Seattle, Washington The Seattle metropolitan area economy continued to slow during the past 12 months. Nonagricultural wage and salary employment declined by 3 percent, 46,500 jobs, during the 12 months ending in November 2002 compared with a 1-percent loss for the same period in 2001. During the past 2 months the only gains recorded were in health services and the Federal Government. Manufacturing experienced the most notable decline, almost three-quarters of which was attributable to the aircraft and parts industry. Since fall 2001 Boeing has laid off 30,000 employees nationwide, an estimated 20,000 of those in the Puget Sound region. An additional 5,000 jobs will be eliminated at Boeing in 2003 through attrition and layoffs beginning in January, the majority also in the Puget Sound region. The unemployment rate averaged 6.5 percent for 2002 compared with 5.2 percent during 2001. Over the past 5 years the Seattle metropolitan area has gone from one of the strongest growing economies in the Nation to one of the slowest. In 1997 annual employment growth measured over 5 percent. A year later Boeing began a round of layoffs totaling 26,000 jobs in a 2-year period, pulling annual employment growth to just over 2 percent by 2000. Led by strength in the high-technology sector, the Seattle area continued to grow even in the face of Boeing’s layoffs. The national recession, the high-technology sector’s collapse, and, finally, the impact of the September 11 terrorist attacks on Boeing’s business together pulled the Seattle metropolitan economy into its current recession. Because of the strong economy during the latter half of the 1990s population growth measured nearly 400,000 during the 10-year period, almost two-thirds of which was attributable to net migration. Since 2000 annual population growth rates have declined from the 2-percent annual average in the previous decade to 1.4 and 1 percent in 2001 and 2002, respectively, with net migration accounting for less than half of the growth. Even with the slower economic conditions and declining net migration, the sales market has continued to be very active. Existing home sales for 2002, reported by the Northwest Multiple Listing Association, totaled 23,614 in the Seattle metropolitan area (King, Snohomish, and Island Counties), up 3 percent compared with 2001. The median sales price rose 3 percent during 2002 to $253,300. New home sales rose 1 percent in 2002 compared with 2001, and the median sales price rose nearly 10 percent to just under $300,000. The condominium market showed mixed results: Existing sales in the metropolitan area totaled 6,599 units, with King County accounting for 80 percent of all sales. Sales activity in the new condominium market was still depressed from an oversupply of units above $350,000. Sales were down 18 percent overall. Single-family building permit activity increased 18 percent to 10,298 homes in response to healthy sales market conditions. The most active communities were Auburn, Black Diamond, Renton, and areas east of Lake Sammamish. Interested buyers for homes in East King County’s Redmond Ridge Development camped out overnight for a chance to purchase 25 of the homes deemed affordable under county guidelines. The new three-bedroom homes, ranging from 1,400 to 1,600 square feet, were priced between $235,000 and $262,000; to qualify, buyers’ incomes could not exceed $93,480 per year. Rental market conditions in the Seattle area remained competitive during the fourth quarter. The overall rental vacancy rate was an estimated 8 percent, up considerably compared with the 5.5-percent vacancy rate in the fourth quarter a year ago. Closein Seattle neighborhoods that have experienced modest amounts of new construction in the past 3 years, such as Capitol Hill, Eastlake, Ballard, Madison, and Rainier Valley, were all performing better than the market overall. Submarkets that had the most new construction activity—and consequently, have higher rents overall, such as East King County—were recording higher vacancy rates and more competitive conditions. The average monthly rent for a two-bedroom/two-bath unit was estimated at $1,022 in King County and $873 in Snohomish County. In both counties rents were unchanged compared with last year. The pace of multifamily building continued to be moderate due to competitive rental and condominium sales market conditions. The Seattle metropolitan area saw 5,920 multifamily units permitted in 2002, down 19 percent compared with 2001. The commercial space market was extremely competitive over the past 12 months with office vacancy rates in the metropolitan area climbing to 16 percent by the year’s end. Earlier this year Boeing confirmed plans to sell 2 million square feet, or 30 percent, of its surplus properties in the Renton area south of Seattle by the end of 2003. In December Boeing applied for a total rezone of the 279 acres of land the company owns in Renton, including the property where the 737 jetliner plant is located, fueling speculation that the company may have long-term plans to close the plant.

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