Tuesday, February 28, 2012

Housing Bubble? Not in Oil-Rich North Dakota

According to quarterly house price indexes from the FHFA, national home prices in the last quarter of 2011 increased slightly from the previous quarter, but ended the year at the same index level as the fourth quarter of 2004, seven years ago.  Compared to the 2007 peak, home prices in 2011 Q4 were 16% lower.

In contrast, home prices in oil-rich North Dakota never peaked, and never crashed, and have been increasing at at annual average rate of 4.55% over the last ten years.  Just one more benefit of domestic energy production in North Dakota  - the state has been completely insulated from the housing bubble and crash, and subsequent wave of foreclosures and depressed prices that have affected most of the rest of the country.    


At 2/28/2012 11:13 PM, Blogger VangelV said...

The same could have been said of Australia in 2010. The housing market never peaked, never crashed, and have been increasing at an annual average rate of 6% since the 1990s. Well, last year the housing market turned and people figured out that housing can fall. I suspect that once the shale gas drilling collapses we will see a peak in real prices even in ND.

At 2/29/2012 12:09 AM, Blogger Benjamin Cole said...

Well, ND has done a good job of preventing housing from being built, outlawing many farmers from putting trailers on their land. If you crimp supply, you can cause shortages and higher prices.

ND also receives twice as much stimulus from federal lard every year that they are getting from the oil/gas. It is a GOP pinko-state.

At 2/29/2012 12:10 AM, Blogger kmg said...

Meh. ND has such a small population that even 50,000 people moving there would distort the whole place, and make housing in short supply.

For this reason, we need the Ohio Shale to also start production soon, and, ideally, the Monterey shale in California.

At 2/29/2012 2:22 AM, Blogger SteveH said...

I think we're talking land value appreciation in certain cities in ND. The majority of the downdraft in housing prices nationally was deflating land values at the margin. You could view the housing bubble as a land value bubble. One way to dampen land value speculation is to require large downpayments 20% or more.

At 2/29/2012 7:35 AM, Blogger Larry G said...

when the oil starts to deplete - the housing bubble will burst.

there are thousands of small towns in the US that used to have a local manufacturing plant - that closed and a plethora of cheap housing is available to those who can live in them without having need for a job.

another area that does not have 'enough' housing is the DC area where thousands and thousands of Federal Workers cannot afford the cost of housing in Northern Va and Southern Maryland and must "drive til they qualify".

that means hundreds of thousands of daily 80-100 mile round-trip commutes... to "affordable" homes.

the bottom line in some respects is that housing is a direct consequence of jobs ..the lack of jobs or the creation of new jobs.

when the jobs go away - you have vacant houses.

At 2/29/2012 8:40 AM, Blogger Jon Murphy said...

This comment has been removed by the author.

At 2/29/2012 8:41 AM, Blogger Jon Murphy said...

Interesting North Dakota housing fact: in the entire state, there are only 5 houses in foreclosure. That's 1 house in 63,500 housing units, by far the lowest ratio in the nation.

Source: http://www.realtytrac.com/trendcenter/

At 2/29/2012 9:05 AM, Blogger Paul said...

"ND also receives twice as much stimulus from federal lard every year that they are getting from the oil/gas. It is a GOP pinko-state."

Morganovich pointed out Benji has the memory of an etch-a-sketch. I've told him repeatedly that North Dakota fielded an all Democrat delegation until 2010, yet he keeps repeating the same nonsense over and over.

At 2/29/2012 12:32 PM, Blogger Breaker Morant said...

Vange>>>I suspect that once the shale gas drilling collapses we will see a peak in real prices even in ND.<<<<

It has never been about Shale Gas drilling in North Dakota. It has always been about Shale Oil Drilling. You simply can not seem to grasp that simple fact.


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