2024 Statewide Housing Needs Assessment
Karen Olson is a research specialist for the Center for Social Research at North Dakota State University (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. NDSU’s Center for Social Research in partnership with and on behalf of the North Dakota Housing Finance Agency conducted a North Dakota housing needs assessment in late 2024. In this article, Karen provides a brief highlight of findings from the 2024 North Dakota Housing Needs Assessment.
A comprehensive analysis of North Dakota’s demographic and economic conditions affecting housing dynamics, housing characteristics, and affordability issues indicates that, at least in the short term, baby boomers will continue to be a significant driver of population and housing trends in the state – and that despite a strong, diversified economy, housing affordability issues continue to impact individuals and families in North Dakota.
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 15 years, resulting in a reversal of decades’ long trends in population. Moderate population growth is projected over the next few years, increasing by 3.6% from 776,874 in 2022 to 804,651 in 2027. 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 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 78 years old, and younger boomers will continue aging into the 65 and older cohort until 2029. Barring a shift in migration patterns, the most significant change in population that is expected to occur by 2027 will be the aging forward of baby boomers into the ‘65 and older’ category.
While overall 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.
North Dakota’s strong, diversified economy has not translated into improved financial conditions across all income ranges
Despite a recent slowdown in oil and gas development activities, thousands of jobs have been added over the past decade and the state’s economy has grown considerably. 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 this rise in income, there was little overall change in the number of moderate-income households in North Dakota. While there was an increase in the number of households earning $125,000 or more, half of all North Dakota households earn less than $75,000 annually (51%); 33% 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, 6,208 people received services for homelessness in 2023, a 35% increase from 4,606 in 2020.
Of individuals receiving services for homelessness in 2023, about 35% were ages 25 to 44 – the largest percentage of any age group served; children comprised 25% of those receiving services for homelessness (an increase from 17% in 2020). 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 51% over the past five years among individuals receiving services for homelessness in North Dakota.
Home ownership rates are down — home prices and monthly housing costs are on the rise
While most housing in North Dakota was owner-occupied in 2022, homeownership rates are down from where they were in 2012, across all income categories. The greatest declines in homeownership rates were for households with lower and moderate incomes, dropping from 75% to 57% for households earning $50,000 to $74,999. During the same time frame, median monthly housing costs for homeowners with a mortgage (including mortgage, insurance, and utilities) rose 38%, from $1,201 in 2012 to $1,653 in 2022.
A rise in construction costs has contributed to the rising costs for homeowners. Average values associated with construction permits for single-family homes in North Dakota increased steadily from 2015 through 2023, by 7% per year on average, with the fastest growth occurring in the past four years. The average value for single-family homes authorized for construction in 2023 was $334,469, a 25% increase from $268,678 in 2020. For the 41% of households in North Dakota earning less than $58,081, the most they could afford would be $162,202.
Along with higher construction costs, home sales prices are increasing as well. According to the annual Sales Ratio Study conducted by the North Dakota Office of State Tax Commissioner, the average residential home sale price increased in all 12 of North Dakota’s largest cities from 2012 to 2022 by at least 21%. The average sale price for residential homes also increased in rural parts of the state – but at a much slower pace than those in the 12 largest cities.
As the homeownership rate in North Dakota decreased, the rate of rental occupancy grew from 34% in 2012 to 37% in 2022. However, rental households in North Dakota are also facing a substantial increase in housing costs. Gross rent in North Dakota grew by 50% from 2012 to 2022 – twice the rate of inflation, from a median of $610 per month in 2012 to $912 in 2022. For about one in five households in North Dakota (i.e., those earning less than $29,041 and defined as extremely low-income by HUD), the most they could afford would be $726 each month.
Housing costs in North Dakota are substantially more of a burden for renters than homeowners. In 2022, 39% of renters in the state were cost burdened (spending at least 30% of income toward housing) compared to 15% of homeowners. In addition to households with lower incomes, householders ages 65 and older were more likely than younger age groups to be burdened by housing costs. Overall, 27% of North Dakota householders ages 65 and older were burdened by housing costs – for older adults who rent, 56% were burdened by housing costs.
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 877 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 50 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 full 2024 North Dakota Statewide Housing Needs Assessment will be published soon online through the Center for Social Research at North Dakota State University.
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.