes are selling for $159,900 to $231,900. At the high end is a development known as the Legends at the Beekman Country Club on a golf course in the town of East Fishkill, where homes are priced in the $380,000 to $600,000 range. Construction has also begun on a 361-unit rental development in Fishkill called Jefferson at Merritt Park, with two-bedroom units expected to rent for approximately $1,300.

According to the National Association of REALTORS^®, the annual rate of home sales in the State as of the third quarter of 1999 was 6.7 percent higher than a year earlier. The New York State Association of REALTORS^® reported that the average price of a home was up 4 percent from a year earlier. The New Jersey Association of REALTORS^® reported that the annual rate of existing sales in New Jersey as of the second quarter of 1999 was 14 percent ahead of last year at the same time. Sales prices for the year are about 3 percent higher than a year earlier.

Manhattan's rental housing market continues to be robust according to a midyear 1999 report issued by Feathered Nest, a real estate firm that specializes in rental housing. Rents in Manhattan have increased by approximately 3.3 percent annually since 1990. The cooperative and condominium markets on both the Upper East Side and the Upper West Side continue to be very active. The Corcoran Group's midyear 1999 report cited the average sales price of studio apartments during the first 6 months of the year as $145,000, up 13 percent from the same period in 1998; one-bedroom apartments averaged $261,000, up 11 percent; two-bedroom apartments averaged $611,000, up 8 percent; and three-bedroom apartments averaged $1,583,000, up 7 percent.

There has been a wave of residential housing development in Harlem, most of it with public financing. One example currently under construction is Renaissance Plaza, a $61 million, 11-story, mixed-use development on Lennox Avenue. This development will contain 60,000 square feet of retail space, 241 one- to three-bedroom limited equity cooperative apartments, and parking spaces for 200 cars. Elsewhere in Harlem an attempt is now being made to test the strength of the private market through the construction of two small, five-story residential buildings containing a total of 28 apartments. One-bedroom units are expected to rent from $750 to $950 and rents for two-bedroom units will range from $950 to $1,200.

The City's New Homes Program is enabling moderate- and middle-income families in New York City's outer boroughs to purchase affordable homes at prices starting at $130,000 and ranging to $300,000. New York City is donating the land and providing grants as high as $10,000 per unit. New York State is providing grants as well. In all, 2,121 homes will be made available for purchase during the next 3 years.

In New Jersey, New Brunswick's efforts to revive its downtown will receive a major boost with the planned construction of Heldrich Plaza, a 15-story, mixed-use development that will combine a conference center, retail space, a 200-room hotel, rental apartments, and a new home for the John J. Heldrich Center for Workforce Development, which is part of Rutgers University.

Spotlight on Syracuse, New York

The Syracuse metropolitan area has lost 1 percent of its population since 1990, declining by approximately 7,600 persons to 734,640. Population gains in suburban Madison and Oswego Counties were offset by losses in the city of Syracuse, which has lost 11,600 persons, or 7 percent of its population, since 1990.

Employment gains in the 12 months ending in August 1999 have been slightly below 1 percent, or 3,000 new jobs, due primarily to increases in the construction, manufacturing, and services sectors. The unemployment rate for the metropolitan area was 3.6 percent as of August, unchanged from 12 months earlier. The area's central location in Upstate New York makes it a major transportation hub, an important factor for manufacturers. Manu-facturing employment comprises 15 percent of total employment. Major manufacturing employers in the area include Carrier Corporation (refrigeration/air conditioning), Lockheed Martin (defense/aerospace), and New Process Gear (automobile parts). Syracuse University, with more than 18,000 students and approximately 4,000 faculty and staff, is the area's third-largest employer. Salaries and wages alone bring an estimated $180 million to the local economy annually. Recently, Sithe Energies and General Electric announced plans to construct a $365 million power plant in Oswego County that should create 1,000 high-paying construction jobs.

During the past 4 years, residential construction in the Syracuse area averaged about 1,300 housing units annually. In the first 9 months of 1999, permits were issued for 600 housing units, slightly ahead of the volume of activity in 1998 for the same period. Single-family homes account for 85 percent of residential housing activity within the metropolitan area, the major part of which has been in suburban Onondaga County.

The existing sales market in the Syracuse metro-politan area has been very active during the past 24 months, averaging approximately 4,400 homes annually, which is 13 percent greater than the annual volume in 1996 and 1997. According to New York State Association of REALTORS^® data, the average sales price of an existing single-family home in the first 9 months of 1999 was $104,155. Until recently the sales market was a buyer's market. The steady increase in sales activity and the reduced supply of available homes have resulted in more balanced conditions. Demand for trade-up homes in the $125,000 to $175,000 price range in the suburbs has been fairly strong.

Multifamily rental housing construction in the metropolitan area has been very limited, averaging only 150 units annually since 1995. Development has been concentrated in suburban Onondaga County, north and east of the city. New developments have monthly rents for two-bedroom apartments of $750 to $800. Rental housing market conditions are soft in the city but balanced in the suburbs. Monthly rents for an existing two-bedroom unit in suburban Onondaga County are typically in the $550 to $600 range. Rent increases have been limited, but well-maintained, better located properties are able to command increases of 3 percent or more.