During the past 12 months, the economy in the Northwest region has slowed. Nonagricultural wage and salary employment in the region increased by 1.7 percent during the 12 months ending February 2001, compared with 2.3 percent for the same period in 2000. Washington State led the region with a 2.3-percent growth rate, followed by Alaska at 2.1 percent. Gains in Washington occurred in services- and trade-related jobs, while Alaska recorded a notable increase in oil industry employment of nearly 25 percent. Both Oregon and Idaho recorded growth rates of less than 1 percent over the 12-month period due to job losses in the lumber and wood products industries. Unemployment in the region averaged 5.5 percent as of February 2001, ranging from 4.4 percent in Idaho to 7.5 percent in Alaska.

The most recent significant economic development in the region was the announcement in late March by the Boeing Company that it was moving its corporate headquarters from Seattle. Approximately 1,000 employees will be directly affected. An estimated 500 persons are expected to relocate to the new headquarters in Chicago, and the remaining employees will be absorbed into existing Seattle-area business units of Boeing, or else possibly laid off. The Boeing Company currently employs approximately 80,000 people in the Puget Sound area.

The region's population growth during the past decade outpaced the Nation overall, increasing 21 percent between 1990 and 2000. Idaho had the region's highest rate of growth at 28.5 percent, followed by Washington at 21 percent, Oregon at 20 percent, and Alaska at 14 percent. Washington State accounted for slightly more than half of the absolute population increase for that period.

Sales of existing homes picked up substantially during the first quarter of 2001 throughout the Northwest despite slower employment growth. Sales of existing homes through the MLS in the Seattle metropolitan area were up 10 percent for the first quarter of 2001 compared with the first quarter of 2000; the median sales price rose an estimated 6 percent over the 12-month period to $240,000. Local REALTORS^® pointed to low interest rates, an increased number of move-up and retiree buyers, and healthy employment levels as the reasons for the continued success of the sales markets in Washington. Existing home sales were up 13 percent in the Tacoma area, 16 percent in the Olympia area, and 29 percent in the Bremerton area. Popular retirement areas in Washington experienced a notable surge in sales, including Grays Harbor (54 percent) and Lewis County (50 percent). Markets in eastern Washington were also recording gains in both sales volume and prices.

Oregon's housing market areas (Coos County, Corvallis, Douglas County, Eugene, Portland, and Salem) recorded sales activity running slightly ahead of 2000. Between February 2000 and February 2001, the number of new and existing homes sold rose 2 percent in the State. The supply of available homes varies considerably by market area, ranging from 8 months in Portland to 16 months in Douglas County. In Anchorage, Alaska, sales for the first quarter of 2001 were up 28 percent compared with the first quarter of 2000, according to the MLS. The average sales price increased 8 percent during the period, to $185,000.

Single-family permits in the Northwest totaled 13,287 homes through March 2001, up 11 percent compared with the first quarter of 2000. Multifamily activity in the region totaled 4,404 units, almost identical to the volume for the same period in 2000; however, both Washington and Oregon recorded declines.

Conditions tightened in the Northwest region's major rental markets during the first quarter of 2001. In the Portland-Vancouver area the rental vacancy rate dropped to 5 percent; in Boise the rate was 4.5 percent. In the Puget Sound area, the tighter market conditions are expected to ease during the next 12 months as the supply of new units begins to meet and, in some cases, slightly exceed, demand. According to the Dupre+Scott Apartment Vacancy Report, as of March 2001 the average apartment vacancy rate in the Seattle area was slightly below 4 percent, with submarket vacancy rates ranging from 2 to 5 percent as of March 2001. The rate in the Tacoma area was also below 4 percent. The Bremerton and Olympia metropolitan areas, as well as Skagit and Whatcom Counties, have all recorded declines in the rental vacancy rate during the past 12 months to less than 4 percent.

Spotlight on Salem, Oregon

The population of the Salem metropolitan area grew fairly rapidly from 1990 to 2000. According to the 2000 census, the population of the area increased by 25 percent during this decade to 347,214. This was more than double the rate of increase of the previous decade. By the end of the 1990s, the Salem area had replaced Eugene-Springfield as Oregon's second largest metropolitan area. Nonagricultural employment in the Salem metropolitan area totaled 140,250 workers as of March 2001, up less than 1 percent in the 12-month period. The services-producing sector added 2,000 jobs to the local economy between March 2000 and March 2001 for a 1.8-percent gain. Current construction projects under way suggest continued expansion of the services sector and involve a 90-room upscale hotel, 4 low-rise office buildings totaling 240,000 square feet, approximately 500,000 square feet of retail shopping space, and two industrial parks with 420,000 square feet of warehouse space. As of March 2001, the unemployment rate stood at 5.4 percent compared with 6.7 percent a year ago.

Sales of both existing and new homes are running behind the pace set in 2000. In 2000, sales totaled 5,653 homes, down 9 percent compared with 1999. The average price of a home was $141,530. According to the Willamette Valley MLS, 1,501 homes were sold in the first quarter of 2001, down only 2 percent from the comparable period of 2000. The average price of a home sold was $139,110. As of March there was a 3.8-month supply of available homes, essentially unchanged from a year ago. Over the 12-month period from March 2000 to March 2001, 27 percent of the sales were homes with prices less than $100,000, while 15 percent were homes priced for more than $200,000.

Strong household growth and significant increases of 10 percent or more annually in sales prices kept the Salem area rental market tight. With rental vacancy rates of 3 percent, the increased demand fueled robust multifamily construction activity in the metropolitan area. Between 1995 and 1997, an estimated 3,700 new units were added to the rental inventory, causing the vacancy rate to double by the end of 1998. In 2000, permits were issued for less than 400 units. Due to a large cutback in construction activity, the rental market has become more balanced during the past 24 months.

The PGP Valuation Inc. Salem/Keiser Winter 2000/2001 Apartment Survey reported an overall apartment vacancy rate for the greater Salem metropolitan area of 5.3 percent compared with 4.5 percent 12 months earlier. The Salem rental apartment market area is expected to remain balanced over the next 12 months, given the low pipeline of units under construction. Of the approximately 250 rental units currently under construction, 200 are for the assisted-living market. Another 352 multifamily units are in the planning stages, but 152 of these will be for long-term care for seniors.