ND Home Prices Soar With Oil Boom
BISMARCK, N.D. (AP) — North Dakota's oil boom isn't just driving up housing prices at the epicenter. Getting a roof overhead is getting more expensive throughout the state, with the average value of a home sold last year topping $200,000 — up more than 20 percent from 2011, a real estate trade group says.
"Houses have appreciated statewide and inventory is low in the whole state," said Jill Beck, CEO of the North Dakota Association of Realtors. "That comes as a shock to a lot of people."
North Dakota's robust economy, led by its soaring oil production in the western part of the state, has resulted in record-high home prices and skyrocketing rental prices that reflect tight supply and strong demand statewide. Home values have quadrupled in some areas since the state's oil boom began, coming just a decade after North Dakota held the distinction of being the only state in the nation to lose population and was struggling to stay on the map.
As recently as 2007 and when the state's oil bonanza was in its infancy, North Dakota officials funded job fairs across the country attempting to entice people to the state — especially young families — in an effort to boost population.
But it was largely oil and the jobs it created that brought people to the state seeking a new start.
North Dakota now has some 20,000 unfilled jobs, a record population and the lowest unemployment rate in the nation. While wildly appreciating home prices are good news for residents who bought homes pre-boom, many of the people wooed by the state just seven years ago could no longer afford to buy a house in North Dakota, Beck and others say.
"Young families are being priced out of the state," Beck said. "I've heard stories of an entry-level home being listed at night and there were 10 clients lined up in the driveway the next morning to see it."
The average sale price of a home in North Dakota last year was $201,991, up from $168,105 in 2011, according to data from the North Dakota Association of Realtors.
A national study from an apartment renting guide recently found that Williston, in the heart of the state's oil patch, had the highest average rent in the United States, at nearly $2,400 a month for a one-bedroom apartment. Dickinson, which also is in western North Dakota, ranked fourth on the Apartment Guide list at an average of $1,733 a month. Both cities were higher than either New York or Los Angeles.
Jeff Zarling, president of a business development firm based in Williston, said a two-bedroom apartment in the city averaged about $300 a month a few years ago. Housing prices in the city have at least quadrupled in the past few years, he said.
"You're lucky if you can find anything under $300,000," he said. "What this is really causing is people are becoming roommates."
Affordable housing for seniors and low-income North Dakota residents has swelled well beyond the state's oil-producing areas, said Jolene Kline, executive director of the North Dakota Finance Agency.
The state's Housing Incentive Fund, which provides dollar-for-dollar tax breaks for donations to help build affordable housing, will help fund about 650 housing units this year. Kline said the need now is to build about 3,600 units annually.
"We're 3,000 short," she said. "Everybody needs to be very concerned."
While most housing in North Dakota is in short supply, affluent residents have several options in the seven-figure price range. Two properties, one in the eastern part of the state and one in the west, are the priciest — currently listed at $2.8 million each.
The offering in Fargo is a castle-like, six-bedroom, 7,450-square-foot home with an indoor pool and 16-seat movie theater. The home last sold in 2007 for $1.8 million, according to its listing.
In tiny Grassy Butte in western North Dakota, $2.8 million will buy a 2,000-square-foot home, which includes a second rental home, a grazing permit and 2,361 acres. No mineral rights come with the purchase, but the new owners will receive $18,500 annually "from oil company surface damages," its listing says.