By Mike Colpitts
In places where jobs are more plentiful and workers are in demand local economies are doing much better than the majority of the U.S. and many housing markets are beginning to even see home prices rise.
North Dakota, which now produces the fourth largest amount of oil in the country, Alaska and some Texas markets are witnessing home prices rising. The move towards higher housing values isn’t an anomaly in these tough economic times, but demonstrates how housing markets are truly local in nature. Isolated Texas markets like Abilene and Amarillo in the oil rich panhandle and El Paso are seeing price gains.
Driven by an oil boom, Texas housing markets in some regions of the state are beginning to take off on a rebound of their own. The transition has been expected for a while in Texas, home to the nation’s largest oil finds that are currently being drilled. However, housing inventory has been in shorter supply in El Paso, which is seeing demand out pace supply due to a military base realignment program.
States with the lowest unemployment levels are doing the best in terms of home prices. North Dakota unemployment averages 3.3%, followed by Nebraska, South Dakota, 4.9% and Vermont, 5.3%. Washington, D.C. is another market that is experiencing home price gains with higher demand for housing as a result of more government jobs.
The U.S. economy has lost 7 million jobs in the last few years, most of which will be permanently lost as a result of corporate cut-backs, automation and out sourcing. Job reductions are likely to translate to lower home prices in many regions of the country for decades. But in less populated states, where workers are in demand like North Dakota, South Dakota, places in Texas and Alaska prices are likely to experience long term increases.
Industrial employment in North Dakota increased 3.2% in the last year, according to the North Dakota Manufacturers Register, an industrial directory published annually by Manufacturers News, Inc. North Dakota gained 1,148 industrial jobs from April 2010 through this last April. The figure doesn’t seem like it is very significant until you realize that the state is one of the few to post employment gains since 2008.
“The recovery is gaining momentum in North Dakota and across the U.S., ” said Tom Dubin, president of the Evanston, Illinois based publishing company, which has been surveying industry since 1912. “North Dakota’s manufacturing has rebounded due to its stronghold in agricultural products, its favorable business climate, and investments in green technologies.”
Other sectors that gained jobs included oil and gas extraction up 22% in the state, stone and glass higher by 6% and fabricated metals up 4.5%.