Nonagricultural employment in the Southeast increased by 686,900 jobs, or 3.1 percent, between February 1997 and February 1998. The greatest increase was in Florida with 254,600 jobs (4 percent). The central region of Florida, including Tampa-St. Petersburg, Lakeland-Winter Haven, Orlando, Melbourne-Titusville, and Daytona Beach, accounted for 40 percent of the jobs added during this period. Although tourism is a major part of the economy, high-technology industries such as microchip manufacturers and various research companies are expanding or relocating and are contributing to the increase in employment and diversification of the central Florida economies.

Sales housing markets in the Southeast continued to show strong activity during the first quarter of 1998. The number of single-family homes authorized by building permits was up 7 percent over the first quarter of 1997, and there were increases in seven of the eight States. Atlanta had the Nation's most active sales housing market in 1997 due to a record-setting pace of single-family home construction. Single-family building permits in the Atlanta metropolitan area exceeded 38,000 units in 1997, which was 3 percent above the volume for 1996. Activity shows no signs of abating, and permits for single-family homes issued during the first quarter of the year were 20 percent ahead of year-earlier figures.

Condominiums are popular again in Georgia. Sales in the city of Atlanta have shown strength recently as prices of single-family homes have escalated beyond the price range of many buyers. The increasing popularity of condominiums has encouraged the first substantial wave of apartment-to-condominium conversion in the city since the 1980s. Recently announced developments have involved the conversion of more than 700 units.

Condominium and townhouse sales activity appears to be regaining market acceptance in the Greensboro, North Carolina, area. After almost halting during the late 1980s, sales of new condominiums increased by 138 units and sales of new townhouses increased by 180 units in 1997.

FHA loans endorsed in the Caribbean during the first quarter of 1998 increased by 10 percent to 3,958, compared with the same quarter in 1997. Sales of FHA-insured houses under Puerto Rico's Affordable Housing Program contributed to the increase.

Increases in building permit activity of multifamily housing were noted during the first quarter of 1998 for all Southeast States except Alabama. Overall the number of multifamily units permitted increased by 20 percent to 26,537 units. Tennessee's major rental markets continue to be balanced, although conditions have become more competitive. First Management Services in Nashville reported that occupancy in Nashville-area apartment properties as of March 1998 was at 93.8 percent, down from 95.8 percent the previous year. Absorption of new rental units, estimated at 3,043 units over the past 15 months, was strong despite the area's slow job growth since 1995. In Memphis the apartment vacancy rate is estimated at 6 percent. According to SPL Corporation, the market may weaken in 1998 when an estimated 3,400 units are completed. The downtown Memphis housing market continues to thrive as more renovations are completed. According to the Memphis Business Journal, the downtown area had 1,541 housing units 9 years ago and now has almost 3,800 units.

The Jacksonville, Florida, rental market was showing signs of softness, with fourth-quarter 1997 vacancies reported at 10.5 percent. The Miami rental market is also showing weakness that can be attributed to a weak economy and the substantial increase in multifamily housing production that began in 1995. Vacancy rates have been steadily rising, and the effects of the large increase in production in 1997 are not yet reflected in the available data. Vacancy rates are now approaching the levels experienced during the 1990-91 recession before Hurricane Andrew. The Orlando market had maintained an occupancy rate of 95 percent as of March 1998, according to a survey of approximately 100,000 multifamily units that was done by Charles Wayne Consulting. However, some softening is expected as more than 9,000 multifamily units are under construction, and the recent surge in construction has only begun to affect the market.

The substantial population and household growth in some of the Southeast major housing markets is beginning to raise concerns about the impact of growth on local infrastructure. The Atlanta area's problems with ozone emissions may limit Federal transportation funds, which are seen as necessary to support the current pattern and pace of development. Strains on infrastructure resulting from rapid development have led local governments to place moratoriums on development in the past year. The moratoriums have more commonly restricted apartment rezoning, moderating a fairly rapid pace of apartment construction.

In North Carolina, recent rapid growth has the city of High Point giving serious consideration to imposing impact fees to finance infrastructure improvements. Any plan developed by the city of High Point would be subject to approval by the city council and the North Carolina General Assembly, a process that could take years. In 1987, Raleigh became the first North Carolina city to adopt impact fees and was soon followed by the neighboring communities of Cary, Chapel Hill, and Durham. Critics are claiming that such fees will discourage growth and drive investors and developers to other competing communities. Others claim the fees will reduce the amount of affordable housing in a community.

Spotlight on Birmingham, Alabama

During the past 20 years, Birmingham's economy has undergone dramatic diversification from its reliance on mining and steel to becoming a leader in healthcare services and banking. The metropolitan area is home to the headquarters of both Health South Corporation and Med Partners, Inc., each with annual revenues exceeding $3 billion. Birmingham is a major banking center in the South, second only to Charlotte, North Carolina.

The area's 4 largest private-industry employers -- Alabama Power; Baptist Health Systems, Inc.; Bell South; and Bruno's Inc. -- each have more than 3,000 employees. A major new economic development in the region is the Mercedes Benz plant located in Vance, which is approximately 30 miles west of Birmingham. The $300 million plant opened in early 1997 and now employs 1,500 people. It has drawn 10 automotive suppliers to middle Alabama, creating an additional 1,000 jobs. As of February 1998, the unemployment rate of 2.7 percent for the four counties in the Birmingham metropolitan area was the second lowest in the State. At the end of 1997, total employment in the Birmingham metropolitan area was 443,953 persons, an increase of 2.3 percent since the end of 1996, compared with the statewide increase of 1.3 percent.

The city of Birmingham is attempting to balance new growth with revitalization and renewal. Over the past decade, annexation has added 30 square miles of vacant or sparsely populated land to the city, which grew from 90 to 120 square miles but increased in population by only 7,000 persons. Most of the new land is available for new commercial and residential development. In August, Jefferson County voters will decide the fate of the Metropolitan Area Projects Strategy (MAPS), which, if approved, would provide $525 million for civic projects. The largest would be a domed stadium and convention center. The rest of the funds would be used primarily for education and the construction of public facilities. The bond issue would be retired by a one-cent sales tax increase within the county.

High occupancy rates and increased rental rates have spurred the development of new office space, which is under construction in downtown Birmingham and in the Colonnade and Oxmoor Valley areas in Jefferson County. A number of companies are finding it more feasible to redevelop old buildings, such as the refurbished First Commercial Bank Building and the John A. Hand Building. The $100 million Summit shopping center, the largest to be built in the past decade, opened last Fall and has achieved great success.

During February 1998, Birmingham-area real estate agents sold a record 717 existing homes, up 15 percent from February 1997. For all of 1997, a record 9,325 existing homes were sold, exceeding the 1996 total of 9,246 homes. The average existing sales price in the area during February 1998 was $140,276, compared with the national average of $124,300, according to the Birmingham Association of REALTORS^®. Local sources are optimistic that sales in 1998 will equal 1997's strong volume. Home construction activity from 1990 through 1993 averaged approximately 3,000 single-family units annually. From 1993 through 1996, permits were issued for 4,250 single-family units per year, but the total fell to 3,826 units in 1997.

Following a period of overbuilding, multifamily housing permits averaged only 600 units annually from 1991 through 1994. The average increased to 1,625 units annually for 1995 and 1996 but fell to 681 units in 1997 as developers cut back in response to increasing inventory. Much of the production over the past 3 years was high-rent, amenity-rich apartment developments. A number of the new complexes are located in Jefferson and Shelby Counties. Rents for new apartments typically run from $600 for a one-bedroom unit up to $1,500 or more for a three-bedroom unit. The overall rental vacancy rate is now from 8 to 9 percent. Following the revitalization of office and commercial space in the city's center has been the development of loft apartments. About 100 units are on the market, and an additional 248 units are planned.