Currently viewing the category: "Housing"

And the year is over. Permit totals are just over $212 million dollars for 2013. In the ten year listing of dollar amounts the next closest year was 2006 and that was just over $156,500,000. Even allowing for inflation, which I haven’t calculated as yet, this has to be a record. I think it is just the next year, 2007, that the Great Recession begin. That year the Grand Forks totals were just over $94 million and dropped to less than $82 million in 2010.

See the chart on this posting for those 10 year totals. Grand Forks does jump around quite a bit over these past 10 years. As I recall this really is not the way Grand Forks does it. Unless that has changed, not that there might not be some slight ups and downs, I believe this might be another indication that Grand Forks is on a true growth binge.

How much? How rapidly? How sustained? There are, I believe, a lot of ifs in those questions. It depends to some degree on Grand Forks continued role in the Bakken development. I have written before that Grand Forks is the eastern city that understands how it is, and continue to be, tied to the Bakken. Some of it is because of things that happened 100 year ago such as locating the University of North Dakota AND THE SCHOOL OF MINES in Grand Forks. Of course those are just words, but then it is how the leadership of UND went after that role by establishing the right engineering programs and hitching their wagon to the right oil development leadership. It does make a difference who you place in leadership positions.

In the same vein, but at a different level, it has made a significant difference to Grand Forks that the EERC (Energy and Environmental Research Center) is located here, and if there is an example of the relationship between public education and private business it is the EERC. If North Dakota is serious about growing our state the best thing they can do is bring Dr. Gerry Groenwald (and others he would want with him) into state government and give him enough money to pursue firms he selects to bring to North Dakota.

Instead of passing the money around the state so each city, or school, or other functionary gets theirs, why doesn’t the executive and legislative branches go with proven winners? Instead we have all these so-called Centers of Excellences and the most we seem to have from them is controversy, again and again. If there are winners in Fargo, or even Jamestown, well then use them, but if not don’t just hand something to them.

Another thing that I don’t believe North Dakota, and especially Grand Forks, appreciates is the role the medical school has played to the state and this city. Some is as simple and direct as federal money and a great deal of state money bringing high paying salaried positions here. Not only those people, but with the multiplier effect, and that is real if not as large as some make it to be, it is making a difference to this city and this state.

Also, after several and too long in being corrected mis-steps, the millions of tax dollars spent on promoting attracting conventions, meetings, etc to this city it is working, and that is another story for another time.

Finally, and to me, most important, has been the role private enterprise has played over the settlement of the prairies. It has been the reason for Grand Forks, agriculture in particular. Today I believe Grand Forks is Simplots largest processing facility. Watch those potato trucks roll into that plant all day long, day after day, after day. There may not be a lot of high paying jobs at the factory, but there is a lot of money that comes to this area because of the potato industry.

Then of course there has been the sugar industry. You may have an opinion about the sugar market, but it is as it is and it has made a huge difference to the Red River Valley because of some very far sighted and daring individuals. Enough said for now, but there is not one person in the valley, including college teachers who are not better off because American Crystal is here.

Again there is the multiplier effect from agriculture. All the manufacturing firms. All the crop protection firms. All the trucks and tractors sold in the valley.

This, some may think, is a long way off the Grand Forks Metro building report, but without all of this and more there would be no building report. There would be no reason for building, and it is a long way from the Buffalo Commons.

More, much more, to come.

 

Getting started this late in the year I haven’t had time to look at comparisons across all the northern plains, nor even just North Dakota on much of the statistical data. In the past one of those statistical comparisons many considered important was the building permit values.

Of course we realized that the larger cities would have higher values unless you had a situation such as the oil boom and its affect on a smaller town like Williston. Still, unless there was something like the oil boom, or Fargo becoming the most northwest suburb of the Twin Cities (and Sioux Falls the most southwest) you would expect that over time at least the increase (hopefully not a decrease) in building values would equal approximately the same percentage increase.There is still one month left, but we shouldn’t expect much of a change.

There are some interesting questions. For instance, what has given Grand Forks the trophy this year and by such a large amount? Seventy five percent with no oil patch. Were things becoming too expensive in Fargo and that Twin Cities influence simply moved up the road.

There still is good growth in Fargo. Nearly 30 percent is respectable, very respectable. Also, why is Bismarck only an increase of seven percent. Why are these changes as they are?

Finally, for Minot, it would take some additional analysis, but I believe their 15 percent decline relates to the flood from two years ago. A big boom after the flood, and simply finding their way now over time. Of course they also have the impact of the oil boom.

We do know though that we have something somewhat complicated and interesting to watch. Maybe more than anything else the building value increases may be the single most important item to reflect the economic and cultural change that is happening in North Dakota.

I have written, North Dakota’s growth is more than just oil. While I expect a slow down in the immediate time agriculture will create some significant change in the state as well and that too will give us an economic and cultural change. So, watch Jamestown, Valley City, West Fargo and Wahpeton. Even the Devils Lake region.

One of the significant conclusions we can see here is that the oil boom has reached maturity. There are some significant declines in the amount of the building going on in the oil patch. However, the totals are still significant. There is still a lot of growth occurring, and I think that will continue. It is just that we have moved out of the boom times to a more orderly increase.

Here is the 2013 data for North Dakota:

 

This is simply a report on what Lynn Helms has just reported. Before I make some comments about the report I want to say that North Dakota is fortunate to have some very fine professional people in our state government. Some complain about the growth of state government, but we are, in my opinion, one of the best informed states, one of the best run states in many areas at a relatively low cost, and what has happened here over the last decade is just one example. I can’t believe so much has been accomplished by so few for so little over this period. This is one example. Job Service is another, and so to is the tax department as far as analysis and reports and also the treasurers department.

Now, as to the report, I will let it speak for itself except to say that the rapid expansion of the oil development continues in the oil patch with a minimum of problems as far as I can see. Yes, there are problems and there will be problems in the future but I expect them to be minimal, at least that is the history so far. So far it does appear no matter what the anti-development people want it to be otherwise that the huge spill was an accident of nature. Apparently caused by a lightning strike. Maybe we should have a better system in place, but that was our fault-a lesson learned I think.

Also, after the go-go days we started with we now are in a more rational approach to development. But just think what this has meant to all of the U.S. economy at a terrible time. Let’s hope we all have it under better control.

Finally, and I am no expert in this, nor have I read anything yet, but there is a substantial drop in the price of oil. Oil in the seventies is getting to the point that some wells may not be drilled, especially at the higher cost of winter drilling. If that happens it will be the first time I think in a long time that something has been shut off. We are at a new plateau in oil prices, both as to income, but also as to cost. It is just like farming. Who would have ever thought wheat in the $6 a bushel price was a serious problem, but it is. So to oil in the seventies.

Here is what Mr. Helms reports:

 

Grand Forks permits totaled nearly $18 1/2 million dollars for November. That would be unbelievable if we didn’t know how large all of 2013 has been. The total to date is nearly $209 million dollars so an $18 million dollar month is not that unbelievable, even coming near the end of the year.
Most will say look at the money that went into apartment homes and that is true. Three and one half times as much this year as last, but still that is only about $55 1/2 million of the $90 million increase in all construction. Another $34 million is in the commercial category, both new construction and remodeling of already standing buildings. A lot of that is motels and we can see that by the increase in the three percent motel fee. Build it and they will come. Grand Forks did (build it) and they did come (for many different reasons).
Single family housing is only a strong half million better than last year and while I would have liked to see a larger increase we have to remember that across the nation after what happened with the housing meltdown more people are telling us they are happy to have the freedom that comes with living in apartments and that is happening in Grand Forks. I have no doubt that much housing of all kinds has to mean an increase in the population of Grand Forks.
Anyway, it has been quite a year to celebrate and we know next year looks good with the $125 million medical school and the new elementary school both planned for at least starting in 2014. In fact they are moving the dirt on the medical school already, and there is also the law school addition.
East Grand Forks is down from last year, but they had a good year last year and this years’ building is respectable. Given the difference in population the single family building is proportionately the same for the east side as for Grand Forks.
Here is the data. Let me know if you would like to see anything else.

 

On Monday I am going to go back to the Engineering and Inspections Department at the Grand Forks city hall and see if I can find out for certain, but as of right now any records I have and any that I can find from anyone else leaves me confident in saying that Grand Forks has now set a record for the dollar value of the buildings being built in the city this year. That is based of the stated value of the permits the contractors have to get from the Inspections Department. And it is not just a record, it is a record by a huge amount. The highest value year I can find is for about $155,550,000 in 2006, the year the Canad Inn was built. The only thing I want to check on is the year the Alerus Center was built. People always say that was $80 million and the Canad was $50 million, and since there was a lot of flood recovery building in 2006 I wonder about the totals then. I will let you know.

Anyway, look at this chart. The total is over $190 million and there are still two months to go. I know that there are not a lot of permits taken out in November and December, but there is always some. There is a good chance we could exceed $200 million. If we don’t it will be very close.

If the figure of $156,500,000 is right for the old record and we just use the current figure we have broke the old record by over 21 percent. Comparing month to month, that is October through October, this year to last year we are ahead by nearly 70 percent. That is something in and of it self. When we hear of projects such as that fertilizer plant which will cost in excess of one billion dollars, even if it isn’t all in Grand Forks, just imagine what the future of Grand Forks looks like right now. Imagine if you are thinking of investing in Grand Forks. You don’t need to think very long other than to verify that this is going to last.

Commercial investment compared to last year is up by about 25%, from nearly $28 million to about $34 and one-half million. That kind of investment, retail and otherwise, is not made on a whim. You can be sure there is a lot of research behind those dollars. The same is true of commercial repair and additions.

If there is an area that held Grand Forks back it is in the public category, but the local schools don’t just build a building without a reason. It now appears that next year there will be an elementary school building and a new $125,000,000 medical school and a substantial remodeling to a major dining facility at UND.

Now, if only we do it right.

As for this table, note each category. Every major category is higher for the year, by a significant amount. Single family housing, townhouses, and of course apartments. We always considered apartments temporary and some futurists always regarded them with a cocked eye. We couldn’t really count on those people staying here permanently, and while they were customers while here they weren’t as good a customer as those in “real” houses. Now since the games the banks played before the big melt down we know, as economist say, a statistically significant percent of the people regard a mortgage with a cocked eye and are satisfied giving up a little square footage to gain some economic freedom.

We will cover more of these categories in detail as the year ends. Why is the retail section finally growing in Grand Forks after a standstill? What has changed that they is a Walmart every twenty or thirty miles, and even two in Grand Forks and Fargo. Then Targets in many of those places as well. And we haven’t even talked about the smaller big boxes.

You put what is happening to the sales tax collections in Grand Forks together with this building table and it is hard to believe we were so concerned in 1997. Of course good management should always have concern this could all change overnight. Imagine if Washington declared fracking illegal and the federal courts gave them even just a temporary ruling supporting their ruling. For now though let’s enjoy it, and here it is: