Poverty in North Dakota oil patch

[crimsonace]

This is where the free market fails, because not anyone can just come in and build apartments. You have to get zoning approval and build to a higher standard than current units.

Zoning approval and regulations are the opposite of the free market. They're governments stepping in -- meaning well -- to enforce a "community standard" that artificially inflates prices and deflates supply. It's essentially the homeowner's association with legal powers.

If a company didn't have to deal with zoning regulations, then it could very easily put up cheap apartments designed to last the length of the boom. But having to pay for attorneys to push it through the zoning process, get approval and get the contractors out to build it is a costly process, and if one waits too long, then it's a major money-losing proposition if the boom begins to wane when the apartments go up.

 

[Cubbiebum]

You didn't understand a word I wrote.

Then what were you talking about. I take "price caps" as capping rent based on what had been discussed in earlier posts.

Capping rent isn't going to eliminate the incentive for people to provide supply i.e. build houses. The houses will still sell instantly and the rent can easily be capped at a fair number that people can afford and landlords still make great money.

 

[YankeeFan]

You didn't understand a word I wrote.

Then what were you talking about. I take "price caps" as capping rent based on what had been discussed in earlier posts.

Capping rent isn't going to eliminate the incentive for people to provide supply i.e. build houses. The houses will still sell instantly and the rent can easily be capped at a fair number that people can afford and landlords still make great money.

Some of you really should have mixed in an economics or business class.

 

[Stitch]

You didn't understand a word I wrote.

Then what were you talking about. I take "price caps" as capping rent based on what had been discussed in earlier posts.

Capping rent isn't going to eliminate the incentive for people to provide supply i.e. build houses. The houses will still sell instantly and the rent can easily be capped at a fair number that people can afford and landlords still make great money.

Some of you really should have mixed in an economics or business class.

Price caps already exist with low-income housing. When I lived in Dickinson, my three-unit building was the only market-rate building in a complex of 15 or so larger buildings. The apartments were owned by a fairly large developer with complexes in several states that is building more housing in Dickinson.

Price caps aren't a deterrent if the developer is sticking with low-income housing instead of building market-rate complexes.

 

[Cubbiebum]

You didn't understand a word I wrote.

Then what were you talking about. I take "price caps" as capping rent based on what had been discussed in earlier posts.

Capping rent isn't going to eliminate the incentive for people to provide supply i.e. build houses. The houses will still sell instantly and the rent can easily be capped at a fair number that people can afford and landlords still make great money.

Some of you really should have mixed in an economics or business class.

I took both, in high school and college. What you wrote is simply wrong, as I explain but if you want to ignore it and just go with the claim that I didn't understand fine. I asked you to explain how I didn't understand it and you simply ignored that. I wonder why.

 

[I Should Coco]

I think part of the problem -- and correct me if I'm wrong, North Dakota folks -- is geography is limiting the "supply" of housing.

In rural areas like this, it's not feasible to live in, say, Billings or Bismarck and commute 100-plus miles to your oil job. Especially with the cost of gas.

In other, more densely populated parts of the country, if the rental housing is too steep in one area, you can rent cheaper somewhere else close by if you give up a few niceties (such as better schools, less crime, etc.)

 

[JonnyD]

And no one with a lick of sense builds new apartment complexes in oil boom towns.

But fear not: The market will sort it out!

I'm betting someone will

They figure there's room to drill 10,000 wells here over the next 20 years. So far Continental has poked just 20 wells. "We're in the first inning here," says operations chief Rick Muncrief. "Just getting started."

What could go wrong, both for Continental and Americaʼs nascent oil and gas boom? Oil prices would have to slump below $50 to make Bakken development uneconomic.

http://www.forbes.com/sites/christopherhelman/2011/06/27/tycoon-says-north-dakota-oil-field-will-yield-24-billion-barrels-among-worlds-biggest/3/

The boom is going on five years old or so now. They're still waiting for that someone who will.

 

[JonnyD]

Price caps wouldn't really help anything.

Right now, you have 10 people who want to rent somewhere to live, and 1 place for them to live. Whoever pays the most wins, and nine people are left out.

Cap the price, and you've still got nine people left out, you just have to make up some new system for deciding which nine.

 

[deskslave]

You didn't understand a word I wrote.

Then what were you talking about. I take "price caps" as capping rent based on what had been discussed in earlier posts.

Capping rent isn't going to eliminate the incentive for people to provide supply i.e. build houses. The houses will still sell instantly and the rent can easily be capped at a fair number that people can afford and landlords still make great money.

Some of you really should have mixed in an economics or business class.

You really should try living in an oil/gas boom area before you start spouting your one-size-fits-all market solutions theories.

Once again: No one with a lick of sense builds new apartments in oil/gas boom areas. Because as soon as oil prices drop or they find somewhere cheaper/less regulated to punch holes in the ground, those oil companies will be long gone.

 

[Azrael]

All societies try to restrict price gouging in times of real emergency. The question is, does the housing shortage in boomtown NoDak constitute a state of emergency.

It very well might if longtime residents not in the oil business are forced out due to spiraling costs. If you're losing all your nurses and librarians and firefighters and cops and butchers and bakers, etc., you might need local government to help stabilize rents and prices. Even if only temporarily.

 

[Cubbiebum]

All societies try to restrict price gouging in times of real emergency. The question is, does the housing shortage in boomtown NoDak constitute a state of emergency.

It very well might if longtime residents not in the oil business are forced out due to spiraling costs. If you're losing all your nurses and librarians and firefighters and cops and butchers and bakers, etc., you might need local government to help stabilize rents and prices. Even if only temporarily.

That is what is going on. Many can stay because they bought homes a long time ago but anyone new that is needed never comes because they can't find housing that is affordable. Parks and Rec are short staffed, police and fire departments, hospital, all service industry (restaurants, Wal-Mart, grocery store ... etc) despite pay very high wages ($10-12 to start at fast food). The shortage of people for theses jobs is only getting worse as time goes.

The newspaper I work at has the same problem. Hard to find housing when you pay $25-30k and no where to live. We have one designed because two quit and are short on sales people too. The only reason I was able to come here less than a year ago was because one of the other reporters had a very small two bedroom and was wanting a roommate.

 

[I Should Coco]

Thought of this thread last night as we ran a good AP article on the "man camp" style barracks that have sprung up around Williston:

http://www.google.com/hostednews/ap/article/ALeqM5iDP9sZ6wt8n0ICSV6iSku63qAsLQ?docId=98cb62e439a747ffba2ed7ee149a8cc9

People come here hopeful, drawn by the promise of jobs. But they probably also utter a few prayers, or expletives, when they realize just how far from home this place really is.

Or when they see the makeshift villages of narrow metal-sided buildings rising from the plains — temporary housing to accommodate what many are calling the largest oil boom in recent North American history.

They're called "man camps," because there's something else you'll notice when you arrive in this upper corner of North Dakota: There aren't a lot of women here.

"The best thing about a man camp? Uhhh, I don't know. I couldn't really tell you," says Jacob Austin, a 22-year-old line cook at a camp outside the small town of Williston.

After a 12-hour day, he stands on a pile of rocks in the camp parking lot, playing his guitar.

"I could tell you the worst thing about a man camp. It's a man camp, and not a woman camp."