Employment growth in the past 12 months has varied considerably among Rocky Mountain States. Colorado's employment continues to lead the region with a 3.3-percent annual growth rate as of March 2001. At the other end of the spectrum, North Dakota's growth remains a slow 0.4 percent. Montana's annual growth rate as of March 2001 had slipped to 1.2 percent. With the exception of Montana, all States in the region recorded unemployment rates below the national average. Despite weak job growth in the Dakotas, unemployment rates remain low, and Colorado and North Dakota both posted rates of less than 3 percent.

After years of expansion, which included major boosts from companies such as Sun Microsystems and Level 3 Communications, Colorado's high-technology sector faces some adjustments. Recent bankruptcy filings by Convergent Communications and ICG Communications have nibbled away at the State's telecommunications industry. A recent news article estimated that high-technology industry layoffs in the first quarter of 2001 have eliminated more than 9,000 jobs. Similarly, the financial sector has not been immune to setbacks, because Janus Capital recently cancelled plans for construction of a major campus on the former Lowry Air Force Base in suburban Denver, then followed this announcement with two job cutbacks at its headquarters in Denver.

So far, the modest slowing in employment growth rates has had little impact on housing construction. Total permits issued in the region during the first quarter of 2001 are slightly ahead of the pace during the first quarter of 2000. Single-family activity was up 8 percent in Colorado, offsetting slower activity in the other States. Multifamily permit activity increased in Utah and Wyoming, offsetting substantial declines in all other States in the region. Foreclosure rates moved up slightly during the fourth quarter in most Rocky Mountain States. Utah's surprising rate jump of almost 1 percent placed it above the national average, while rates in the other States remain well below that for the Nation.

Rocky Mountain metropolitan areas continue to report growing economies and increased housing demand. Salt Lake City's annual job growth rate has held steady at 2.5 percent in 2001, a level that has been maintained since 1998. Residential building received a boost in the first quarter with the start of a 330-unit apartment project in downtown Salt Lake City. The project will house media employees during the 2002 Winter Olympics before being released to the market after the games. Earlier cutbacks in apartment construction have begun to firm the rental market; Hendricks & Associates' fourth-quarter 2000 survey showed a vacancy rate of 3.7 percent, down from the 5.2 percent recorded a year earlier.

Colorado Springs' healthy economy slowed only slightly during the first 2 months of 2001 as annual job growth slipped under 3 percent. The strong rate of growth continues to support increased residential construction activity. Building permit activity in the first quarter of 2001 was 56 percent greater than in the first quarter of 2000. The approximately 1,900 apartment units currently under construction are expected to begin to ease the area's tight rental market.

Spotlight on Denver, Colorado

The Denver metropolitan area's economy continues to expand. The annual rate of job growth has slowed only moderately after reaching a recent peak of 4.4 percent in 1997. Annual growth rates have hovered in the 3.5- to 4-percent range during the past 3 years and have been at approximately 3.9 percent for the past few months. Almost half of the new jobs created in the past year have been in the services sector, most of which came from double-digit gains in business services. Continued increases in construction employment have also pushed this sector to near-record levels.

Apartment construction activity dropped back to less than 5,000 units in 1999, but in 2000 a surge in building permits put apartment activity for the year up to almost 9,000 units. Some of this activity is merely replacing rental units lost to condominium conversions; a local real estate firm estimates that conversions are transferring approximately 1,500 units annually out of the rental inventory. With substantial price increases for single-family homes, condominiums are becoming one of the few alternatives for would-be homeowners seeking a home priced at less than $200,000.

There are currently more than 9,000 rental units under construction in the Denver metropolitan area, more than needed by the market based on recent absorption. Vacancy rates are expected to increase later in 2001, easing the somewhat tight market conditions.

Rental vacancy rates for the metropolitan area have remained in the 4- to 5-percent range for most of the past 5 years. The latest report from the local apartment association reported a rate of 4.7 percent as of the fourth quarter of 2000. Submarkets in suburban Douglas County reported higher rates, reflecting a recent surge in luxury apartment completions. Construction activity in the Northglenn/Thornton and South Aurora areas also has increased recently.

Overall, absorption of new units has been strong in most Denver area submarkets, and few projects offer concessions after reaching sustaining occupancy. Average rents for two-bedroom, two-bathroom units as of the fourth quarter of 2000 range from slightly more than $900 in Adams County to almost $1,200 in Douglas County. The metropolitan area average for two-bedroom, two-bathroom units was slightly more than $950.

In the seniors housing market, construction activity has slowed after reaching a peak of more than 1,000 units in 1998. Recent absorption has been mixed; some assisted living projects have leased within 6 months of opening, while others still struggle for 1 to 2 years after completion. Production of housing for seniors has also shifted its focus; there are few assisted living units under construction but an increasing number of "independent" age-restricted rental developments (both market rate and tax credit) in the pipeline.

Single-family permit activity set a new high for the 1990s at more than 18,000 units in 1999. A small cutback in 2000 brought volume down to slightly more than 17,000 units. Sales activity has remained high, spurred by a shift to single-family attached housing as ever-increasing single-family home prices have forced many potential homebuyers to choose townhomes and condominiums as affordable alternatives. Existing home listings in the Denver area are up substantially from 1 year ago. Increases in both February and March 2001 pushed the inventory to almost 12,000 homes, a 2-year high. This could portend a little easing in Denver's perennial seller's market by the middle of 2001, but bargain hunters will likely be disappointed. Total home sales were off slightly in the first quarter of 2001, but the average annual price increase has stayed in double digits. The average sales price for single-family homes is now more than $250,000, while condominium prices average more than $150,000.

Denver's strong housing market spurred a dramatic increase in activity in both the sales and rental markets in the downtown area. Initially, developers focused on conversion of warehouse space in the lower downtown into high-priced lofts and on the rehabilitation of vacant office buildings into mixed-income rental projects. More recently, new luxury rentals uptown and in the Commons Park area have been added to the mix, and there are plans for more near Coors Field and also northwest of the central business district. Ongoing historic rehabilitation of loft projects has been joined by new construction of mid- and highrise condominiums in the Golden Triangle, Central Platte Valley, and uptown neighborhoods. Penthouses priced at $1 million or more move slowly, but sales and presales reservations for projects under construction in the $300,000-to-$500,000 range remain brisk. Sales of most one-bedroom units are in the $200,000-to-$400,000 range, with two-bedroom units priced in the $300,000-to-$500,000 range. One-bedroom units have dominated recent production of rental units downtown and in nearby areas, but two-bedroom units are offered in most developments. The latter units rent for $1,200 to $2,000 per month.