North Dakota is seeing a building season for housing that is perhaps unlike any the state has ever seen, and it couldn’t be coming at a better time.
A housing shortage in North Dakota, particularly in the oil fields in the western part of the state, has pushed rents in some parts of the state so high that they’ve made national headlines. According to a blog posting by ApartmentGuide.com, the highest rents in the nation are in Williston, North Dakota, though some question the efficacy of that analysis.
Still, there’s no question that high rents are a problem, particularly for the elderly and the disabled who aren’t in a position to enjoy the state’s nation-leading growth in personal incomes (in six out of the last seven years North Dakota has been home to the largest increase in the nation in per-capita personal incomes according to the Bureau of Labor Statistics).
But the state is quickly catching up. According to data collected by the the St. Louis Fed, housing starts as measured by issued building permits for privately-owned single family homes exploded this spring (housing starts are a widely used metric for measuring a given economic area’s growth).
The latest data is from May of this year, when 818 permits were issued statewide. That’s a new record, and a 57 percent increase over the previous record in August of 2013 when the state saw 519 permits issued.
That’s just one facet of the state’s housing boom. The single-family homes category obviously doesn’t include things like twinhomes, condominiums and apartments. There is no question that those categories of housing are booming as well.
This may be a turning point for the state’s housing situation. While there’s no question that communities have been busy with housing construction, previous years aren’t going to hold a candle to what the state is going to see in this building season.
More housing supply means less upward pressure on prices. Rents on par with what you’d see in Los Angeles or Manhattan aren’t the new normal for North Dakota. They will quickly become unsustainable as new housing comes on line.
That’s a big deal, though we should note that reactionary and parochial attitudes about temporary housing have exacerbated this situation. With booming population growth in small, rural communities there was never any question that the housing markets were going to see a price spike. But that spike could have been tempered by a more welcoming attitude toward temporary housing – the much-maligned “man camps” – than was displayed by many local leaders in the state.
That attitude made things worse, unfortunately, but now it seems the state may be through the worst of it.