Mortgage & Rent in ND Counties

Frequently the discussion on the Jarrod Thomas Show turns to factors like income and costs which can be very tricky to measure. Why tricky? It is not the case that everyone buys the same basket of goods, has the same number of children, same family situation, and so on. We use measures like median and average because they are the best we have, but that does not make them great. Still, you do the job with what you have.

To begin here is a look at the median home value in ND counties.

The higher median values are mostly in the Bakken region and in Bismarck. The lone outliers, really, in the eastern part of the state come in Cass and Grand Forks counties. So in terms of the discussion about the cost of living in Grand Forks, the value/cost of housing would seem to fall into the higher cost end, though it is not the highest.

On the income side we always have so many measures to choose from that it is a bit unclear if there is a “best” one, or just good ones. I think consistency of choice is the only thing you really want to guarantee. As an example I use annual wage from the BLS.

Clearly this map shows the current state of wages in the state. The “hot” spot as such is in the Bakken area and represents the growth area of the state economy at the present time. The Red River Valley, for the most part, appears to be I the middle range of values.

Along with home price and income I have gross rent by county,

The situation with rent is interesting. Rent is highest in the Bakken region, confirming the high constraint in the housing markets there. However, it is also higher in Grand Forks and Cass counties which also seems to confirm the conventional wisdom about costs. So I created an estimated monthly mortgage payment for the median value home if you bought the home and locked in the current 30 year rate fixed. I then looked at the mortgage as a percentage of the monthly wage. That results in the following map:

While not the highest counties in the state Grand Forks and Cass are on the higher end of the spectrum clearly. Higher mortgage amounts as a percentage of income gives rent cover to be higher as well, which seems to be confirmed in the following map.

It seems that mortgage costs and rent tend to be higher together. The notable exception to this is the Bakken area. The costs are higher there, as are home values, but higher incomes offset some of the cost burden.

As a last item I look at the ratio of the estimated mortgage payment to the rent.

The breakdown of this is very interesting. Grand Forks and Cass are on the higher end of the spectrum. What is interesting though is that Grand Forks ratio is just over 1 in 2017. I am still thinking about the interpretation of this number but this would seem to mean that the expense of rent and the straight mortgage costs are about the same. There are other costs to consider as well to be sure that could tip the balance strongly, but it is interesting that the financial costs are so close. It also seems to confirm to me that these there is a situation of multiple equilibria in housing market costs.

There is more to look at and examine but this is an interesting first pass at localized conditions in terms of housing expenses and the cost of living.

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