The New York/New Jersey regional economy continues to improve at a steady pace. Nonagricultural employment in New York State increased by 74,100 jobs (0.9 percent) during the 12-month period ending in May 1997. Employment in New Jersey increased by 57,900 jobs (1.6 percent) during the same period. New York State's unemployment rate, however, remained at a relatively high rate (6.3 percent in May) and did not change from the previous year. New Jersey's unemployment rate was 5.3 percent in May, which was a significant decline from 6.1 percent the previous year.

Most of the job growth in New York State during the past year has been in New York City and on Long Island. Three of Upstate New York's major areas have had limited annual job growth. Albany has suffered from the downsizing of State government. Buffalo's economy has been hurt by the weak dollar in Canada. Rochester has been adversely affected by job cuts at Eastman Kodak.

Long Island is in the midst of an economic recovery. The May 1997 unemployment rate in the Long Island area was only 3.6 percent. Because defense industry activities previously dominated Long Island's economy, the area was particularly hard hit from 1989 through 1992 when more than 100,000 jobs were lost. Since then employment has increased by 6 percent. The recovery was initially very slow and confined largely to low-paying jobs in the service sector. However, since early 1996 there has been a surge in higher paying jobs in finance, tourism, and trade. Central Suffolk County has also seen increased job growth in the high-technology sector. The Route 110 corridor in western Suffolk County has become Long Island's most active business and retail market, with rents in new office buildings averaging about $25 per square foot annually.

The average sales price for homes in the Long Island area fell 13 percent between 1989 and 1995 but has rebounded 5 percent through the first quarter of 1997. Although the greatest demand is for homes priced less than $250,000, demand for more expensive homes ($550,000 or more) is up significantly, and such homes are in short supply.

The New York City rental housing market remains very strong. As of the second quarter of 1997, rents in Manhattan and the other boroughs were generally 3 to 5 percent higher than the previous year. A recent survey indicated a 1996 rental vacancy rate of 4 percent.

There is a notable shortage of affordable housing in New York City. A recent study by Martin Schill and Benjamin Scafidi of the New York University Law School Real Estate Center indicated that 27 percent of New York City's households pay more than 50 percent of their income for rent, and in the Bronx one-third of the renters pay more than 50 percent of their income for rent.

According to the New York State Association of REALTORS^®, the number of existing homes sold statewide in the first quarter of 1997 decreased by 1.5 percent compared with 1996's first-quarter total. The median sales price of homes ($123,300) was up 2.5 percent for the first quarter of 1997 compared with the previous year. The New Jersey Association of REALTORS^® reported that home sales increased 4.2 percent in the first quarter of 1997 compared with the previous year, but the median sales price of $151,000 declined slightly from $152,000 the previous year.

Single-family building permit activity in New York State for the first half of 1997 remained fairly strong (9,126 units) and was only off by 5 percent from 1996 volumes for the same period. Multifamily activity in the first 6 months of 1997 totalled 6,349 units, a 13-percent decline from a very strong 1996 when more than 15,760 units were permitted for the entire year. Although it has experienced a decline, multifamily activity in 1997 is now on pace to achieve the second-best level since 1990. Multifamily activity continued to show strength in New York City's housing market, where activity in the first 6 months of 1997 (4,222 units) was up 32 percent compared with the same period last year.

In New Jersey single-family building permit activity totalled 10,799 units in the first half of 1997, a 25-percent increase over the first half of 1996. Multifamily permit activity (1,969 units) showed an even bigger, 48-percent gain, albeit on a smaller base.

Spotlight on Syracuse, New York

The 4-county Syracuse metropolitan area experienced a small, 1.1-percent population gain between 1990 and 1995 for a total population of 750,100. The economy of the Syracuse area is doing somewhat better than that of New York State as a whole. Syracuse's economy was hurt by job losses from 1990 through 1993 that stemmed from mergers, acquisitions, and departures in the manufacturing sector, primarily in the defense industry. As of May 1997, the unemployment rate in Syracuse had dropped to 4.3 percent, compared with 6.3 percent for New York State.

Although the Syracuse metropolitan area has a diversified economy, manufacturing remains a significant part of the area's employment and accounts for close to 15 percent of total nonagricultural employment. Major manufacturing employers include the Carrier Corporation (refrigeration and air conditioning) and Lockheed-Martin.

Housing construction activity held relatively stable and averaged 1,950 units annually between 1990 and 1994. However, activity fell to an average of only 1,350 units annually in 1995 and 1996. Activity has continued to decrease in 1997. In the first 6 months of 1997, permits were issued for only 220 homes, a 25-percent decline compared with the first half of 1996. Single-family construction has accounted for almost 85 percent of residential construction since 1990. The majority of the new homes built were in suburban Onondaga County.

According to the New York State Association of REALTORS^®, existing home sales in the Syracuse area have averaged approximately 600 homes a year since 1995. The median sales price increased by 2.4 percent to $77,300 as of the first quarter of 1997 compared with the same period in 1996.

The rental market in the Syracuse area is balanced, and rent increases have been minimal. Multifamily housing construction has been at low levels since 1990, averaging 330 units per year from 1990 through 1994 and less than 200 units annually in 1995 and 1996. In the first 6 months of 1997, permits were issued for only 42 units. Apartment construction has occurred mostly in suburban Onondaga County. Rent for a typical new, two-bedroom unit is $550 to $600 per month, excluding utilities.