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ND housing study examines cost burdens

ND housing study examines cost burdens

File Photo Houses in a newer southeast Minot development add to the city’s housing inventory. The cost of new construction is one of the factors that price homes out of the reach of certain households.

A 2020 housing report shows many North Dakotans face challenges in obtaining affordable housing, often due to tight housing markets and steadily increasing home values.

“More than half of existing homes on the market in North Dakota had a sale price above $300,000 in September, and the cost of construction materials, labor, land and utilities restricts the ability to list a home for less than $250,000, making it difficult for new households, particularly first time buyers, to enter the market,” said Dave Flohr, North Dakota Housing Finance Agency executive director, in a release announcing the results of a new housing study.

The “Current State of Housing in North Dakota” is a study of the affordability of the state’s single and multi-family housing, the impacts of COVID-19 and housing challenges faced by vulnerable populations in 2020. The study is a snapshot of the housing availability and affordability across the state and reflects data gathered from 2018 to 2020 from state, federal, academic and association sources.

The data show housing availability is skewed toward upper-end homes.

The report noted the seven largest housing markets together had 1,674 detached single-family homes, townhomes and condos listed for sale on Realtor.com this past Sept. 1. Of the listed homes, 14 percent were under $199,999; 30 percent were $200,000 to $299,999; and 56 percent were listed for more than $300,000.

In Minot’s market, there were 154 single-family homes listed on Sept. 1, and only 30 were priced below $200,000. That number increases to 47 when townhomes/condos are included. There were 66 total homes between $200,000 and $300,000 and 83 priced over $300,000. Of the 196 single-family or townhomes/condos on the market, 30.6% were priced above $350,000.

Tamie Dunn, president of the Minot Board of Realtors, said the website may not have captured all available homes, but the housing inventory this year has been lower than last year. COVID-19 and fewer military movements likely have been contributors to those lower numbers, she said.

She agrees with the report’s conclusion on the need for more homes in affordable price ranges.

“That’s always been something Minot has needed,” she said.

The extremely low interest rates have increased buying power, though, and homes up to $300,000 are now in the price range of more buyers, Dunn said. That helps make new construction more affordable too.

“I do feel the need for more new construction,” Dunn said, noting some homes have been built recently. “They did sell very well.”

Home values generally increase 3 to 4 percent every year due to inflation and natural population growth, according to the study report. From 2014-2018, homeowners averaged a 22.8 percent increase in their median household value.

“North Dakota is currently ranked first in the nation for homeowners that are housing stable,” the report stated. “However, almost a third of this population faces economic hardships every month. Of the state’s homeowners who have an active home mortgage, 17 percent are considered ‘housing cost burdened.’ Additionally, 10 percent of North Dakotans who own their home outright (i.e., no mortgage) are housing cost burdened, which means they pay more than 30 percent of their income for housing expenses which for them would include utilities, insurance and property taxes.”

Renters have their own struggles.

In North Dakota, the Fair Market Rent as published by the U.S. Department of Housing and Urban Development for a two-bedroom apartment is $841. It is $972 in Ward County. In order to afford $841 in rent and utilities, without paying more than 30% of income on housing, a household must earn $33,647 annually. Assuming a 40-hour work week, a single income earner would need an hourly wage of $16.18 per hour to provide for the household.

“A large segment of North Dakota’s renter population works in accommodations and food services industries, the state’s lowest wage occupations,” said Flohr. “If a household earns minimum wage, they have to work 89 hours per week to rent what is considered to be an affordable apartment.”

The most common reason for eviction is unpaid rent. The housing report notes the number of eviction judgments in North Dakota increased by 15 percent year over year since 2016, according to the study report. Ward County ranked third behind Cass and Williams with 232 evictions between January 2016 and June 2020. Evictions declined beginning in April 2020 due to state and federal moratoriums related to the COVID-19 pandemic.

In response to the pandemic, the state created the Emergency Rent Bridge program. As of September 2020, payments were issued to landlords to assist 539 rental households. The average payment amount was $601.85, with more than $1.1 million disbursed among 17 counties.

The agencies that comprise the North Dakota Continuum of Care reported assisting 1,697 individuals at risk of homelessness or experiencing homelessness from March 21 to Sept. 1, 2020. Of those, 22% reported needing services specifically because of COVID-19 impacts.

The “Current State of Housing in North Dakota” is available online at ndhfa.org by selecting “News and Events” and then “publications.”

Access to Homes

– In 2018, 14% of North Dakota homeowners, or 27,879 households, with and without a mortgage, paid more than 30% of their gross household income for housing expenses.

– 39% of renters spend more than 30 percent of their income on housing expenses.

– In 2018, 30% of all North Dakota housing units were renter-occupied. These 113,486 units housed 37% of the state’s population.

Source: “Current State of Housing in North Dakota,” N.D. Housing Finance Agency

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