they say real estate prices in North Dakota
are going through the roof, they’re not exaggerating. The price of homes in the oil-rich state,
especially in the Bakken
formation region, is not only up 20 percent since 2011, just getting a roof
just over your head is not as easy as it sounds. The average price for a home in the state now
exceeds $200,000. North Dakota
now ranks only second to Texas
in total oil production.
"Houses have appreciated
statewide and inventory is low in the whole state," says Jill Beck, CEO of
the North Dakota Association of Realtors. "That comes as a shock to a lot
Tight supply and strong demand
have also sent the price for rental properties to new record highs. North Dakota
has the lowest unemployment rate in the nation at just 2.6 percent. That’s a full percentage point below second
place Nebraska almost seven
points below last place Rhode Island.
Production in the oil-rich
western part of the state has completely transformed the state’s economy. The Bakken shale deposit has also made
housing unaffordable to many who have lived in the state all their lives.
In fact, in some areas the
average price for a home has as much as quadrupled. A decade ago, before the oil rush, the state
was actually losing population.
Officials in North Dakota
as recently as 2007 were even holding job fairs to try and get people to move
there. Now, it’s all they can do to put
a roof over their heads.
data shows that the state has a glut of as many as 20,000 jobs, an all-time
population high and the lowest jobless rate ever. For those who bought their home seven years
ago, the jump in real estate prices has been a welcome boon. For those looking to buy now, if they are not
enjoying the windfall from the oil boom, they might just find it impossible to
afford a decent home now.
"Young families are being
priced out of the state," says Beck. "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."
average sale price for homes in 2013 was $201,991. Compare that to just $168,105 in 2011. In fact, a new study shows that rental
property in Williston, which sits right in the middle of the oil boom, has the
highest average in the entire United States
at $2400 per month for just a one-bedroom apartment. That’s more than Los Angeles
"You're lucky if you can
find anything under $300,000," says Jeff Zarling, a business developer in
Williston. "What this is really causing is people are becoming
roommates." Affordable housing for
those in need is also setting new record highs.
Jolene Kline, executive director
of the North Dakota Finance Agency, says that the state’s Housing Incentive
Fund, which supports tax-deductible donations to help produce more affordable
housing, will be able to build 650 units this year. Still, that’s not nearly enough.
“We’re 3000 short,” says
was once, not so long ago, a sleepy state where
immigration meant a cold front was on the way.
The Bakken and Three Forks formations changed the state seemingly
overnight. These formations differ than
many because not only are they rich in oil, but natural gas as well. With a small population and little
infrastructure, the area was ripe for a boom.
Many liken it to the Texas
oil boom of the early 20th
2001, the state’s oil production has increased almost 1000 percent. Before the boom, North Dakota
had just 15 oil rigs.
By the end of 2012 that number had jumped to 180.
it was not an already established oil state, there was virtually no supporting
infrastructure. Much of it had to be
built from scratch, unlike in other traditional oil states like Texas
. For North Dakota
, this meant jobs, jobs, and more jobs. Jobs in the oil and gas industry and everything
around it. The boom has now spread to
everything from housing to commercial real estate, restaurants and grocery
stores, everything needed to support the population explosion.
more famous of the two formations, the Bakken
rests on more than 200,000 square miles of rock foundation. Underlying elements stretch into Montana
and as far as Manitoba
. Along with the
Eagle Ford Shale play in Texas
, it has emerged as one of the most important finds in
report by USGS geochemist Leigh Price estimated reserves in the Bakken at
anywhere from 271 to 503 bbo. Beginning
with the Elm Coulee Oil Field in 2000, Price’s estimates were proven true. Price died in 2000 before his research was
though the boom is relatively new, the Bakken
formation has been producing oil since as far back as 1953. That was when the first well was completed in
the region. Nowadays it’s hard to
believe North Dakota
is even the same place it was ten years ago.
even with the soaring price of real estate in North Dakota
, even with all the money pouring into the state, progress
is still having trouble keeping pace. In
Williston, at the heart of the boom, the only department store is still a
"We desperately need some
kind of shopping center or mall here in Williston," says Rev. Jay
Reinke, 20-year resident and pastor of Concordia
"You have to drive hours to find decent shopping."
That may be due to the fact that
this is not the first time North Dakota
has seen this kind of growth. Back in
the 1980s the state saw a similar surge, only to watch it burn out and leave
many investors holding the bag. Debts
piled up in some areas of the state were not paid off until just a few years
ago. This time around, caution may be
the call of the day.
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