The recent GF Herald article about housing prices brings to the forefront an issue with housing price calculations. The Herald used index numbers based on sales, which is problematic. What was the composition of sales in a given month? If there were only high value homes there could be sample issues. Also, when you attempt to make a comparison between two areas you have a double issue with the inconsistency of samples.
As a topic, the economics of housing in North Dakota creates a significant amount of debate. This debate lacks consistency, ground rules, and facts. Most of the discussion takes place under the umbrella term of “affordable housing.” On numerous occasions I indicated the inadequacy of this term. The first problem is that it seems assumed the mere assertion of an “affordable housing” problem is adequate substitute for actual evidence of a problem. The second is a failure to recognize the differing nature of a potential problem when we are talking about a retired couple, a newly married young couple, or a family of five. An “affordable housing” problem for each of these three groups could look significantly different and require drastically different solutions. How much of a solution do we want? There are times it seems people want a 100% solution, by which I mean everyone that wants a house should have one in their price range. It is not that kind of world! Let’s make sure it is on the block they want too.
We reached that level finally. The straw man of a housing price issue in Grand Forks (and North Dakota for that matter)pushed us all into the merry old land of Oz. The article in the Grand Forks Herald (September 21, 2014 “A price problem?) is the latest effort in a litany of faulty economic reasoning.
Housing remains a frequent topic of discussion for people in North Dakota. Most of the discussion falls under the heading of “affordability”, a suitably vague term essentially guaranteeing little to no progress on the issue, if it is a problem at all. What is the affordability issue? My suspicion is that people are thinking of something similar to the following graph:
The subtitle for this post could be why we need to resist the “temptation” to meddle with housing markets in North Dakota. There are times and places for interventions, but you need clear standards for action, clear goals, and clear exit strategies.