After sustaining massive river flooding, the North Dakota housing market is entering a new phase and is beginning to take an about face from its comfort zone. Increasing job losses in the energy business, including natural gas and oil will weaken North Dakota housing markets sending them into the deflationary cycles the rest of the country is suffering through.
North Dakota had been one of the last hold-outs from the national financial crisis. But weakening demand and commodity price weakness along with higher operating costs are producing a struggling energy market.
Natural gas and oil operators are rapidly idling drilling rigs with the lower demand. The majority of U.S. companies produce more natural gas than crude and that will have a major impact on housing prices in North Dakota as those employed by the industry flee to other parts. Moving trucks are already at a premium to rent in Williston, home of one of the state's oil fields.
The economy had been unusually strong in North Dakota, buffered by natural energy. Slower home sales in Bismarck will have a growing impact through the remainder of the year, despite the fact that more local banks are making mortgages in the area than many other places in the country. Bismarck homes are forecast by Housing Predictor to deflate 5.6% in 2009.
 |
| City |
Forecast |
| Bismarck |
− 5.6% |
| Grand Forks |
− 4.7% |
| Fargo |
− 4.5% |
| Minot |
− 2.7% |
After the Red River over-ran its banks homeowners are writing letters to the City of Fargo asking the city to consider buying their homes, and city engineers are compiling a list of homes to consider. Homes damaged by flooding have the highest probability.
Fargo is likely to experience a micro-market boom following the disaster followed by deflation in its housing market as a result of the locally weakening economy. Fargo is now forecast to average housing deflation of 4.5% in 2009. But there are plenty of jobs that are available and that should draw more newcomers, many of whom in turn become homeowners.
The Grand Forks housing market is also beginning to lose its stabilization as a result of the state's weakening economy. More homes are for sale in Grand Forks these days making it a buyer's marketplace. But Grand Forks market is strengthened by a ready crop of new buyers from its Air Force base, which has suffered few foreclosures as a result of the credit crunch. Grand Forks should see less deflation as a result at least in 2009, forecast to be just 4.7% for the year.
Little Minot is often mentioned on local weathercasts for being the coldest place in the nation during winter months. It too has a military base and many military members who serve our country there live off base. Sales of homes are slowing in Minot, but you'd hardly notice since it's never been a booming marketplace, which is forecast to deflate the least of any place Housing Predictor forecasts in North Dakota in 2009 at just 2.7%.
