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Monday, September 8, 2014

For Investors Only -- September 8, 2014; Update On Minot Housing -- Apartment Vacancy Stands At 3.3%

This is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

Trading at new highs today: BRK.B, CAH, EEQ, MSFT, SRE, TSO.

I'm surprised the market has held up well as it has considering the shocking news that came out of Japan yesterday -- significant drop in Japan's growth -- reported earlier.

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Update on Minot Housing

This is an interesting story. Sometime ago -- maybe two years ago -- I mentioned that the recent housing boom in Minot was due to the oil and gas industry. I was wrong. Most of the housing boom, I was told, was due to the 2011 flood, and the Bakken boom simply added to it (or vice versa). Looking back, I am glad I was told that (by a Minot developer), am happy that it turned out to be accurate, and even happier that things seem to be improving for the folks in Minot. Prairie Biz Mag is reporting:
The flood destroyed more than 4,100 homes at a time when the oil boom in western North Dakota, attracting workers from across the country, pinched the housing supply in the region. So, as North Dakota experienced an affordable housing shortage statewide, the Minot region saw a two-fold crunch.
Experts say the oil boom started to pressure Minot’s housing market in about 2008, and the loss of housing stock during the 2011 flood exasperated the problem. At one point, the citywide apartment vacancy rate stood at 0.02 percent.
In recent months, as developers build more apartments, relief appears in sight. The apartment vacancy rate is now up to 3.3 percent, said Danelle Zietz, rental property manager for First Minot Management.
And a bit more background:
Although Minot is on the edge of the Oil Patch, the city has seen immense growth due to the oil boom.
Bruce Carlson, a Minot Area Development Corporation board member and manager of Verendrye Electric Cooperative in nearby Velva said all sorts of industries, not just oil, are bringing more workers into Minot.
“Things have really changed,” Carlson said. For example, the Minot airport sees about 14 flights a day, he said. “Years ago, that was unheard of.”
Also, Minot Air Force Base recently announced it will be adding more than 300 personnel. On-base housing is at 90 percent occupancy, according to Lt. Col. Bryan Opperman.
And several oil companies, such as Hunt Oil Co. and Halliburton Co., have offices in Minot, Carlson said.
The national buzz about North Dakota jobs and economic prosperity has brought people to the state, particularly the western region, in droves.
Also, not mentioned in the article, though I might have missed it, is the increased BNSF activity.

10 comments:

  1. Bruce, this looks like a spin. There is at least 9 major apt buildings still being built. Perhaps 1000 or more units. Apartments are empty all over the city. 10% seems more realistic. With the new units coming Rentals are going to come down in price. There is an apt close to me that went vacant and sat unrented for at least a month. The previous renter was paying 1350.00 per month for a 400 sq ft main floor. 2 bedrooms and small bath upstairs, no garage. Rents are coming down in Minot. Soon.

    ReplyDelete
    Replies
    1. Thank you for the update. I also find that a lot of stories -- the data is "old" -- the journalist has done the research but by the time the story is written, facts verified, editor publishes, etc., a lot can change.

      Delete
  2. BUT I thought there was a need for rent control in Western N.D.

    It looks as thought the market can and will correct itself.

    ReplyDelete
    Replies
    1. I completely missed that story. Thank you.

      Here is a story as recently as July, 2014, calling for rent control:

      http://sayanythingblog.com/entry/rent-control-williston/

      Delete
  3. I agree with first comment above. Vacancy is higher than 3% (we run about 10% currently) and rents have dropped about 20% from ours peaks. A number of factors have driven this, but it is primarily new apartments being built. I don't think there are 1,000 new units to be added to the mix in MInot as there hasn't been that many permits issued this year, but 500 easily coming on line. But there is no next wave planned. Apartment developments have been shelved, just like approximately 1,000 additional motel rooms have been canceled. Minot like other places though still have people moving to town, So I am expecting to see the vacancies start to lower. Also, banks and the city are making it very difficult to build in Minot, so the boom that we have seen I think would start to waiver. If the persons talked about all moved to Minot in about 2 years will be short apartment housing again.

    Also, in our world we have 2 bedroom vacancies. 1 and 3 bedrooms, we are close to zero vacancy. So its the mix of unit that comes into play as well.

    ReplyDelete
    Replies
    1. It's interesting you mentioned "the mix." I was thinking the same thing. Also, when you get to 3% or 10% vacancy, you also run into "quality" of available/existing housing. Personally, I don't see a lot of difference between 3% and 10% when you start factoring in quality, choice, mix, etc.

      I'm with you. The housing situation in Minot might be better than what it was, and less problematic than in Williston, but it's still a huge challenge. Thank you for the long note; thank you for taking time to write.

      Delete
  4. http://www.kxnet.com/story/26481170/eye-on-energy-bakken-developers-not-slowing

    worthy of a read.

    ReplyDelete
    Replies
    1. It is worth the read. I now know where Williston Crossing will be. Thank you. North of town, "in conjunction" with Northstar Center.

      Delete
  5. Minot might have a few oil companies, but a lot of the hotel and apartment rentals that were being taken up by oil workers has now shifted closer to the patch as more and more housing comes on line in places like Williston, Stanley, and New Town. Most of the new construction taken place is replacing the 4,000 + homes damaged or destroyed by the floods, along with the couple thousand new military jobs at the air force base. I question how much of Minots growth is from the oil boom. When you look at job service North Dakota's latest employment numbers and facts, Minot has not had that much growth in employment. Williston has acatually surpassed Minot in the number of "non federal government" employees. Williston is sitting at just over 40,000 workers. Minot is around 36,000. But Minot has a little more when you add in the military personal at the air base. But Minot is definately building...but mostly related to flood recovery and air base.

    ReplyDelete
    Replies
    1. All I can say: it sure is remarkable how fast all this came about.

      Delete

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