In Depth: Data finds 66 percent of North Dakota homes are single-family

(Sources & Credits: Voice of Alexandria / Construction Coverage) — New data paints a clear and not-too-attractive picture of the state of single-family housing in the United States.

In recent years, rising home prices and interest rates have strained affordability throughout the United States, especially for first-time home buyers and younger families with limited budgets. North Dakota has not been immune from this challenge.

Additionally, since the COVID-19 pandemic, more people are working remotely from home, either full-time or part-time, which further complicates housing decisions.  

Trends in Single-Family Residential Construction

Construction Coverage analysis of Census data and construction trends finds that since the peak of the U.S. housing bubble in the early 2000s, the proportion of housing units authorized for single-family homes has decreased significantly – from 78 percent in 2005 to 59 percent in 2015.

Although there was a modest rebound in single-family construction post-2015, the surge has subsided. Last year, only 62 percent of new construction was allocated to single-family unites. 

While as many as 89 percent of homebuyers would prefer a single-family home, recent construction trends diverge from this sentiment.

This underinvestment has led to an estimated shortfall of approximately 6.5 million single-family homes, a primary contributor to elevated housing prices.

Ripple Effect Felt Throughout the Housing Market

This has a ripple effect throughout the economy. Beyond challenging first-time home buyers and younger families, many middle-aged ’empty nesters’ are unable to find smaller single-family homes to downsize into, which keeps their larger single-family homes off the market. This thereby locks many middle-income families into their current houses even though these homes don’t meet all the needs for their growing families.

In a healthy housing environment, these houses would be ideal starter homes for first-time home buyers or new families as middle-income families move up into larger dwellings – the very ones now occupied by many middle-aged ’empty nesters.’

Owned vs. Rented Single-Family Housing

Americans’ strong preference for single-family homes observed during the early stages of the pandemic also extended to the rental market before softening in recent months.

Only about one-third of renters (31 percent) live in single-family units, compared to 89 percent of owners. But during the pandemic, there was a notable surge in demand for single-family rentals, causing rent prices to reach record levels.

How North Dakota Compares to the Rest of the Country

To determine the locations with the most single-family homes, researchers at Construction Coverage calculated the percentage of housing unites that are single-family, as defined as “single unit, detached” or “single unit, attached.”

The data finds that while an adequate supply of single-family homes is the current challenge, single-family units remain the norm in most places.

State-by-state analysis finds New York to be the only state where multi-family units constitute a majority of housing (47 percent single-family units).

In contrast, 35 states have 70 percent or more single-family units. North Dakota is not one of them. The data for North Dakota shows:

  • Percentage of single-family housing units: 65.6 percent
  • Total single-family housing units: 217,413
  • Total housing units (single- and multi-family): 331,481

In North Dakota, More Inventory is Needed Across the Board

Additional data from the most recent North Dakota Statewide Housing Assessment, conducted by the North Dakota Housing Finance Agency, found homeownership rates dropped from 78 percent in 2010 to 60 percent in 2020 for North Dakota households earning between $50,000 to $74,999. For those households earning between $35,000 and $49,999 in this same period, ownership rates ent from 64 percent to 51 percent.

All of this is happening against the backdrop of the state needing 13,000 more affordable rental units, both single- and multi-family. 

“Many North Dakotans don’t appreciate the scale of the affordable housing problem in our state,” says LCD Group Executive Director Brent Ekstrom. 

“The data confirms the anecdotal evidence that we need both more single-family homes on the market and more rental units. The issue can only be resolved through collaboration across state and local governments and among lenders and developers.”

Photo Credit: Robert Crum / Shutterstock

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