It may seem like an unlikely candidate for a boom, but in the western out-posts of North Dakota an oil boom is taking place that has led to a major housing shortage and it’s driving the local economy. Thanks to a lack of major national lenders, little subprime financing and Alt-A mortgages North Dakota missed most of the national housing boom.
But now North Dakota ranks fourth in oil production among all U.S. states and will soon under go its own housing boom. Discovered in the out-skirts on the western fringe of the state, the Bakken oil find is one of the largest oil discoveries ever assessed by the U.S. Geological survey.
Employees working the oil fields travel long distances to work since housing is all but impossible to find in nearby towns like Williston. The community has a desperate need for new home construction and already has plans for a new major apartment complex.
In Stanley, which had a population of just 1,300 until new laborers started arriving to work in the oil fields, the population is bursting. In Williston and a number of other small western communities studies are going on to determine how much new housing is needed. Hundreds of workers are stuck living in temporary quarters in motels, hotels and trailers just to get by in the mean time.
That’s not to say the financial crisis has not had some impact on the state. Businesses laid-off workers, slowing home sales amid growing concerns over the recession, but small job cuts has led to one of the lowest unemployment rates in the country, hovering in the 3 to 4% range statewide.
In Bismarck, new home construction has helped to lead the city out of any sort of a slowdown as new residential building permits climb. The federal tax credit prompted new home builders to boost sales in the area, and the New Year is promising to be even more rewarding. Bismarck is forecast to see average housing prices increase in the amount of 3.1% in 2011.
Fargo has grown to be larger than the state capital of Bismarck, including its twin city Moorhead, Minnesota and is approaching nearly 200,000 in population. Homes along the Red River, inundated by flooding two years ago, have been repaired or demolished in Fargo and newcomers have been attracted to the area. Fargo has been adding new workers for two straight years to enjoy a growing economy.
North Dakota State University is one of the area’s largest employers, along with big employers in health care, food processing, insurance and banking. Fargo home prices are forecast to appreciate 3.3% in 2011 as the area experiences tightness in the market.
Grand Forks is strengthened by its military base, which employs 2,500 civilians, while manufacturing industries play a key role in the areas economy. Prices for homes didn’t move much in the last year and shouldn’t have that much of an impact in 2011 on the local economy with a forecast appreciation level of only 2.4%.
In Minot, 125-miles away from the booming oil fields little is expected to change in 2011, except perhaps a few new homes due to the thriving regional economy. U.S. Department of Agriculture Rural Development mortgages should help increase home sales and inject more money into the local economy, allowing home prices to gradually increase a forecast 2.1% for the year.