Ask A Researcher

November 2022

Lower-income households and baby boomers, main drivers for North Dakota housing needs in the near term

Dr. Nancy Hodur is the director of the Center for Social Research at North Dakota State University and has over 25 years of professional experience in applied research, public policy, and outreach education. Nancy's primary research areas include socio-economic impact assessment, community and economic development, and natural resource management.
Karen Olson is a research specialist for the Center for Social Research at NDSU. Her efforts involve a wide range of topics including migration, characteristics of the aging population, community efforts to reduce poverty, housing needs, and the health and well-being of children and families.


A decade ago, North Dakota’s housing needs were driven by a rapidly growing population – due largely to the expanding oil and gas industry. The 2022 North Dakota Statewide Housing Needs Assessment conducted by North Dakota State University’s (NDSU) Center for Social Research in partnership with and on behalf of the North Dakota Housing Finance Agency (NDHFA) finds that the state’s focus needs to shift from building as fast as possible to addressing the age of its housing stock, limited housing options, and affordability barriers.

These conclusions were reached after conducting a comprehensive analysis of North Dakota’s demographic and economic conditions that affect housing dynamics, existing housing characteristics, and affordability issues. Projections of population, housing needs, and housing inventory through 2025 were generated to provide insights into future housing requirements in the state. The main trends and conditions that contributed to the housing needs assessment are presented below.

Population - Baby boomers will continue to fuel the need for housing suited to meet the needs of an aging population

North Dakota has experienced substantial population growth over the past 10 years, resulting in a reversal of decades’ long trends in population and key socio-economic indicators. Moderate population growth is projected over the next few years, increasing by 1.3% from 779,094 in 2020 to 789,074 in 2025. Population growth since 2010 has been driven by strong in-migration as a result of employment opportunities in the state — which has also contributed to a substantial increase in the prime childbearing age cohort and more births. This recent change has resulted in the state’s population becoming younger and more racially diverse over the past decade. While the state overall has become younger, the baby boom generation is getting older. The oldest baby boomers are now 76 years old, and younger boomers will continue aging into the 65 and older cohort until 2029. While population trends have currently stabilized, the continued aging of baby boomers will be a significant demographic driver which will continue to fuel the need for housing suited to meet the needs of an aging population.

Economy – North Dakota’s strong, diversified economy has not translated into improved financial conditions across all income ranges

Despite a recent decline in oil and gas development activities, thousands of jobs have been added over the past decade and the state’s economy is considerably stronger than it was just a few years ago. Economic growth is especially strong in the state’s largest urban areas where economies are more diversified. However, growth and strong economic conditions vary regionally. Some rural areas continue to experience population declines, although at rates lower than in the past. Other rural counties remained stable or experienced modest population growth. Economic growth is likely to continue to increase population statewide, albeit at more modest rates.

Higher wages and salaries have resulted in higher household and family incomes across the state. Despite the rise in incomes, there has been little overall change in the percentage of households earning from $50,000 to $99,999 in North Dakota. While there has been an increase in the percentage of households that earn $125,000 or more, the majority of all North Dakota households earn less than $75,000 annually (57%); 38% earn less than $50,000. Further, despite rapid growth in incomes across North Dakota during the past decade, there was little change in the state’s official poverty rate. The poverty rate continues to be significantly higher for non-white populations in the state – populations which are also the fastest growing statewide. In addition, nearly 5,000 people have received services for homelessness each year from 2019 to 2021. Of individuals receiving services for homelessness in 2021, about 43% were ages 25 to 44 – the largest percentage of any age group served; children composed 19% of those receiving services for homelessness. Another important trend is an increase in the number of individuals receiving homeless services who are also struggling with other conditions, disorders, or disabilities. In particular, mental health disorders are becoming more frequent, increasing 46% over the past five years among individuals receiving services for homelessness in North Dakota.

Household Characteristics and Affordability - A steady increase in home prices, monthly housing costs, and lack of available housing inventory is likely contributing to the decline in homeownership

In 2020, most occupied housing in the state was owner occupied; however, homeownership rates have declined across all income categories since 2010, with the sharpest declines for households earning from $50,000 to $74,999. While most households with moderate- and upper-level incomes can afford most of the state’s inventory of housing, only 42%, or just over 83,000 of the state’s inventory of owner-occupied housing was affordable for lower-income households (earning less than $52,140 annually). For further context, there are approximately 66,525 lower-income households in North Dakota that rent. While not all renters may want to buy a home, even if 10% (6,653 households) of lower-income renters wanted to purchase a home, only 3,179 home sales listed through the Multiple Listing Services of North Dakota (MLS) in 2020 would have been affordable for these householders. While not all homes are listed and sold through the state’s MLS, clearly there is a lack of affordable housing units in the state and even fewer that are on the market and available for purchase.

In addition to limited availability of affordable housing on the market, the overall costs for housing are increasing substantially in the state. The median monthly housing costs for homeowners with a mortgage (including mortgage, insurance, and utilities) rose 27% since 2010, from $1,146 to $1,457 in 2020. In addition, even with a significant increase in household income, 41% over the past decade, the average price for home sales in North Dakota rose faster, by 51% from $163,144 in 2010 to $246,786 in 2020. In 2021, sales prices increased another 8% to $267,404. Combined, the steady increase in home prices, monthly housing costs, and lack of available housing inventory is likely the contributing cause for the decline in homeownership.

Homeownership affordability is also impacted by mortgage interest rates. In early May 2022, mortgage rates rose above 5%, the highest level since 2009 according to Freddie Mac’s Primary Mortgage Market Survey. The Federal Reserve continues to adjust the federal interest rate in an attempt to address rising inflation. At the time of this study’s release, interest rates for a 30-year fixed mortgage hovered around 6%. Assumptions on affordable purchases prices in this study assumed a 5% interest rate and non-housing debt of 10% of income. Should interest rates continue to rise, and should households have other debt such as car and/or credit card payments that exceed 10% of their income, the amount that families can afford to spend on a home is reduced substantially.

As homeownership rates declined over the past decade, rental occupancy increased in the state. Households that rent face rising costs as well. Gross rent in North Dakota grew by 49% during the past decade – twice the rate of inflation - from a median of $555 per month in 2010 to $828 in 2020. In 2020, North Dakota households that spent more one-third their household income toward housing costs (which is considered a threshold for housing affordability) was 23%, slightly more than one in five households. Housing costs are substantially more of a burden for renters than homeowners. In 2020, 39% of renters in the state were burdened by housing costs, compared to 14% of homeowners. While a majority of North Dakotans who rent can afford housing, lower-income households and seniors are especially strained by recent trends.

While there are various rent and income-restricted multifamily housing programs available in North Dakota to help households with lower incomes secure affordable, safe, and appropriate housing, these programs fall short of meeting the need. The Housing Choice Voucher program aims to fill the gap between affordable rent and market rates for lower-income households. However, a growing number of voucher recipients have been unable to secure affordable housing, often due to difficulty finding properties with rents low enough to meet Department of Housing and Urban Development (HUD) program requirements or situations in which property managers do not accept vouchers. Occupancy rates at Public Housing programs are consistently high, indicating strong demand. Other programs provide loan guarantees and tax credits to incentivize development of low-income properties with various income restrictions. However, there are only 951 rent and income-restricted multifamily housing units available to extremely low-income households based on respective income restrictions. Further, many properties that participate in the various rent and income-restricted housing programs have been in service for decades and may likely need repair and/or rehabilitation. Forty-four percent of rent and income-restricted housing in North Dakota is more than 20 years old and 25% is more than 30 years old. Additionally, most projects owned and managed by local public housing authorities are at least 40 years old.

Clearly there is need for not only additional affordable multifamily units, but renovation of a substantial portion of the current inventory of income-restricted multifamily housing. Higher rents and the lack of low-income housing, age of low-income housing, and the percentage of renters, especially seniors, suggest the need for not only additional rent and income-restricted housing, but renovation of much of the existing inventory.

For more information

The 2022 North Dakota Statewide Housing Needs Assessment is available online. The assessment consists of several components – a statewide population and housing forecast, regional profiles, and detailed tables broken down by various levels of geography including the state as a whole, the eight planning regions, 53 counties, 12 major cities, and four American Indian Reservations.

The study authors and the NDHFA hope the information generated by the study will help community leaders, non-profits, and state and local governments assess recent trends, current conditions, projections, and other key considerations in order to develop programs and policy ensuring safe, adequate, and affordable housing in North Dakota.

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