The rate of economic growth continued to slow in the Northwest region during the past year. Nonagricultural wage and salary employment increased just 0.4 percent in 2001. Alaska led the region with a 1.7-percent growth rate, followed by Idaho with a 1.3-percent growth rate and Washing-ton at 0.8 percent. During 2001, Oregon employment declined by more than 10,600 jobs, or 0.7 percent, because of lower prices for wood products and agricultural commodities, high energy and fuel prices, and decreased demand for semiconductors and high technology products.

The unemployment rate in the region averaged 5.8 percent for 2001, up from 5.1 percent in 2000. Unemployment rates ranged from 4.9 percent in Idaho to 6 percent in both Alaska and Washington. As of December 2001, Oregon had a 7.5-percent unemployment rate, the highest of any State in the Nation. During the past year, transportation equipment, construction, primary and fabricated metals, and the electronic and electrical equipment industries experienced the greatest job losses in Oregon.

Washington recorded losses in nearly every sector of the economy during the past year. The electronics manufacturing and wood products industries tallied significant declines. In December, the Boeing Company laid off 5,000 workers. An additional 24,000 Boeing workers in the Puget Sound area are expected to be laid off by the end of 2003. Growth in Idaho was slowed by layoffs in high technology and wood products industries and a decline in construction employment. The annual rate of employment growth in Idaho is forecast to fall to 0.5 percent in 2002.

The sales housing markets throughout the region have continued to remain strong despite the slowing regional economy. Existing home sales for the year in Idaho and Oregon were up more than 10 percent. Alaska recorded a 21-percent increase in activity. In Oregon's major metropolitan markets, total sales of new and existing homes in 2001 rose 8 percent compared with 2000. The Portland and Salem areas recorded the strongest increase in sales at 9 percent each. The median sales price for 2001 in the Portland area was $172,300, up 1 percent compared with the median for 2000. The Boise area recorded an 11-percent gain in homes sold in 2001 compared with 2000, while sales in Idaho Falls rose 18 percent and the Burley-Rupert area experienced a 13-percent increase in sales over the year.

Existing sales activity in Washington State was up less than 0.5 percent. During 2001, sales of existing homes and condominiums in the Seattle metropolitan area totaled 41,394 homes, off just 0.3 percent from 2000. Existing sales, including condominiums, increased 9 percent in the Bremerton area and 5 percent in both the Tacoma and Olympia areas. The market for new homes was exceptionally strong. Sales for the year rose 21 percent in the Bremerton market, 18 percent in the Tacoma area, and 7 percent in the Seattle area compared with the past year.

Single-family building permit activity tracked the sales market activity in the region. Permits were issued for 55,631 homes in 2001, a 4-percent in-crease. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma), building permit activity increased 3 percent to 15,396 homes. In the Portland-Vancouver metropolitan area, activity for the year rose 7 percent to 10,639 homes.

Rental market conditions remained strong throughout much of the Northwest during 2001, although some markets have become more competitive. In the Portland-Vancouver area, vacancies have risen to 6 percent, up from 5 percent in the fourth quarter of 2000, due to economic conditions. Eugene-Springfield's rental market remained relatively tight, as was the Central Oregon market in the Bend area. In Idaho, balanced-to-tight market conditions prevailed in the southwest portion of the State while eastern Idaho markets were tight, in the 2- to 3-percent vacancy rate range. Lewiston and the surrounding central Idaho markets were beginning to soften due to high technology layoffs in the area.

In the Puget Sound area, rental vacancy rates increased in 2001, and market conditions became more balanced. Slower growth in demand for new units, together with an increase in homeownership and a large number of new units entering the rental market, resulted in the rate climbing to 7 percent compared with 4 percent as of fourth quarter 2000. In Seattle, conditions in most close-in neighborhoods were tight a year ago with 2- to 3-percent rental vacancy rates, but now have eased as vacancy rates have risen to 5 percent. Developments in high-end submarket areas such as downtown Seattle and the Eastside, which have experienced building booms over the past 2 to 3 years, have begun to record rising vacancies in the past 6 months. Rates are as high as 20 percent in some developments. Some properties have reduced asking rents, and nearly all have begun offering concessions. Market conditions are expected to remain soft in these submarkets for at least the next 12 to 18 months. Rental vacancy rates in the Puget Sound region are expected to be in the 8-percent range by early 2003 or sooner as pipeline units continue to enter the market, creating softer market conditions.

Multifamily building permit activity in the Northwest Region during 2001 totaled 19,373 units, a 3-percent decrease compared with 2000. Activity in the Seattle-Everett area fell 26 percent to 7,320 units. In the Portland area, multifamily activity declined 14 percent to 3,111 units.

Spotlight on Medford-Ashland, Oregon

The Medford-Ashland metropolitan area in southern Oregon along the California border is the State's major retirement area as well as the regional center for trade and medical services in southern Oregon. The city of Ashland is home to Southern Oregon University, which has a current enrollment of more than 5,500 students. The city is also the home of the world-renowned Oregon Shakespearean Festival.

The economy of the Medford-Ashland metropolitan area grew rapidly from 1990 to 2000. Nonagricultural employment growth during the period averaged 3 percent annually. Nonmanufacturing employment grew 41 percent as a result of increases in retail trade and health services. Currently, 1 in 10 nonfarm jobs in the area are in health services. The traditional backbone of the Medford-Ashland area's manufacturing sector, lumber and wood products, recorded a 28-percent decline in employment during the decade, and the rate of growth in nonagricultural employment in the Medford-Ashland area slowed to 1 percent in 2001. Job increases continued to be concentrated in retail trade and health services. Downsizing by high technology electronics firms and the continued contraction in lumber and wood products industry resulted in the loss of more than 1,000 manufacturing jobs in 2001. The unemployment rate rose from an average of 5.4 percent in 2000 to 5.9 percent as of the end of December 2001.

The steady growth in job opportunities during the prior decade and the area's popularity as a retirement destination spurred a population increase in the metropolitan area. The 2000 census reported that the population increased in the decade, to 181,269 persons as of April 2000. This represents an average increase of 2.2 percent per year. Nearly 90 percent of the increase was the result of in-migration. Approximately 60 percent of the population growth occurred in the cities of Medford and Ashland.

Housing sales market conditions in the Medford-Ashland area were generally strong in 2001. New and existing sales totaled 2,357 homes in 2001, up 6 percent from 2000, according to data from the local multiple listing service as compiled by Roy Wright Appraisal Services. The average sales price also rose 6 percent to $171,850 in 2001. Single-family building activity increased, spurred by a steady stream of buyers. Single-family permit activity for 2001 totaled 1,289 units, up 12 percent compared with 2000.

Ashland has been one of Oregon's hottest housing markets. The city has become increasingly popular, having been nominated as one of the Nation's most attractive communities by several publications and recently ranked by the American Association of Retired Persons as the second-best small town in America for retirees. This growing popularity, combined with a very limited supply of land for residential development, has contributed to double-digit increases in sales prices over the past 2 years. Prices increased 20 percent in 2000; for 2001, the average price of a home was $273,100. However, this dramatic rise in prices appears to have tapped out the market. Sales in 2001 came in 22 percent below 2000, and the inventory of homes for sale rose 59 percent.

Strong population growth during the previous decade contributed to a significant 24-percent increase in renter households in the Medford-Ashland area. According to the 2000 census, just under 24,000 renter households were in the metropolitan area in 2000. With growth has come tighter market conditions. The Southern Oregon Rental Owners Association's December 2001 survey reported the apartment vacancy rate was 3.9 percent at year's end. As of the survey date, two-bedroom apartments in the area typically rented for between $525 and $575. Multifamily building permit activity in the metropolitan area totaled 307 units in 2001, an increase of 24 percent compared with 2000 and 12 percent higher than the 5-year annual average.