NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI). The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway. The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health. The three are: employment, house prices and single family housing permit growth.
For the fourth release , 41 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Bismarck, North Dakota metropolitan statistical area (MSA).
The health of the Bismarck housing market is in part due to its position as a large and rapidly growing regional healthcare center, its excellent infrastructure and its role as the state capital. These factors have made Bismarck a popular destination for retirees from other parts of North Dakota as well as for many other individuals. Of late, however, local growth is primarily due to the recent discovery of the Bakken shale and the even larger and more recently discovered Three Forks-Sanish formation. While they are both about 100 miles away, their effects are being felt in many ways. According to home builder Chad Moldenhauer, the President of K & L Homes, “oil and gas service companies are setting up shop here as are pipeline and oil drilling firms, and the oil refineries are booming.” He went on to say that “oil industry executives and senior managers are now moving their families here and with growth at both Medcenter One and St. Alexius, there is an increase in the number of high income households who not only want nice housing but often want new houses.” As a result, education levels are rising in the area.
Comparing educational and industry data from the 2000 Census to the 2009 American Community Survey confirms these impacts. Today there are 3,012 (or 17%) more management jobs than in 2000 and 816 (or 25%) more professional jobs. Reinforcing these findings, the number of people with a high school diploma increased from 15,837 to 18,239 and individuals with some college rose from 14,129 to 14,806. The number of people with an associate degree jumped from 6,886 to 8,958, those with a B.A. jumped from 11,814 to 15,344 and the number of those with a professional degree increased from 3,808 to 4,705. Emblematic of the changing workforce dynamics, employment in the finance, insurance and real estate industry grew by 31% followed closely by employment in professional services which increased by 25%.
According to Eddy Mitzel, President of Mitzel Homes and the North Dakota Association of Builders, “our very low unemployment rate, the construction of several coal fired gasification plants, the new wind farm, increasing immigration from western North Dakota, the new cancer care center and the oil boom have allowed us to totally skirt the recession.“ As a result, house prices have performed well over the past few years. Prices are up 7.9% since the trough in February 2010 and have now surpassed the previous high set in July 2011.
Improving economic conditions has resulted in payroll employment higher than ever with 64,800 employed persons, breaking the previous high of 64,500 set in October 2011 and up by 7.1% since the trough in December 2007. Single family permitting activity is up a robust 10.7% on a seasonally adjusted monthly average basis from the trough set in March 2009. While new homes are being built in many parts of the Bismarck MSA, activity has been primarily centered in the northwest part of the City of Bismarck and the southwest part of the City of Mandan.