Like other parts of the South and Midwest, energy and agriculture prices are impacting the 2015 Housing Market in North Dakota. North Dakota is the second highest crude oil producer in the nation, and the slumping oil prices will most likely have some effect on the North Dakota real estate. But while some would view this problem as impending doom and gloom, realtors in the state still see growth. Even though the population dropped from this time last year realtors point out that there is still oil in the ground, and that temporary oilfield worker employees are becoming permanent residents. They are beginning to buy real estate and settle down.
The other factor that is determining the landscape of the North Dakota real estate market is the state’s agriculture. Grain farmers are yielding high counts of protein, but currently the price of wheat is lower than state farmers would like. Because of this some are stocking up on their crops in hopes that prices will soon increase. Both of the state’s key industries are currently seeing dips in terms of capital. This will impact the economy but considering the high inflation of the past few years others see it as the market balancing itself out.
Just two years ago the demand in the North Dakota real estate market had outpaced the supply resulting in rent and land prices increasing exponentially. Viewing rental websites and the online classified website Craigslist North Dakota had areas in the state that were seeing rental prices at more than $2,500 a month. The real estate in North Dakota was too hot for many would-be financiers as the lack of inventory was driving up land prices and raising concerns about a bubble. But since that time, prices once on par with New York City have dropped significantly. From January to March of this year, rental prices dropped by as much as 20% in the oil hub cities.
As oil prices drop, the demand in housing has also seen a decrease, as energy producers have had to make cuts in capital spending. But there are still approximately 2,000 energy related jobs available in the state. This means that while there is still a demand for housing as these positions get filled the shortage in inventory is nothing like it was just a few years ago. New developers are beginning to lease out new housing units, and tenants are able to negotiate lower rental prices. “You’re starting to see prices fall this year as more units come online,” says Terry Metzler of Granite Peak Development. Her company currently has 480 apartments and homes under construction, and in July of this year an Exxon Mobil Corp subsidiary donated $5 million to a North Dakota housing fund that subsidizes construction in certain areas of the state.
Similar projects are still moving forward despite recent layoffs by Halliburton and other energy companies. This may cool off economic growth slightly but property managers maintain that they are having no problem filling open vacancies, especially amidst falling prices. In fact recent data shows that individual properties are nearly 90% full. And community leaders are actually excited about the recent price drop in rentals. “You can’t build a vibrant community with services, quality of life and families when you have some of the highest rents and costs in the nation,” says Shawn Wenko, Williston’s director of economic development. And it looks like people are starting to find permanent residence in North Dakota real estate market. Says Terry Metzler, “We still, even with all we’re building, don’t have enough housing in this region.”
Influencing Factors for the 2015 North Dakota Real Estate Market
- The average home price in North Dakota is $195,900. The average Sold price is $194,069.
- Home appreciation is up 11.3% in the last year.
- There are currently 5,500 homes for sale. Homes spend an average of 66 days on Zillow.
- North Dakota has a median household income of $54,792, slightly higher than the national average.
- The state’s unemployment rate is 2.6%, still well below the national average of 6.3%.
- Residents and investors will continue to keep an eye on the energy and agriculture sectors in the state. While the results of the fall in prices have certainly been felt as of now the market is balancing out. Further drops in industry prices will surely began to show increasing concerns for the economy.
Best Places to Live in North Dakota
Fargo ND real estate is one of the healthiest markets in the region. According to Zillow Fargo ND has a home value median of $185,300 and this value has increased 9% in the last year. Predictions have this number rising by another 2.6% in the next 12 months. More good news is that the percent of delinquent mortgages is 1%, far lower than the national average of 6%, and Fargo boasts a household income that is $7,000 higher than the state average. There are more homes to buy in Fargo than there are in other parts of the state. When looking on Trulia Fargo ND has 300 listings currently available. Fargo’s local economy is strong, and the job sector is the driving force. Recent data shows a recent job growth rate of 3.8%. Over the last few years Fargo has prioritized development of its downtown area and it is beginning to pay off. Coupled with affordability the city of Fargo is beginning to draw a large number of millennials, but the cost of living is also a draw to retirees. Recently, Forbes ranked Fargo in its “25 Best Places to Retire in 2015” list.
Second to Fargo in terms of availability is the capital of North Dakota, Bismarck. Bismarck ND real estate has always been a fairly healthy market, even before the recent oil boom. Trulia has Bismarck real estate listings numbered just under 300. The home value index has the housing market in the region as being more on the high end at $261,500, and incredibly this value is up 6.9% in the past year. Forecasts have this rising another 2.8% in the upcoming year. Bismarck not only offers the culture and arts one would expect with being a capital city but it also has an impressive parks system. The city’s parks and recreation district stretches out over 2,300 acres of real estate.
Grand Forks ND real estate has a home value index of $172,700, a 2.4% increase from this time a year ago. And with only 99 houses listed currently for sale it is also a desirable market. This is a stark contrast from just a few years ago when local housing was almost nonexistent. Homes were being sold within hours on the market and the rental vacancy rate was as low as 2.29%. But since there are more housing options as new units have been built, and nearly 800 multi-family housing units are currently under construction. The city is a bit of a cultural hub as it houses the Grand Forks International Airport, Grand Forks Air Force Base, and the University of North Dakota. Along with arts and culture, Grand Forks also has a respectable parks and recreation scene as well. Not only does it have the Arnold Palmer designed King’s Walk Golf Course but it also has the Andrew Hampsten Bikeway System- a contiguous biketrail system that stretches for over 43 miles.
Some of the more expensive land in the region is Minot ND real estate. Minot has a home value of $218,900. But if you can afford it, it is a good time to buy in Minot. Home appreciation is up 11.3% in the last 12 months. Located close to the Canadian border Minot is a trading center of the state. Minot has a vibrant art scene and continues to be a sought after market in the state. It also has a youthful population, as the median age in the city is 33 years old. Young people seek out Minot to both live and work.
It is most evident in the Williston ND real estate market that the housing market is in good shape. Last year Williston issued building permits for 1,290 apartments, 10 times the rate that was seen the previous year. And while it is not at the same clip, Williston is again seeing an increase in building permits this year. As further evidence Stropiq LLC, a major developer, is currently seeking board approval for a half million-dollar development just outside the city that will include both residential and commercial space.
The oil industry drives Williston’s economy and the city has seen a large increase in population and developments with the expansion of drilling. If the falling oil prices has anyone concerned about home values dropping Williston is the best example of why the North Dakota real estate market seems to be holding its own.