North Dakota housing market holds strong, for now
In the face of national uncertainty, North Dakotans are still buying homes
BISMARCK — North Dakota's housing market appears to be holding firm amid the economic uncertainty of the COVID-19 pandemic.
Real estate brokers across the state are enumerating their recent triumphs as other sectors of the state economy limp out of the sudden recession.
In Fargo, Scott Breidenbach, chair of the North Dakota Real Estate Commission and a broker with Beyond Realty, said his firm can “count on one hand” the number of transactions that have fallen through due to the pandemic.
A home in a northwest neighborhood of Bismarck was listed at nearly $900,000 on a Tuesday and off the market the very next day. “It’s been busy,” Darren Schmidt, a Bismarck broker, said of the situation in the state capital.
And farther west, where pandemic-induced layoffs in the oil industry have taken their steepest toll, houses in the more affordable sub-$300,000 range have rolled off the market like clockwork.
“If it’s a good house, good bones, decent location and actually priced properly,” said Kassie Gorder, a Realtor with Basin Brokers in Williston, “we’re seeing these houses have multiple offers and sold in less than a week.”
As Jill Beck, the CEO of the North Dakota Association of Realtors, summed up the situation, "Markets are hot and Realtors are very busy."
More good news still: the market seems to be moving for lower-income buyers as much as the more affluent North Dakotans.
“Our business is really on par with last year,” said Dave Flohr, the director of the North Dakota Finance Agency, a state agency that finances loans for low- and middle-income North Dakotans. “Now is probably as good a time as it has been in recent years to buy a home ... for any income level.”
Given the marked volatility of the markets in other parts of the country, some brokers expressed surprise at North Dakota’s stability. A few factors have buoyed the state’s markets so far.
Springtime tends to prompt a flurry of real estate activity in any market, an industry wisdom that may be especially true in a state where buyers have to seize warm weather to make big moves. Prolonged consignment to cramped homes during the pandemic may also have prompted many families to seek out roomier, more hospitable accommodations. And, most significantly, radical intervention by the Federal Reserve has held interest rates near rock-bottom, making for some of the most favorable homebuying conditions in years.
“We’re seeing pent-up demand and people still wanting to buy houses,” said Nick Olson, president of the Fargo-Moorhead Area Association of Realtors. “The interest rates are less than 4%, and, you know, it’s almost free money.”
Compared to other states, North Dakota has benefited from relatively lax pandemic precautions. While some states put tight constraints on home shopping to slow virus transmission — for more than a month buyers in Michigan closed on new houses sight unseen — homebuying in North Dakota has proceeded with little interruption.
North Dakota real estate agents were encouraged not to hold open houses and some voluntarily opted to provide virtual tours. Otherwise, not much changed.
Historically, North Dakota’s housing market has weathered times of extreme uncertainty with remarkable calm.
Even as housing markets crashed across the country during the 2008 mortgage crisis, North Dakota saw one of the smallest housing price drops in the country. In regions with bigger, more transient hubs, housing markets can tend to fall hard and rebound aggressively, but North Dakota has rarely experienced this kind of volatility.
“We don’t see the big swings like they do. We’re a pretty steady investment here,” Olson said.
And while layoffs and furloughs have swept North Dakota during the pandemic, the state has been spared the worst of the unemployment crisis. According to Federal Reserve data, North Dakota unemployment shot up to more than 9% statewide in April, up from 2% on the cusp of the pandemic, a massive jump that nonetheless comes in well below the national average of 14.7%.
But even though the ship is upright for now, some experts caution that housing markets can be slow to react to economic instability. “My gut feeling is that the negative effect is happening right now; we just don’t have the data yet,” said Prodosh Simlai, a professor of economics at the University of North Dakota who specializes in financial markets and real estate.
Steady selling prices have lent confidence to brokers, but a dip in the total number of transactions could have broad effects on the state economy.
According to data from the North Dakota Association of Realtors, new listings in the Fargo-Moorhead area, the state’s largest market, are down by more than 300 listings this year compared to 2019.
Simlai argues that small, local losses like these add up, since every home purchase comes with its own long list of “spill-over effects”: one transaction brings new customers to moving companies, furniture outlets, interior designers, renovation contractors and other adjacent businesses.
If the pandemic continues through the summer and fall and unemployment remains high in North Dakota, the diminished real estate transaction numbers could eventually catch up to the economy.
"It will be like a snowball effect” for the state economy, Simlai said, but he assured that even if things take a turn for the worse, the markets will eventually stabilize.
“If there is one lesson that we learned from our 2007 and ‘08 Great Recession, and that’s the very positive news, it’s that we actually went back,” Simlai said. “I’m confident that the housing market will go back to its pre-COVID-19 level; I’m just not confident when it will happen.”
Adam Willis, a Report For America corps member, can be reached at email@example.com.