The increase in housing prices are hurting ND economy
The housing market in the Fargo/ Moorhead area has skyrocketed in recent years. Community members are struggling to find affordable housing. Houses are on the market for a very short time before they are bought, usually above asking price.
The price of a house in the United States has gone up in recent years. According to Bloomberg, ‘The median selling price for a home in November, $416,000, was nearly 25% more than it was in February 2020.”
This makes it especially hard for first time buyers to find an affordable house because they are not able to benefit from the competitive market at all, while other home buyers are able to use their money from their prior home to secure a new one.
In the United States, rent for apartments has risen 10% in the third quarter of 2021 alone. According to Bloomberg, “The apartment rental site Dwellsy, meanwhile, found the national average rent went up 4.8% in just a single month between December 2021 and January 2022.”
Fargo and North Dakota real estate has varied compared to the rest of the country. Jeremy Jackson is a professor of economics at North Dakota State University. “When the rest of the country saw real estate prices plummet in the mortgage crisis, ND home prices held to their steady, gradual increase,” said Jackson.
This rise in prices of housing is largely due to repercussions from the pandemic. COVID-19 caused many manufacturers to slow the production of products. This has led to an increase in demand paired with a decrease in supply.
“Because of the difficulty builders have faced getting raw inputs and maintaining a workforce, the rate of building new homes slowed during the pandemic,” said Jackson. This also happens at a time when many people are searching for a new, upgraded home. These conditions have led to housing prices in the area, and around the nation, to rise within the past few years.
This increase in the housing market can impact the North Dakota economy, as many people may struggle to move to this area. When looking to move to a new area, people tend to search out affordable housing prices.
“This is one of the problems we encounter when trying to attract the workforce that is needed for regional economic growth,” said Jackson. North Dakota real estate prices are normally attractive to new residents, however this could influence workers from moving to the area.
The increase in housing prices and a decrease in available houses cause people to look elsewhere for a place to move. “This means employers will have to offer increasing salaries and benefits to attract new employees to the region,” said Jackson.
This increase of prices is benefiting some people such as real estate agents in the region. The increase in prices and competitive markets make it easier for real estate agents to sell their houses, which is beneficial since they get paid off commission. This could also be helpful for those trying to downsize, houses are selling fast and for a good price which could benefit those who are moving into an apartment or smaller house.