Employment growth in the Mid-Atlantic region during the 12 months ending in June 1999 continued to vary considerably. Delaware, Maryland, and Virginia recorded relatively strong rates of growth of 3.0, 2.0, and 1.8 percent respectively, while employment gains in the District of Columbia, Pennsylvania, and West Virginia were all 1 percent or less. Employment has increased 2.7 percent in the Washington metropolitan area in the past 12 months. The gains in the Northern Virginia suburbs, at more than 4 percent annually, are the driving force behind the metropolitan area's economic growth.

During the first half of 1999, single-family building permit activity in the Mid-Atlantic region totaled more than 56,700 units, a 10-percent increase over a very strong first half of 1998. All States recorded increases in activity. Virginia led the region with the largest volume, 22,765 homes, and the biggest percentage increase, 17 percent. The State's three biggest markets, Northern Virginia, Richmond-Petersburg, and Tidewater, all recorded substantial increases in activity. In West Virginia single-family permit activity for the first 6 months of 1999 was up 11 percent. However, permits are not a complete picture of the strength of the sales market since manufactured housing units, which represent about 60 percent of West Virginia's new homes activity, are not covered.

Existing home sales in the first half of 1999 in the Mid-Atlantic region recorded some fairly significant increases. The annual rate of sales activity in Maryland and Virginia, as of the second quarter, was up 14 percent and 13 percent, respectively. Resales in Pennsylvania were up 11 percent over 1998 volume for the same period. In the Pittsburgh area, sales in May were up nearly 9 percent over the May 1998 sales volume. Sales of existing homes in the Washington metropolitan area through June totaled approximately 46,000 homes, an 18-percent increase over the first half of 1998 volume. Resales in 1998 were 32 percent greater than in 1997. As a result, the supply of available homes has fallen sharply in many submarkets, and homes in some close-in neighborhoods are typically selling within 30 days or less. Sales of single-family homes in the District of Columbia in the first half of the year were up 11 percent and sales of condominiums and co-ops were up 23 percent.

New home sales in the Washington metropolitan area, for the first 6 months of 1999, totaled more than 17,000. With rapid growth in high-technology employment centers, the Northern Virginia counties of Loudoun, Fairfax, and Prince William continued to lead the Washington metropolitan area in new home sales during the first half of 1999, accounting for 55 percent of the sales in the area. The average sales price for a new home in the Washington metropolitan area during the period was $263,000 and $268,000 in Northern Virginia. In the first-ring suburbs of Fairfax and Montgomery Counties, the average prices were $405,000 and $346,000, respectively. Activity in Loudoun County accounted for slightly less than one-third of all new home sales in the Northern Virginia portion of the metropolitan area.

Demand for new rentals remains strong throughout the Mid-Atlantic region. Pennsylvania, Virginia, and West Virginia all recorded increases of more than 20 percent in multifamily building permit activity for the first 6 months of the year. In the Richmond-Petersburg area multifamily activity during the first half of 1999 is on pace to exceed 1998's volume and, if so, it will be the third straight year of annual construction of 1,000 units or more. In the Pittsburgh area, permit activity for the first 6 months of this year is double that of the 1998 volume for the same period. Pittsburgh's apartment market is currently balanced, with occupancy rates of 95 percent being typical. Occupancy in Class A apartments has recently declined to 93 percent, with the increase in new units on the market.

In the Washington metropolitan area, more than 4,600 new, market-rate apartment units were absorbed during the 12-month period ending March 1999, and it is estimated that up to 17,000 more units could be coming on the market over the next 3 years. Vacancy rates in Class A apartment development are running at 3 percent or less, with rent increases of 5 percent or more in some submarkets.

In the Philadelphia metropolitan area, the apartment market is heating up, particularly for new upscale rentals in the city. The recently completed Locust on the Park development, orig-inally built in 1918 for the National Publishing Company, was fully leased within 1 month of completion. The development contains 152 units of loft-style luxury apartments, with rents of $1,150 for a one-bedroom and $2,100 for a two-bedroom unit. In another big development, Boston Financial has joined forces with Philadelphia developer P&A Associates to build an $80-million luxury apartment tower in the city's Society Hill area at 8th and Walnut Streets. The $80-million, 40-story highrise will include 300 luxury apartments, a restaurant, and retail space. The plan calls for the existing PSFS Building (Philadelphia Savings Fund Society) on the site to be restored, with part of the building converted to a restaurant and the remainder becoming part of the residential development. In addition, the facades of three historic private homes would be maintained and integrated into the apartment building. P&A Associates also applied for a permit to build 200 rental units and ground-floor retail space on both sides of Second Street near Elfreth's Alley in the Society Hill neighborhood.

Spotlight on Baltimore, Maryland

The population of the Baltimore metropolitan area was estimated at 2.5 million persons as of July 1998, an increase of 102,000 (4.3 percent) since the 1990 census. Since 1990 the population of the city of Baltimore declined by 90,500 persons. However, recently the loss rate has been decreasing. In 1998 the loss rate of 1.8 percent was the lowest of the past 5 years. Meanwhile, several of the outer suburban counties continued to record fairly substantial gains. Howard County leads the area with a 26-percent increase between 1990 and 1998, followed by Carroll County with 21 percent, Harford County with 18 percent, and Anne Arundel County with 11 percent.

Employment growth in the Baltimore metropolitan area in 1998 was the highest of the decade, with an increase of 37,000 jobs. After experiencing a severe recession from 1990 through 1992, and the loss of some 59,000 jobs, employment growth averaged just 1 percent annually from 1993 through 1997. Employment levels in 1998 finally exceeded those prior to the recession and have continued to increase through the first half of 1999. Nonagricultural wage and salary employment totaled 1,212,700 persons as of June 1999, a 1.3-percent increase over June 1998. The unemployment rate has fallen to 4.6 percent from 5.7 percent last year. Economic conditions in the city of Baltimore are also improving. The city has recorded increases in employment during each of the past 2 years, increasing by 2.2 percent in the 12-month period ending in June, to more than 410,000.

In recent years the city of Baltimore has increasingly benefited from tourism and medical services. The Inner Harbor has become a major convention and visitor destination for more than 7 million people annually, 80 percent from out of town. Baltimore's redevelopment efforts in the downtown area have now begun to focus on the old retail districts as well as the Inner Harbor. Legislation was passed in April allowing tax breaks for the development of several downtown hotels. A 750-room Wyndham International Hotel is currently under construction, and seven more major hotels are in the planning stages. Several mixed-use residential/commercial projects are currently under construction. NationsBank recently pledged $100 million to revitalize Baltimore's one-time retail center between Howard Street and the University of Maryland's downtown campus, just north of Oriole Park. Four new educational buildings ($108 million) at the campus are slated for completion within the next 12 months. Significant commercial construction in recent years has spurred demand for residential housing in downtown Baltimore. Several new residential conversion projects began construction in 1998, and there are plans to convert a number of the area's older Class B office buildings to residential use.

The sales housing market in the Baltimore area in 1998 increased dramatically, as the improved economy, low interest rates, and high consumer confidence stimulated construction and sales. Existing home sales in 1998 were 28 percent greater than in 1997, and new home sales posted a 14-percent gain. During the first 6 months of 1999, existing home sales were up 14 percent over the 1998 volume for the same period. Sales for 1999 are expected to remain strong but end the year slightly below 1998's volume. The median sales price for an existing home in the metropolitan area in the first half of 1999 was approximately $133,000, up about 5 percent from last year. The city's commitment to improving housing opportunities by revitalizing older neighborhoods and expanding minority homeownership opportunities received a tremendous boost in the second quarter of 1999. Fannie Mae, in partnership with House-Baltimore, announced a $4.2 billion initiative to continue its work in the city and to expand its programs to Baltimore, Anne Arundel, Harford, and Howard Counties. House-Baltimore exceeded its original goal of $750 million by providing more than $815 million in affordable financing to lenders and developers since 1994. It is estimated that more than 14,000 families in the city have been helped by this program and an additional 40,000 families are targeted for the expanded area.

The Baltimore metropolitan area apartment market is balanced, with an overall vacancy rate of less than 5 percent. Extremely tight conditions were reported in high-rent submarkets in Howard County and in Owings Mills in northwest Baltimore County. Owings Mills, a planned community, was designated nearly 20 years ago by Baltimore County as a high-density residential/commercial development and has received substantial public investment to accommodate future planned growth. Between 1991 and 1998, more than 60 percent of the multifamily activity in Baltimore County took place in the Owings Mills area. Approximately 250 apartment units have been built annually, with the Federal Housing Administration (FHA) playing a major role in the financing. Absorption of new units has been especially strong with monthly rents for two-bedroom units ranging from $870 to $1,225. Targeting the young professionals and transferees, amenities include contemporary unit designs, dual master suites, concierge services, attached garages, and cathedral ceilings. Multifamily building permit activity in the Baltimore area totaled 2,980 in 1998, the highest volume since 1990. In the first 5 months of 1999, permits were issued for 1,581 units, an increase of 3 percent compared with the same period in 1998.