Growing Pains

Growing Pains

Published: Jan 31, 2014

From small rural town to the nation’s fastest-growing “micropolitan” statistical area, can communities along North Dakota’s Bakken shale formation meet boom town demands?

In many prevalent destinations with abundant hotels, extended stay suites, corporate apartments, rental homes, and existing permanent housing, you generally have a number of locations and options for temporary and permanent housing that meet budgetary requirements and the individual needs of your relocating families.

Not so in the rural towns spotted along North Dakota's expansive Bakken shale formation, particularly in and around the Williston, ND, basin, where the oil and gas exploration boom has created demand for temporary housing, apartments, and permanent housing that is either scarce or non-existent.

Boom Town Skepticism

While less traditional temporary housing, i.e., FEMA trailers, cabins, “man camps”, mobile homes, modular semi-permanent hotels, and some apartments have become available to meet demand, city officials and developers are skeptical to over-invest in affordable permanent housing and its associated infrastructure to support the influx of approximately 15,000 oil and gas workers since 2009. And not without cause; the North Dakota landscape is scattered with dozens of abandoned towns once filled with promise – the latest boom turned bust as recent as the 1980s, leaving towns like Williston, ND, with $28 million in debt.

Despite the expected population growth of 6,000 a year for the next decade, and the billions of dollars in oil money now gushing into North Dakota, the number of new housing permits indicates a growing population of renters. 

During the first five months of 2013 in Williston, ND:

  • Only 20 single-family home permits were issued 
  • 482 permits were obtained for apartment units

Many of the jobs are filled by men who send earnings to their families in other states, rather than investing their money locally.

Companies capitalizing on this revolutionary drilling method are competing with the tens of thousands of newcomers looking for affordable housing in Williston and other communities surrounding the Bakken shale formation. This shortage of affordable, permanent rental and single family homes is driving prices up and creating a seller’s market.

Searching for Solutions

NEI extensively researched temporary and permanent housing options to compare price, square footage, proximity to work location, and availability in and around a client’s work site, including Williston.

While there is ample temporary housing, list prices for the scarce number of available homes have soared by almost 27% over last year, and some rental rates have gone up considerably more.

For example, rent for a 2-bedroom apartment with about 400 square feet has gone from about $350 a month before the boom, to over $2,000 today.

At a rate of only six newly constructed units per day, communities like Williston aren’t able to keep up with the estimated 14,000 housing units needed today.

Among the 30 options researched, NEI found: 

  • Furnished studio apartments with about 220 square feet ranged from $975 per month to $4,300 per month for a one year lease.
  • One-bedroom furnished apartments ranging between 360 to 800 square feet averaged about $2,000 per month.  Unfurnished units were less, but had extensive wait lists.
  • Two-bedroom furnished apartments ranging between 420 to 1,150 square feet rented between $2,300 and $6,500 per month.
  • A few locations had three-bedroom options but were either not available, still under construction or occupancy was based upon income qualifications.

Many of the available units were pre-manufactured homes designed as two bedroom or multi-unit buildings.  It is not uncommon for landlords to charge additional rates for flat screen TVs, housekeeping, etc.

Long Term Planning

Companies whose goal is to establish a permanent workforce and demonstrate a corporate commitment to the community and local economy may need to consider additional incentives to encourage employees to move their families and call North Dakota home.

These incentives could include:

  • A housing allowance
  • Compensation for an increased commute
  • Transportation to and from the site from nearby towns 
  • In some areas, employers are building apartments for the employees
  • A short-term solution is to contact companies who provide emergency temporary housing

Long-term strategies can include contacting local government entities to see what public incentives can be offered to help the community grow.  When Walt Disney decided to build Walt Disney World in Florida, he incorporated the town of Buena Vista and was able to qualify for many forms of government support.