Nonagricultural wage and salary employment in the Northwest region increased by 1.2 percent during the 12 months ending February 2000, compared with a 2.5-percent growth rate for the same period 1 year ago. Gains were led by Idaho, at 3.2 percent, and Washington, at 1 percent. Oregon and Alaska recorded gains of less than 1 percent. Idaho's growth was the result of increases in manufacturing, retail trade, and services. Since 1998, Boise has been one of the leading areas in the Nation in employment and population growth. A recent Standard and Poor's report predicted that Boise will be among the fastest growing metropolitan areas in the West through 2004. In Washington, high-technology industries continued to create new jobs, while the aerospace industry continued to decline, down approximately 22,600 jobs from the peak in June 1998. The unemployment rate in the region was 5.3 percent as of February 2000.

The sales housing market started 2000 very strong throughout much of the Northwest. Home sales in Boise remained strong through the first quarter, with activity up 3 percent compared with the first quarter 1999 volume. The median sales price for Boise rose 2.5 percent, to $113,350, for the same period. Home sales in Portland declined 4 percent during the first quarter of 2000, but the median price rose 3 percent, to $159,175.

Single-family home building permit activity in the Northwest region through March 2000 totaled 11,989 homes, down 6 percent from first quarter 1999 totals. Alaska recorded a 15-percent increase in activity, while Washington and Oregon registered reduced activity. Multifamily housing activity for the first 3 months of 2000 was down 10 percent from last year's pace, with permits issued for 4,448 units. Idaho continued to be one of the region's most active markets, with multifamily permit activity in the first quarter almost double the level of the same period last year. A recent estimate by O'Connor Consulting indicated that approximately two-thirds of all multifamily units permitted in 1999 in the Seattle metropolitan area were intended for condominium ownership rather than rental.

With the exception of the Spokane area, the major rental housing markets in Washington tightened considerably. The Puget Sound area was still the hottest rental market. The March 2000 Dupre+Scott Apartment Vacancy Report showed the Seattle metropolitan area with a 4.2-percent vacancy rate, despite an increase in new construction. Although most close-in Seattle neighborhoods still recorded vacancy rates of 3 percent or less, some suburban submarkets showed more balanced conditions and increased competition, with vacancy rates in the 7-percent range. The estimated rental vacancy rate in the Tri-Cities was below 5 percent, and central Washington markets (Wenatchee, Ellensburg) were in the 5-percent range as well. The rental vacancy rate in the Spokane metropolitan area remained around 8 percent. Boise rental market conditions ranged from balanced to tight, with a 5-percent vacancy rate overall. In the Portland-Vancouver metropolitan area, the rental vacancy rate as of the first quarter of 2000 was estimated at 5.5 percent.

Spotlight on Bremerton, Washington

Employment increases in the Bremerton metropolitan area in recent years have been relatively modest compared with the growth rate in the other metropolitan areas in the Puget Sound region. Wage and salary employment averaged 72,400 in 1999, a 1-percent increase from 1998. For the 12 months ending February 2000, the increase was 1.3 percent above February 1999. The unemployment rate in Kitsap County averaged 5.0 percent in 1999, compared with 5.3 percent in 1998. As of February 2000, it was an estimated 5.6 percent, barely changed from the February 1999 rate of 5.5 percent.

Although more diverse than in the past, the economy of the Bremerton area continued to be driven by Federal defense spending at the Puget Sound Naval Shipyard, the Naval Undersea Warfare Engineering Station (Keyport), and other Navy facilities. More than 17,000 military and civilian U.S. Department of Defense personnel are employed in the area, and spending for payroll and contracts brings more than $1.1 billion into the local economy annually. Although the government sector accounted for more than one-third of employment in the metropolitan area, job gains over the past year occurred primarily in the trade and service sectors.

Like much of the Puget Sound region, the Bremerton area has experienced a fairly rapid increase in population since 1990. As of July 1, 1999, the population of the Bremerton area was estimated to be 236,600, a 2.4-percent annual growth rate since the 1990 Census. Approximately 63 percent of the growth was the result of in-migration.

The area is slowly becoming a bedroom community for people working in the Seattle area, and it is an attractive area for retirees, with its more rural environment and affordable housing. Demand for housing in Kitsap County has been relatively strong. An increasing number of people are willing to commute up to 55 minutes on the ferry so they can purchase affordable housing farther away from Seattle. In 1999, sales of existing single-family homes and condominiums totaled 3,700 units, an 8-percent increase from the 1998 sales volume. The median sales price in Kitsap County was $142,000, compared with a median sales price of $217,000 in 1999 in King County (Seattle). REALTORS^® are concerned about the outlook for the Bremerton area's sales market because of the recent passage of Initiative 695, which cuts the budget for the Washington State Ferry System. With ferry fees projected to increase, the increased cost of commuting could dampen sales.

Single-family home building permit activity in the Bremerton area in 1999 totaled 1,128 homes, a 16-percent increase from 1998 activity. From 1990 through 1996, single-family activity averaged 1,600 homes annually. From 1997 through 1999, activity declined to an average of 1,025 units annually. The decline in activity reflects the reduced rate of employment growth in the area and increased restrictions on development.

Multifamily housing building has essentially been at a standstill since 1997. From 1990 through 1997, building permit activity averaged 430 units annually. Market conditions softened considerably in 1997, when the increase in new Navy family housing units and the reduction in naval personnel homeported in Bremerton resulted in rental vacancies rising to 10 percent. After practically no multifamily activity for the past 3 years, the Dupre+Scott Apartment Vacancy Report showed a 5.5-percent overall vacancy rate as of March 2000. Average rents in the Bremerton area were considerably less expensive than those in Seattle. Two-bedroom apartments were available in the $570-$680 range.

A niche market that has evolved in the city of Bremerton is for apartments/studios and galleries for Puget Sound artists. As artists in downtown Seattle find themselves pushed out by rising rents and redevelopment, art galleries and studios are locating in Bremerton near the shipyard. The Kitsap County Consolidated Housing Authority is currently working on a plan to create a government complex to house government agencies in one section of the downtown area. More artist housing and work space may be developed along with the government complex.