Price Inflation Rises in March.

Overall consumer price inflation during March 2000 rose at its highest rate since 1990. This rise caused huge declines in the stock markets. The Index of Leading Economic Indicators fell in February and consumer confidence dropped in March, though many positive signs still exist. One is good earnings reports from many companies. They helped produce a strong increase in the stock market for two days following the recent Black Friday plunge in the stock market. Recently-released multifamily housing market data was mixed. More mixed signals are likely to occur over the next several months if the economic growth moderates as expected.

Rental Housing Market

* A 6.2 percent annual rate of increase in rents was recorded in March. This was the highest monthly rate of increase since the same rate of increase was recorded in July 1996. It is likely 'that the March change was an aberration. The real trend is probably closer to the 3.1 percent rise in rents over the twelve-month period ending in March 2000.

* Absorption rates of new apartment units continued to be relatively strong in the fourth quarter of 1999. Approximately 77 percent of all apartment homes completed in the third quarter of 1999 were rented within three months. A year ago for the same period, it was 74 percent and fewer apartment homes were on the market then.

* Don't read too much into the sharp drop in new apartment contraction starts in March. It probably just represents an adjustment to the high rates of activity in January and February. A 272,000 annual rate of apartment starts was recorded in March. This followed a 460,000 unit rate in February and a 351,000 rate in January.

The Economy

* The final estimate for GDP growth in the fourth quarter was even higher than reported earlier. A 7.3 percent inflation adjusted annual growth occurred in the fourth quarter, versus a preliminary estimate of 6.9 percent annual rate. Investment in business machinery and equipment and consumers led the growth economy.

* Consumer confidence fell in March after a long term upward trend.

Labor Markets 

* No change occurred on the unemployment rate in March. The principal issue to continued job growth is the ability to find workers.

Inflation and Interest Rates

* Inflation jumped at an 8.8 percent annual rate in March. This is the highest rate of change since August 1990, near the onset of the last recession. Higher energy costs continue to work their way through the economy.

* The Federal Reserve Board (FED) tightened monetary policy further on March 21, raising the Federal Funds and Discount Rates by 25 basis points. The financial markets already discounted these increases. Interest rates began to decline slightly after the FED's last move. Part of the drop may be coming from the lack of product. Paying down the Federal debt reduces the supply of government bonds and other debt instruments. There is little doubt that the FED is still hawkish and sees an upside risk for inflation. This means that they will tighten monetary to the point where they see demand in the U.S. economy slow substantially, and the risk of a recession not just a soft landing as we experienced in 1994-95, last time the Fed tightened monetary policy. The economy is much stronger now than it was then.

Apartment Vacancy Rate Rises

The rental apartment vacancy rate, structures with five or more apartment homes, as reported by the U.S. Department of Commerce, of 8.9 percent in the first quarter of 2000 was up from 8.7 percent for the previous two quarters. It was, however, down from the 9.2 percent recorded a year earlier. The 7.9 percent vacancy rate for all multifamily housing communities did not change from the fourth quarter level. It was up from the 7.8 percent reported for the first quarter a year ago.

According to Robert J. Sheehan, consulting economist for the National Apartment Association, the rental apartment housing market remains strong, even though a further decline in the rental apartment vacancy rate did not occur during the first quarter. Lower rental vacancy rates were prevented by the setting of another record in the homeownership. Healthy rent increases and good absorptions of new rental units give is evidence of the strength of the apartment market.

Vacancy rates for all rental units were mixed regionally in the first quarter. They dropped in the Midwest to 8.5 percent from nine percent in the fourth quarter, and to six percent from 6.1 percent in the West. The 10.2 percent rate in the South was unchanged. An increase to 5.6 percent from 5.3 percent occurred in the Northeast.

A record 67.1 percent seasonally adjusted annual homeownership rate was recorded in the first quarter. It was 66.9 percent in the fourth quarter of 1999 and 66.7 percent a year ago.

Stable Markets, Fewer Property Sales Reported in Quarterly Survey

The steady rent increases and high apartment occupancy rates of the past few years remained unchanged during the first three months of 2000, according to the National Multi Housing Council's Quarterly Survey of Apartment Market Conditions. Sixty-two percent of respondents reported that apartment market tightness, as measured by rent increases and vacancy rates in markets they watch, was "about unchanged" from three months earlier.

In contrast to the stability in the markets, nearly half, or 43 percent, report that the volume of property sales continued to decline over the past three months. That decline appears to have moderated somewhat from the last quarter of 1999, however, when 63 percent reported fewer deals.

The tightening of mortgage conditions, noted by 50 percent of the survey participants, may have contributed to the slowing in transactions. But conditions for borrowers appear to have leveled somewhat compared to the prior quarter, when 90 percent of the respondents reported that it was a worse time to borrow. Twenty-six percent of respondents to this quarter's survey said that "now is a better time to borrow," up from two percent in the prior quarter. The price and nonprice terms of equity financing, another factor in sales transactions, remained unchanged from three months ago, according to 61 percent of survey participants. Seventeen percent said equity financing was more available than three months ago, compared to seven percent last quarter.

OSHA Accepts Complaints On-line

Workers can use the Internet to file complaints about safety and health hazards at their workplaces, the Occupational Safety and Health Administration (OSHA) recently announced. OSHA Administrator Charles N. Jeffress says the move was prompted by the growing number of Americans who have Internet access and their willingness to conduct business electronically. According to Jeffress, The Workers' Page will be an on-line resource that gives employees an electronic option for filing formal complaints. Previously, employees had to call or write OSHA when alleging workplace hazards. The Workers' Page is available on OSHA's website at www.osha.gov.

Lost-Work Injuries and Illnesses Decline

According to a recent Bureau of Labor Statistics (BLS) report, slightly more than 1.7 million injuries and illnesses that required recuperation away from work beyond the day of the incident were reported in selected private industry workplaces in 1998. The total number of these cases has declined every year since 1992. Men accounted for two out of three of the 1.7 million cases, a ratio somewhat higher than their 59 percent share of the hours worked by all private wage and salary workers. Workers aged 24 and under accounted for 15 percent of the cases and 14 percent of the total hours worked by all private wage and salary workers. Workers aged 25 to 44 accounted for 56 percent of the cases and 55 percent of the hours worked. Workers aged 45 and older accounted for 27 percent of the cases and 30 percent of the hours worked.

AT&T/TCI Forged Maintenance Agreement

AT&T/TCI was recently found liable in United States District Court on the charge of committing forgery with intent to defraud by forging the signature of Houston, Texas property owner, T. David O'Brien, III. The Cable Television Easement and Maintenance Agreement to which the signature was forged forced O'Brien into allowing AT&T/TCI to continue serving the property, thereby effectively removing his opportunities to negotiate for services with AT&T/TCI's competitors.

The forgery became evident to O'Brien and Larry Kessler of InteliCable in December 1996. This occurred while Kessler was attempting to research and negotiate new cable agreements for O'Brien, with AT&T/TCI's competitors.

On December 5, 1996, during a conversation with Roswell Moore III of the cable company to clarify that it did not have a current agreement binding O'Brien's property, Moore told Kessler that InteliCable's research was incorrect and that the company was in fact holding an agreement signed by O'Brien in 1995. Kessler immediately contacted O'Brien to inform him of the situation. However, O'Brien stated he had never signed an agreement with the company in 1995 or any other time.

To bring resolution to the matter, O'Brien faxed a "signed" request for a copy of the agreement, per the request of Moore. O'Brien did so, using a non-authentic signature. Approximately two hours later, a faxed copy of the agreement was sent by Moore. To O'Brien's astonishment, the document was signed with a signature strikingly similar to the non-authentic signature used in his fax request two hours earlier.

Immediately upon receiving the forged document, O'Brien and Kessler attempted to resolve the situation with Moore and several others, including its chief legal counsel. These attempts were made from December of 1996 through January of 1998.

The jury promptly delivered an award in the amount of more than $4.5 million. Presiding United States District Judge Vanessa D. Gilmore did not reduce the jury's award.

           Homeownership Rates            Renter Share of
                                          Total Households

          1st Quarter                   1st Quarter
Year      Unadjusted      SA(*)         Unadjusted      SA(*)

1980      65.5%           65.5%         34.5%           34.5%
1981      65.6%           65.6%         34.4%           34.4%
1982      64.8%           64.8%         35.2%           35.2%
1983      64.7%           64.7%         35.3%           35.3%
1984      64.6%           64.6%         35.4%           35.4%
1985      64.1%           64.1%         35.9%           35.9%
1986      63.6%           63.7%         36.4%           36.3%
1987      63.8%           63.9%         36.2%           36.1%
1988      63.7%           63.8%         36.3%           36.2%
1989      63.9%           64.0%         36.1%           36.0%
1990      64.0%           64.1%         36.0%           35.9%
1991      63.9%           64.0%         36.1%           36.0%
1992      64.2%           64.1%         35.8%           35.9%
1993      63.7%           63.8%         36.3%           36.2%
1994      63.8%           64.0%         36.2%           36.0%
1995      64.2%           64.4%         35.8%           35.6%
1996      65.1%           65.2%         34.9%           34.8%
1997      65.4%           65.5%         34.6%           34.5%
1998      65.9%           66.0%         34.1%           34.0%
1999      66.7%           66.7%         33.3%           33.3%
2000      67.1%           67.1%         32.9%           32.9%

(*) Seasonally adjusted Source: U.S. Department of Commerce