OIL PRODUCTION IN NORTH DAKOTA CAUSES INCREASE IN HOME BUILDING & PRICES
Due to advances such as Hydraulic fracturing & horizontal drilling, North Dakota is now only second to Texas in the amount of oil produced.
This has meant a consistent increase in home prices and is now leading to a shortage of housing. Local markets, especially in the western part of the state, are booming due to increased oil production in the Bakken Formation.
And that’s creating a dire need for everything from new housing to commercial development.
It’s not uncommon for some workers who have migrated to the area for employment to sleep in modest accommodations called “crew camps,” or even in cars. For them, the sacrifice is worth it: The average wage in the oil- and gas-extraction industry was $89,020 in 2011, well above the statewide average of $40,914, according to the North Dakota Petroleum Council.
While some are content with their temporary living arrangement, others who head to the Bakken are seeking a new career and life — and a place to live.
Over the last 10 years the number of properties on the market has dwindled and prices are much higher. In 2002, a 1,800-square-foot home in Williston cost in the $80,000 range, he said. Today, a comparable 2,000-square-foot home built in 1978 is listed for $327,000. Rent on a two-bedroom apartment in 2002 would have averaged $340 a month whereas today developers are proposing to charge between $1,755 & $2,700 a month.
There’s also an increased need for services in the area, and some developers are eyeing the opportunities. Many communities are struggling to keep up with growing populations in North Dakota. This is resulting in developers looking to invest in the area to provide essential services too.
In Williston alone it is estimated that there is a pent-up demand for as many as 6,000 housing units. And other areas such as Minot has seen an increase in population from 38,000 to 46,000 over the last 2 ½ years. The average price of a single family residence in this area has risen from $125,000 in 2008 to $246,000 currently.
The town’s housing shortage was compounded by last year’s devastating flood in the area, in which 4,100 homes were lost. About 2,000 homes are scheduled to be built by the end of this year, and apartment and hotel projects are also underway. Of course, not everyone is flocking to the area to invest, the biggest question investors ask is whether this oil boom is here to stay. Plus, environmentalists and others say the new drilling technology can have negative effects on the environment, including effects on an area’s groundwater.
But right now, none of that is changing the fact that there are more than 200 oil rigs operating in the state, and each active rig provides about 120 direct and indirect jobs, according to the North Dakota Petroleum Council.