What is next for the North Dakota Real Estate Market?
As July comes to a close, the rollercoaster ride of the US economy continues. Over the last few years, we have gone through sudden drops due to pandemic shut-downs, sharp inclines with past presidents, and what seems like an endless series of loop-de-loops with rising interest rates and high oil prices. It is enough to make anyone’s head spin, so we hope this brief newsletter can provide you with a little relief from economic vertigo.
One important thing to remember is the distinct difference between the North Dakota economy and that of the whole country. We are fortunate to live in a state that is dedicated to its citizens and understands the importance of economic growth. Our primary industries are critical for daily life: energy, agriculture, social services (healthcare, education, community resources). This provides greater job stability and growth opportunities for workers.
Rig counts have continued to increase. While we haven’t reached pre-pandemic levels, the 2-year improvement is promising. This time in 2020, there were 11 active drill rigs. That went up to 19 in 2021. Currently, there are 44 active rigs as of July 29th.
We can see this reflected in the state’s buying habits. North Dakota has seen increases in taxable sales and purchases for the last four quarters. Brian Kroshus, North Dakota Tax Commissioner, released the numbers in June and is encouraged by the growth the state has had since the decline during the early pandemic.
When compared to the same time period last year, the mining and oil sector increased taxable sales / purchases by 37.1% and the wholesale trade sector increased by 27.5%. Williams County has seen an overall increase by 32.1% across all industries.
However, like many other places; we are experiencing a workforce shortage. Companies are struggling to recruit and retain workers. This bottleneck for our area’s ability to continue to grow has led to action and assistance on the city and state level.
Williston Chamber of Commerce President Anna Nelson outlined the steps they are putting in place to increase workforce volume and development. She notes, “Remember, a strong economy begins with a strong, well-educated workforce; I would also add the word healthy.” To foster this, the Chamber is developing a resource guide with employment and relocation assistance. They acknowledge that it is not only workers we are vying for, but also their families. In order to retain a quality workforce, we need the buy-in from their support systems. So to showcase the beauty and benefits of this community, the Chamber is working on an interactive concierge service to help families integrate into the area.
The City of Williston Department of Economic Development is also taking action to increase workforce volume. They aim to grow K-12 initiatives to involve local youth in training and partnerships with businesses. They are working closely with TrainND to prepare skilled workers for critical industries. The state has dedicated two billion dollars to grow infrastructure and housing over the next 10 years. These efforts are working towards a skilled and sustained workforce.
As the country continues its slide into recession, North Dakota remains a beacon of hope for many. Here, the American Dream is still attainable. People can move here with nothing and through bootstrap determination and hard work, they are able to build a prosperous life.
The average household income in the US is just over $87,000. Estimates for 2022 show the average North Dakota household income as over $105,000. The median personal income in the US is $44,225 and the median personal income in Williston specifically is $85,426.
While we remain confident in the local economic strength, we absolutely acknowledge the significant slowing of the real estate market. Rising interest rates and higher inflationary pressures lead to lower purchasing power. However, despite these factors; families still outgrow homes, businesses need bigger facilities, and purchasing a home is still a better option than renting.
While many news outlets use attention-grabbing headlines that fuel fear and confusion, we can look at history to understand the context of our current situation better. We have enjoyed historically low interest rates for the last ten years. However, despite increased rates over the last six months, they are still significantly lower when compared to historical 30-year fixed rate mortgages (FRM).
So as purchasing power decreases, we learn to adjust our strategy. Each percentage point the interest rate moves, as does the buying power. If interest rates increase by 1%, buying power decreases by 10% and vice versa. By making a larger down payment upfront, considering a shorter lending term (15 instead of 30 year fixed), and/or optimizing individual credit scores; homebuyers can regain purchasing power.
Here at Proven, we have continued to grow and thrive. Our experience has taught us how to navigate the murky waters of a labile market. By utilizing the cloud-based brokerage at eXp, we keep our overhead down while maintaining a large network of resources and referrals for our clients and agents. This has allowed us to continue expanding our Proven family. We recently brought on four support staff, all working remotely. They will take pressure off of our agents and assist with paperwork, digital content, and transaction coordination. Welcome to the team Bobbie, Ronald, Janella, and Adamson! They are each skilled and experienced in real estate and business. Our top-quality service will continue to improve with them on board.
We aim for our agents to have long, sustainable careers in real estate. That translates to them not having to spend endless hours on paperwork when they want to be with loved ones, the ability to take a vacation and know their clients are being taken care of, and access to affordable healthcare for them and their families. We love bringing new and experienced realtors onto our team and working with them to build strong careers.
Recently, we welcomed a new agent out of Watford City to Proven Realty. Welcome Stephanie Ray! Her bio is below and we cannot wait to see the great things she has ahead of her.
If you are interested in buying or selling a home or business; or if you would just like to discuss the current market and determine how to best position yourself for growth and prosperity; reach out to us. We are happy to sit down with you.