North Dakota: “Little Housing Boom on the Prairie”

A booming oil industry in North Dakota has contributed to the state leading the United States in housing growth in 2012:

According to recently released Census data, North Dakota led the nation in housing growth in 2012, increasing its supply of housing by 2.3% in just one year. Overall national growth was 0.3%.

While much of this growth has been focused on the oil patch, the entire state has seen strong economic growth, job creation, and accompanying strength in the housing market. Cities located hours outside the oilfield are reporting shortages of housing and tight markets for existing housing. Shortages of housing have also been reported in small towns throughout the state, as job-seekers move to the region looking to find work in the state’s growing oil and ag industries. A review of the new Census data bears out such reports. North Dakota is home to 8 of the top 100 counties nationwide for housing growth, including 4 of the top 10. Williams and McKenzie County, in the heart of the Bakken development, placed number one and two nationally, respectively, but counties far outside the oil patch also showed strong rates of growth.

The new shift towards more permanent housing construction will probably come as a relief to communities and officials throughout the state, who have been scrambling to find solutions to shortages. While temporary housing for oil workers has boomed throughout the oilfield, local officials have begun to explore limits on such “man camps”, citing their negative effects on local communities, impact on permanent development, strain on infrastructure, and safety concerns. The state has also seen rising rates of homelessness, and faced challenges finding enough workers to fill job openings- often due to lack of places for those interested in moving to the region to work. As estimates of the amount of recoverable oil in the Bakken continue to climb, larger, out of state developers have begun to enter the region, looking to take advantage of what may be a longer, more sustained expansion. With 21,000 job openings currently unfilled statewide and the potential for tens of thousands of wells remaining to be drilled over the next three decades, the pressure for more housing growth to meet the needs of expanding businesses is likely to continue.

It makes sense that housing is following the people and money to North Dakota. But, it is unclear what this means in the bigger picture:

1. Is this housing meant to last, meaning that it is intended to be there 50 years from now when the oil boom may or may not be there? What happens in these communities if these new subdivisions are ghost towns in ten years?

2. Are there any sort of housing innovations in North Dakota? Since this is a unique situation, it seems like a ripe opportunity for some new ideas.

3. Is this housing industry money (real estate, builders, construction jobs) benefiting people in North Dakota or does this involve a lot of out-of-town/state businesses? Growth may often be viewed as solely a good thing but we can also ask who is benefiting from the housing boom.

The best state to live in is North Dakota; will this change anything?

A new set of rankings suggests that North Dakota is the #1 state in which to live. Here are some of the reasons:

Lowest unemployment rate among the 50 states. North Dakota’s 3.8 percent unemployment rate is less than half the national rate.

Statewide GDP growth of 3.9 percent ranked third in the nation in 2009 behind Oklahoma and Wyoming (2010’s figures are not yet available.)

Best job growth last year. A Gallup survey reported that North Dakota businesses had the best ratio of hiring to firing among the 50 states.

Stable housing market. Across the nation, nearly 1 in 4 homeowners with a mortgage are underwater. In North Dakota, just 1 in 14 have negative equity, the fourth lowest negative-equity ratio among all the states. The state also has the third-lowest home foreclosure rate. Affordable homes are a big part of the story here; let’s just say you don’t need to overstretch to own. According to Zillow, the median home price in North Dakota is below $150,000. That’s less than three times the state’s median household income. By comparison, even after sharp post-bubble price declines, the median priced home in California is still about five times median household income.

Low violent crime rate. The incidence of violent crime per 100,000 residents in North Dakota in 2008 (latest available data) was the fourth lowest in the country and nearly 60 percent lower than the national average.

Lowest credit card default rate. According to TransUnion, North Dakotans seem to have a handle on spending within their means.

The article goes on to say that Gallup recently found North Dakota to be the 3rd happiest state in the county.

One way of thinking about this ranking is to address the typical questions about such rankings: how dependent is the ranking on what factors were considered and how they were weighted? This plagues rankings of everything from states to colleges to communities to country’s well-being.

But another way to look at this is to ask whether the ranking will have any impact in the real world. This seems akin to the issue of substantive significance: statistics or data might suggest several variables are related but this doesn’t mean that this relationship or finding makes a big difference in everyday life. If North Dakota really is #1 based on a variety of useful measures, does this mean more people will move to the state? People move for a variety of reasons: jobs, to be by family, for certain climates (warmer weather) or atmospheres (the excitement of creative class cities or more sophisticated places), for education, to escape certain issues (crime, poverty) and benefit from the advantages of certain places (schools, parks, family-friendly, kid-friendly). But would anyone ever move to North Dakota based on this ranking? Will it lead to more businesses taking a second look at locating in North Dakota rather than big cities (or their suburbs) like New York, Chicago, Los Angeles, or elsewhere?

Another possible area of impact are perceptions about the state. Will the state’s status or prestige increase due to this ranking? If the state is seen as successful by other states, they might emulate North Dakota’s policies.

Overall, if North Dakota was #1 for decades, would anything really change?

(A related issue: if people did start moving to North Dakota in large numbers, would the state be able to maintain its top rank on this list?)