(Sources & Credits: New Topic News / constructioncoverage.com) — New inflation data from the federal Bureau of Labor Statistics revealed that while October’s Consumer Price Index was up 3.7 percent year-over-year, the index for shelter had risen 7.2 percent over the same span.
The big picture: While inflation in most economic sectors has come down, rent prices have not.
- The dynamics of the rental market in recent years largely reflect simple supply and demand.
- In the years following the housing crash and the Great Recession, the number of new housing projects plummeted and were slow to recover throughout the 2010s.
- Around the same time, America’s largest generation, the Millennials – with more than 72 million members – began to reach adulthood, which added greater demand on the market.
- Economic conditions during the COVID-19 pandemic have exacerbated issues with the rental market. As fast-rising real estate values priced more people out of home-buying, rental markets have become more competitive.
- On the supply side, increasing cost of materials, rising interest rates, and tightness in the labor market have all contributed to difficulties in developing new housing stock.
All of these issues have come to a head over the last couple of years. The combined crunch of limited supply and high demand have driven the national rental vacancy rate to its lowest levels since the late 1980s.
- With fewer available units, prices have risen dramatically.
- The year-over-year change in rental prices leaped from a recent low of 1.8 percent in the second quarter of 2021 to 8.6 percent in the second quarter of 2023.
Here in North Dakota: Our state has not been immune from these pressures. While North Dakota’s median rent is lower than many states, prices remain stubbornly high. And inventory is well below what is needed.
- Currently, North Dakota has a deficit of 12,780 affordable and available rental units with only 4,017 at or below 50 percent of Area Median Income (AMI).
- Data shows there are currently 25,385 renter households that fit the classification of extremely low renter households.
- The existing number of affordable and available rental homes is only 12,605.
By the Numbers – Rental prices in North Dakota: Construction Coverage is a website that provides construction insurance guides. The website’s researchers conducted an analysis of median rental prices in all 50 states using data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
- North Dakota’s median rent overall: $1,063
- Median studio apartment rent: $768
- Median 1-bedroom rent: $828
- Median 2-bedroom rent: $1,004
- Median 3-bedroom rent: $1,390
- Median 4-bedroom rent: $1,681
Zoom in: These numbers, and influencing factors, further confirm that affordable housing is very much a challenge in North Dakota.
“While North Dakota is not struggling as bad as some states, we need to understand that if we don’t increase supply the problem will continue to get worse,” says LCD Group Executive Director Brent Ekstrom.
“As I have said before, many North Dakotans don’t appreciate the scope of the affordable housing problem in our state. We need collaboration across governments and among lenders and developers to address this issue.”