Washington, D.C.-Maryland-Virginia The Washington metropolitan area has experienced the impact of the economic slowdown during the past 12 months. In the 12-month period ending September 2002 total nonagricultural wage and salary employment remained essentially unchanged compared with employment in the same period ending September 2001. Employment in the most recent 12 months actually declined by less than 0.1 percent, or 1,300 jobs, out of a total employment base of nearly 2.9 million. This represents a significant departure from job gains over the previous 5 years when the average annual rate of growth exceeded 3 percent. Substantial declines in the transportation and public utilities and manufacturing sectors were offset by gains in the local government and service sectors. Despite the economic downturn the metropolitan area continued to attract a significant number of new job seekers. The civilian labor force expanded by 1.7 percent, or 46,000 people, during the 12 months ending August 2002. With fewer job opportunities the unemployment rate rose to 3.8 percent. (The unemployment rate has remained below 4 percent for the past 6 years.) The real estate sector continues to be a mainstay of the regional economy. The District of Columbia’s Downtown Business Improvement District recently reported that 17 commercial and residential developments, valued at $1.1 billion, were completed in the past 18 months, including more than 1,500 units of new market-rate rental housing. The static but relatively strong local economy has meant continued high demand for sales housing in both new and existing homes. The number of building permits for single-family homes in the first 9 months of 2002 increased 4 percent to 23,049 homes compared with the same period in 2001. Single-family permit activity since 1998 has averaged approximately 29,000 homes annually, and 2002 is on track to meet this pace. Continued increases in existing home sales volume and prices have led to a very active resale market. Sales of existing homes have exceeded 100,000 every year since 1998. Data from Metropolitan Regional Information Systems, the area’s major MLS, indicated that sales of existing homes in the metropolitan area in 2001 totaled approximately 125,000. Sales volume for the first 9 months of 2002 totaled nearly 86,000 homes, an increase of 5 percent over the same period in 2001. Median sales prices for existing homes in 2001 increased by 25 percent in the District of Columbia; 17 percent in Prince William County, Virginia; and 15 percent in Arlington County, Virginia. As a result of the tight market conditions double-digit increases in sales prices of existing single-family homes continued throughout much of the metropolitan area during the first 9 months of 2002. Conditions in the rental market throughout much of the Washington metropolitan area continue to be relatively tight. However, vacancy rates increased during the third quarter of 2002. Delta Associates reported that the vacancy rate for Class A apartments increased from 2.6 percent to 3.1 percent in Northern Virginia, even with the absorption of more than 3,600 units in the 12 months ending in September 2002. In the Maryland suburbs the vacancy rate for Class A units was below 2 percent and the rate in the District remained unchanged at 3.8 percent. Reflecting the slower economic conditions, multifamily building permit activity declined slightly in the first 9 months of 2002. Permits were issued for 6,472 units, approximately 5 percent below the activity for the same period in 2001. The tight market conditions, particularly for affordable rentals, have made renovation of existing Class B properties increasingly attractive. As of the third quarter of 2002 an estimated 4,500 units in Class B developments were undergoing renovations, a 67-percent increase over the third quarter of 2001 (2,672 units), according to Delta Associates.

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