OUR OPINION: Housing shortage needs GF’s attention
July 11, 2012 at 4:30 pm in Grand Forks Herald
City leaders should recognize that the housing shortage is hurting Grand Forks’ growth, then resolve to do something about it. Continue Reading
OUR OPINION: Housing shortage needs GF’s attention
19 Comments
What housing shortage? There is plenty of housing available. The reason people are reluctant to buy in grand forks is due to the inflated market. You can buy across the river or down the road 10 miles and get much more for the same price.
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Ever see the old SNL spoof on Citizen Kane? Where Kane is told it’s a slow news day by one of his reporters so he opens a window, pulls out a gun, and takes several shots then says something like….”Take this down…mad man opens up in a crowd and shoots two…Wait…Make that three….?” Kind of reminds me of slow news days around here….
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How many homes were replaced of the 1500 lost to the flood? How many homes are occupied by students?
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The Grand Forks market has been artificially inflated for years. We discussed this at length when we were talking about the poka dot house.
Special Assessments and the unwillingness of Grand Forks citizens to act as one (right now everyone pretends their small neighborhood is the be all and end all) are part of the problems. Roads and sewers benefit everyone. Having a housing area pay for their own, on top of their already high city taxes is ridiculous.
However, that is not the complete story. There is a part missing; a collusion. Like the Deep Throat of old, I would suggest “following the money.” Who is benefitting from the lack of affordable housing?
It is convenient but inaccurate to blame students, transient workers, and immigrants. Every other city of comparable size in the region faces the same problems but has managed to keep abreast of demand (the oil patch is an aberration, they do not factor into this discussion). Fargo has a very healthy market with a variety of $150,000 houses to choose from. Grand Forks is not nearly as unique as it thinks it is.
I would suggest starting with the permit process and work outward from there. Since the shortage is artificial, there has to be structural impediments to builders doing what they get paid to do.
If GF is serious about what is going on, quit blaming people and start looking at the system. That is where the answer will be found.
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You have to start with the land prices. If you look most of the land to build a single family house starts at $38,000. That much for a lot less than an acre in size.
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So, how many of the people who posted read the actual article and not just the Herald editorial opinion? The actual article points out that the average house sale price this year is $173,164. That is the average, not the median; since there are few houses sold below $100,000 and some houses that are sold well above the average, most houses are selling for less than the average price. Regardless, housing prices are distorted because of low interest rates.
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It is supply and demand. The government’s obsession with artificially holding interest rates down to control inflation and to prevent further devaluation of the housing market continues to perpetuate this problem. As long as interest rates are low and people have access to “cheap” loans housing prices will continue to rise. Low interest rates let people borrow more money than if the interest rates were higher. More available money means more competition for each home. More competition means higher home prices. The government needs to stop holding interest rates down and allow the market to return to real supply and demand. There are actually congressional people starting to complain that lenders are being too tight with home loans! This is precisely why we had the first housing bubble and here we go again; lower interest rates, encourage people with marginal credit to buy houses, watch the price of homes go up because everybody now has “cheap” money, and then scratch our heads when the interest rates rise and people default on their mortgage
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What? Are you suggesting that by not actually doing anything to assure the problems from the first time around are starting to re-appear to bite everyone in the ass again? How could that happen? After all…Didn’t they give us their word they’d behave? Ya right…….I don’t know how you get congress who is so dependant on their money to go against the cash cows, but if they don’t….Then we all pretty much know how this story eventually shakes out…
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Joe: your logic is only half correct. Cheap money should cause builders to build more houses to take advantage of the cheap money supply. This increase in supply would then result in a lower cost.
Cheap money is most definitely part of the problem (buying more house than you can afford) but it does not drive prices up.
The lack of supply in the face of a strong demand drives prices up.
My first house in GF was $113,000. Similar house in the same neighborhood is now pushing $180,000 if it is available at all. Good for my ex-wife, but not for anyone trying to buy a house they can live with.
When the market is hot, builders build to capitalize on it. That is not happening here. My question is why?
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Its the economy.
Who is willing to take the risk?
I for one would be terrified to build a bunch of new homes right now thinking i could turn a decent profit because as soon as they were built i would have to worry about what kind of taxes and regulations the Federal Govt would impose.
Until the Government backs off and allows people some breathing room, no one is going to build anything that they arent going to live in themselves.
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I agree about the taxes and fees but I don’t think it is the feds in this case. They don’t affect local housing markets to any great degree. It is the local taxman that is the burden. That is not to say I support getting rid of property taxes; I just think our system of special assessments has to go.
Another factor that is different in GF from Fargo is the quality of available work. Fargo while mired in a service economy like everyone else, still has some manufacturing and high tech jobs. GF has very little of either. Look at what a huge deal the lockout was. Those were $15-$20 an hour jobs. Good but not great. No $250,000 house on those wages.
Part of the reluctance on the part of developers might be the blight of good paying jobs so people can afford a $150,000 home
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Factories with high paying jobs locate where transportation access is best. Once Fargo had 2 interstates it took off in comparison to GF. Just as Sioux Falls development accelerated when it got 2 interstates & left Sioux City in the dust. Other factors that make FM grow faster is their 25,000 college students & 1000 lakes 40 mi. to the east. Those factors make it easier to retain pop. since industries see the labor supply as sufficient.
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The one advantage GF has over Fargo is the closer proximity to Lake of the Woods. That’s about it. Fargo is closer to the Twin Cities…which is a bigger draw for many people as well. Location…location…location.
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So GF doesn’t also have the advantage of being closer to Winnipeg than Fargo by an hour? Talk to Peggers & they say it makes a diff. Living in GF you are 2 hrs. from a foreign city that is different enough to be quite interesting. Fargo is 3 1/2 hrs. from MSP for more of the same kinds of shopping as they are accustomed to.
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I agree with you Spearman and I stand corrected.
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The Univ. isn’t high tech jobs?
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“‘In Grand Forks, it’s the age-old problem of availability of land,” said Betty McDonald, executive officer of the Forx Builders Association, in the 2003 story.
That was a load of crap in 2003, and it’s a load of crap now. How can a town have MORE land than another, except that they expand the city limits? This town decided the best possible solution was to expand onto prime farmland (already owned by developers) instead of expanding on the less-expensive dirt north of town. Gee, I wonder how much money went under-the-table to promote the south end expansion.
We all know what this is about: Developers are holding back because they know it won’t be long before the taxpayer is forced to subsidize “affordable housing”…again. And again…and again.
The developers are just waiting for the Council to hand over the startup money, and to sign the tax rebates and exemptions.
Developers make the profits, let them accept the normal business risks as well. NO SUBSIDIZED HOUSING!
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Shurkey , why would people want to live on north side alkali flatlands that won’t grow lawns or trees? Why would developers buy that land to sell lots from?
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The “genius” city council needs to sit down, figure out a plan, make a decision and move on it. It may be months or years before anything is done to fix this problem. In my opinion Grand Forks is losing outstanding people and revenue to surrounding towns, because we have created a housing market that has aging homes priced too high, not enough new homes and taxes that leave you scratching your head. I challenge City Council members and the Mayor to physically go through the steps of finding a new home in Grand Forks and compare it to other markets. They will have a huge eyeopener. According to Zillow, a real estate website, Fargo’s median list price is $147,900, compared to Grand Forks at $169,900. That is messed up.
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