BISMARCK, ND – January 5, 2009 – (RealEstateRama) – The North Dakota Housing Finance Agency (NDHFA) has released a report that shows a rapidly growing housing affordability gap in North Dakota.
“ North Dakota has experienced some phenomenal economic growth in recent years,” said Mike Anderson, NDHFA executive director. “Unfortunately, this expansion has stressed our housing market, particularly in western North Dakota , pushing housing out of reach for many families.”
Median home values in the state increased at a rate of 20.5 percent from 2005 to 2007, while median household income grew only 6.6 percent. That disparity is contrasted with a relatively uniform increase of approximately 19 percent for both numbers from 2000 to 2005.
The greatest jump was found in the Williston area where the average house sold for $72,000 in 2005 and more than $110,000 in 2007. The communities of Dickinson and Bismarck-Mandan also saw substantial price increases. Moderate growth was found in the remaining areas of the state.
“While North Dakota is considered one of the more affordable markets in the country, few households with a single-wage earner can manage homeownership,” said Anderson . “A second-wage earner is typically required to make mortgage payments.”
The average home in North Dakota sold for $142,000 in 2007, while the average employee earned less than $34,000. Only employees in four industries – Mining, Management, Finance and Insurance, and Wholesale Trade – were able to afford, on their own, the respective monthly mortgage payment of $1067. The average employee in every industry could pay the rent on a two-bedroom apartment with the exception of those working in Accommodations and Food Service.
“While the report shows that most working North Dakotans have an income that allows them the ability to be able to rent, it is increasing difficult for lower-income households to find something affordable particularly in urban and energy-impacted areas,” said Anderson .
Statewide, an hourly wage of $9.75 is needed to make a $507 per month rent payment on a two-bedroom apartment. Low-wage earners such as cashiers, childcare workers and retail salespeople are typically forced to pay more than 30 percent of their monthly income for housing. A social security beneficiary without any other sources of income may pay out half of their monthly income for rent.
The report uses the Fair Market Rent (FMR) published by the US Department of Housing and Urban Development to represent current rent levels. While FMRs provided the best available data, much higher rents are being reported in the state’s growing communities.
The NDHFA conducted the report with the support of the Grand Forks Office of Urban Development and the Grand Forks Housing Authority, the ND Association of Builders, ND Association of Realtors, ND Department of Commerce, ND Rural Development Council and Center for Technology and Business, and the USDA Rural Development – ND State Office.
By presenting this information, the sponsors of the report seek to increase awareness of the housing situation in North Dakota and allow all interested parties to better address the critical issue of affordable housing in the state. The NDHFA plans to continue monitoring the state’s housing market.
The full report can be found on the NDHFA website. Questions should be directed to Mike Anderson at (701) 328-8080, (800) 292-8621, (800) 366-6888 (TTY), or info (at) ndhfa (dot) org.
