Go north, young person: Why millennials are flocking to area cities’ real estate
GRAND FORKS, N.D. – The numbers still dazzle anyone who recalls the days of the Buffalo Commons and Great Depopulation:
North Dakota now has the highest proportion of 18- to 34-year-olds in the nation.
South Dakota shows up time and again on lists of Top 10 States for Millennials.
And in the metro areas of both states, young people are buying homes at unusually high rates.
Taken together, these trends rank among the most positive and the most important in the histories of both states. Populations that are both skewing younger and taking on homeownership bode well for the Dakotas’ long-term outlook, including the region’s culture, economy and quality of life.
This story will look at both how these key trends are playing out, and why.
Millennials and homeownership
Last year, Wallethub.com studied affordability, education, health and other indicators, then ranked the Best and Worst States for Millennials.
North Dakota ranked No. 2 on the “Best” list, Minnesota ranked No. 3 and South Dakota ranked No. 10.
Here’s another, even more telling list:
“A recent study by student loan refinancing firm Comet found the states with the highest proportions of millennials living at home,” BusinessInsider.com reported in August.
In New Jersey, California and New York, some 12 percent of millennials live at home. That’s understandable: “Between the cost of living, high property taxes and the sheer amount of student loan debt young adults are taking on, it's not surprising why children are moving back in with their parents,” said Joe Mercurio, Comet’s project manager, to Business Insider.
Meanwhile, “states like North Dakota (5.2 percent) and South Dakota (6.1 percent) had the lowest proportion of millennials living at home.”
Moreover, among those many young people in the Dakotas who are living outside their parents’ home, surprisingly high numbers are buying homes of their own. Ellie Mae, a software company that processes mortgage applications, publishes a Millennial Tracker that focuses on millennial mortgage applications.
In February, Millennial Tracker’s Top 10 List of cities for those applications included Fargo, Williston and Minot, N.D.
For its part, Sioux Falls, S.D., ranks eighth in the nation on another key statistic: percentage of homeowners who are younger than 35. That number is 20.6 percent in Sioux Falls, compared with only 3.5 percent in Palo Alto, Calif., near the other end of the scale, according to NerdWallet.com.
The trends are clear, as Ellie Mae put it in 2017: “Millennial homebuyers continued to favor Midwestern states where prices remain comparatively more affordable, the latest Ellie Mae Millennial Tracker found.”
Understand, the word “comparatively” in that last sentence counts. Because while houses in area cities are less expensive than they would be on the coasts, they’re more expensive than North and South Dakotans encountered in years past.
“Recently, we did a 10-year look-back at the Bismarck-Mandan area’s median sales price of single family homes,” said Mike Bohrer, broker/owner at Venture Real Estate in Bismarck.
“In 2008, the median sales price for a single-family home in the area was $163,000. In 2018, it was $264,950.”
Clearly, “that’s a significant gain,” Bohrer said. Just as clearly, the oil boom was the driver that boosted population and demand, in Bismarck and in other North Dakota cities, too.
But a number of factors keep millennials in the home-buying mix, despite the price rise.
First, construction has kept pace, especially with apartments.
Said Jillian Lagasse, president of the Bismarck-Mandan Young Professionals Network, that means “people have options.
“Housing in Bismarck-Mandan is not a crisis for young professionals,” Lagasse continued. There are plenty of apartments available, as well as townhomes and older homes for first-time homebuyers.
Moreover, salaries are high enough that “in North Dakota, it’s still fairly common to buy a house in your 20s,” she said. “I know people in their 30s who’ve moved into their second home from their first home.”
Alyssa Ralston, Young Professionals Network coordinator for the Fargo Moorhead West Fargo Chamber of Commerce, agreed. “Fargo, too, has lots of options,” she said.
These include not only apartments, but also older homes in good condition in trusted and established neighborhoods. And as a result, she said, “housing is not something that I hear people talk about as a problem when it comes up.”
Another plus for millennials is First Time Homebuyer assistance, which is offered by most states. In North Dakota, “the programs can get people into a home for as little as 3 percent down, if it’s their first home,” said Kelly Edwards, mortgage loan officer at First International Bank in Fargo.
Plus, “through the Start Program, they can give eligible buyers 3 percent of the loan amount to use toward down payment and closing cost assistance.” That can put a buyer into a home for as little as $500 down.
“Most people whom we explain this to are like, ‘What? Really?’,” Edwards said.
Bohrer of Venture Real Estate in Bismarck agreed. “The North Dakota Housing Finance Agency’s programs have been a huge asset to our clients who are first-time home buyers and who qualify,” he said.
“I would say their products get used by more than 50 percent of my first-time home buyers. It’s a big deal.”
Insulated but not isolated
Also important in the region’s appeal is its quality of life, said Nathan Schneider, vice president of the Bismarck Mandan Chamber EDC.
“More and more, you hear about young people who are looking for a community that they want to be a part of, and then looking for a job there,” Schneider said.
And that process serves local cities well, thanks to the investments they’ve made in their downtowns, recreational amenities, new schools and the like.
“Things like the Starion Sports Complex in Mandan, which the voters actually voted to raise their sales tax to build,” Schneider said.
“Or our Missouri River amenities, which have turned the river into a real asset. There are all of these different quality-of-life projects that are happening and that I know are appealing to young professionals.”
In Sioux Falls, the latest Best Place to Live listing got announced as recently as March. That’s when Livability.com ranked the city as the seventh-best place to live in America.
“I am so proud of South Dakota, North Dakota and Iowa, where I’m originally from,” said Bob Mundt, president and CEO of the Sioux Falls Development Foundation.
“As someone told me the other day, we are ‘insulated but not isolated.’
“And you know, that’s true,” Mundt said. “We’ve got it pretty good. We always say that if we can just get people who’ve never been here to come visit, there’s a good chance they’ll relocate here, because they’re always so impressed with what they see.
“As long as we bring them in sometime after April and before November,” he said with a laugh.
Editor, Prairie Business