Grand Forks Housing Market, again
The local housing market in Grand Forks will soon be a major topic again with new findings released. I will wait to pass final judgement until research design is clear and we can evaluate methodology. There are a few things we should repeat so they are clear.
First, let’s carefully define the issue of concern to us. The “housing market” issue changed over time. At various points in included a concern about the price level, the change in prices, overall availability, and the availability of “affordable” housing. Could all these be an issue? Probably not.
It is a dangerous game to point a finger at price as a problem. Price is more a symptom than a causal factor. You go in to the doctor and complain about a set of symptoms and he comes back and says you have a virus. You want to complain about price and most people will look at other factors that may impact price. The point is that price is not really directly actionable, unless you favor some type of government regulation of housing prices. I am pretty sure most people do not condone such action. If price is really the concern, and from my perspective it is not and that is not the current focus of complaint, then you deal with other supply and demand factors and attempt to influence price. However, I think we are beyond that. Well at least I hope we are. Moving on.
That leads into a discussion of the quantity issues. There are all types of complains in this area. Have we built too many apartments? Why are builders building in the areas they are? Why do builders build the types of homes they build? Then there are the assertions about inadequate amounts of affordable housing.
As I mentioned many times on the radio, affordable is a loaded word. Affordable for whom? And just how far do we want to go with this? Are we looking to make sure everyone that wants to buy a home has one available in their price range? Why? Surely not everyone who has such a want is credit worthy. (The availability of credit has been overlooked in this discussion for the most part.) Are we going to look at the changing income distributions over time in Grand Forks and predict where housing demands will go? I doubt it.
Over the last 40 months Grand forks saw just under 61 units per month permitted according to Census Bureau data (January 2013 – April 2016). On average 14.25 of them were single units while over 46 were in structures with five or more units. To be sure there is significant variability. It is no surprise that January, February, and December are low permit months.
The monthly average for total permits is down from 82 in 2013 to 36.67 in 2015. Through April of 2016 the monthly average for permits is 28.25. The value for permits is down too. In 2014 the monthly average total value for permits was $10,109,167, while in 2015 the value was $5,277,500. Of course if enough building occurs without removal of older stock you do see less need for further additions and therefore fewer permits.
Another issue to consider here is the overall growth of the community. Clearly that is a rough measure. In another post I will break down some income and age characteristics of Grand Forks and we can discuss the implications for housing there. Over the same time frame as the permits data Grand Forks labor force increased by less than 1,000 people and employment increased by less than 2,000. Clearly the jobs profile and earnings and income data are needed to draw better conclusions, but this hardly seems to be a growth market.
So we will see what new determinations are made regarding the state of the housing market and then evaluate them, all the while hoping sensible, sound economic reasoning win out in the assessment of these questions.