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if rent is so high then there should be a boom in home construction and apartment construction too.
And there is. Along with a boom in convienience stores, grocery, retail outlets, and everything else. They put in something like 1000 rv spaces and were filled before construction was complete. They have built thousands of apartments and many homes, all sold or rented before they were complete. It's typical of a boom.
But the fact remains that when a boom hits, and prices go up due to demand, those prices don't come down like they did when they went up. They come down a little, but will never return to previous pricing.
I hear they have the highest rents in the country, higher than Manhattan or SanFranscisco. So it is booming for some "people"
That depends on where you are in the state. It's a gradient that increases as you go North and West. Fargo, for example, has tons of available retail service and construction jobs and relatively low rent. You can find a decent 2 bedroom for $600-700 last I checked.
And there is. Along with a boom in convienience stores, grocery, retail outlets, and everything else. They put in something like 1000 rv spaces and were filled before construction was complete. They have built thousands of apartments and many homes, all sold or rented before they were complete. It's typical of a boom.
But the fact remains that when a boom hits, and prices go up due to demand, those prices don't come down like they did when they went up. They come down a little, but will never return to previous pricing.
Don't bet on that. It is still North Dakota. See Goldfield NV as an example. There are hundreds in the west.
And there is. Along with a boom in convienience stores, grocery, retail outlets, and everything else. They put in something like 1000 rv spaces and were filled before construction was complete. They have built thousands of apartments and many homes, all sold or rented before they were complete. It's typical of a boom.
But the fact remains that when a boom hits, and prices go up due to demand, those prices don't come down like they did when they went up. They come down a little, but will never return to previous pricing.
And trying to convince people who know they are staying for years to buy a house is like pulling teeth!
Why do people shell out $2,000-$4,000 a month in rent????
Talk about money out the window!!!
I would agree with that with one exception. The market will drop at some point in the future when the number of houses exceeds the ready number of buyers. My understanding that most houses in the oil areas are being bought prior to completion. Most buyers believe that there is a correction coming so they are hesitant to take the loss.
I think the correction will be small considering inflation and the price to build a modest house is continuing to increase.
... you would think no one ever heard of Sutter or the Klondike...
Most people don't know anything about history. When asked who the top 5 most important presidents in US history, the list always contains the last three. Most people have no idea why George Washington was significant. They don't even know what FDR stands for.
Most people couldn't tell you what Sutter or Klondike were, let alone how they relate to Williston.
Quote:
Originally Posted by Julie Upnorth
And trying to convince people who know they are staying for years to buy a house is like pulling teeth!!
Why would someone want to buy a house?
There is a time to rent and a time to buy.
It is not a time to buy when prices are jacked because supply is low.
The ability to add supply is much greater than the upcoming increases in demand so it can be expected that prices will eventually go back to where they were before the boom. It's just math.
Why would I buy a place for $250k that someone can build for $150k? By its very nature, a building is a deteriorating asset.
Yeah. I'll pay your "exorbitant" rent. It's cheaper than eating the depreciation. I'm staying for a minimum of ten years. I can do math.
Most people don't know anything about history. When asked who the top 5 most important presidents in US history, the list always contains the last three. Most people have no idea why George Washington was significant. They don't even know what FDR stands for.
Most people couldn't tell you what Sutter or Klondike were, let alone how they relate to Williston.
Why would someone want to buy a house?
There is a time to rent and a time to buy.
It is not a time to buy when prices are jacked because supply is low.
The ability to add supply is much greater than the upcoming increases in demand so it can be expected that prices will eventually go back to where they were before the boom. It's just math.
Why would I buy a place for $250k that someone can build for $150k? By its very nature, a building is a deteriorating asset.
Yeah. I'll pay your "exorbitant" rent. It's cheaper than eating the depreciation. I'm staying for a minimum of ten years. I can do math.
Then build a house for $150K! Every month you shell out rent is lost money.
NO! A house is most often an appreciating asset.
Best bet is to build the biggest home in the Bakken you can afford, rent part of it out and let some ELSE make your payment.
I stink at math but I did raise an accountant/CPA, obviously he was not home schooled, LOL!
I own 3 homes, they all provide passive income for me, including our Bakken home.
In your haste to quote every friggin' line in my post directly under my post, you didn't read what I wrote. A house is a "deteriorating" asset. Whether is appreciates or not is not relevant. Something can both deteriorate and appreciate. ( It cannot depreciate and appreciate at the same time. )
Quote:
Originally Posted by Julie Upnorth
Every month you shell out rent is lost money.
No it is not. Much of what you pay in rent is taxes, maintenance, and repairs.
That statement coming from realtors is like statements coming from used car salesdroids. A realtor's job is to perform a service and not to advise on the viability of an investment.
Buying a house using a mortgage further adds the risk of leverage. If you only pay 3% down then if the value of the asset declines by 3%, you lose 100% of your investment.
Many people put 10-20% down on a house in the mid-2000's and are underwater now. Every month they shelled out the mortgage payment was lost money. They also paid taxes, maintenance, and repairs.
Quote:
Originally Posted by nosyneighbors
What happens to all this new housing when the area goes bust?
Your statement should have been "What happens to all this new housing IF the area goes bust?" You don't know if it will go bust or not.
It might go bust next year. I could see scenarios where that would happen. It might not happen till we are dead. I could see those scenarios also. If I was betting on it, and I am, this area will be a prosperous oil producing area for decades.
In any case, the supply of housing will catch up with the demand sooner than the sceptics think.
When the boom started, the housing supply in Williston was just under 6k units. Since then, over 6k units have been added. The money is being made building houses and won't be made buying them.
Staying on topic, North Dakota is certainly growing due to the oil boom. Many parts of the economy get distorted when growth come as rapidly as it has. You see things like the effective minimum wage more than double other parts of the country. You see rents and house prices sometimes triple. This isn't the Bay Area and it isn't Manhattan. There's plenty of space to put new housing at prices far less than current rates.
We are already seen "prices" for drivers and the ease of getting 6-figure jobs becoming less. These kinds of things further reduce the chances of the price of real estate and rents to rise.
The only reason to buy a house is because you can afford it and you want one. That's always been the only reason to buy a house. Not to make money ( unless your business is flipping ).
Last edited by IDtheftV; 02-26-2014 at 12:18 PM..
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