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Brandi Jewett, Forum Communications, Published November 15 2012

Report confirms housing in Grand Forks ‘unaffordable’

GRAND FORKS - The cost of housing for some renters and potential homeowners in Grand Forks has reached the point of being unaffordable, according to a report released by a city commission.

After almost three months of deliberation, the Blue Ribbon Commission on Housing released its report Wednesday detailing the condition of Grand Forks’ housing market.

Created in August, the commission was tasked with creating the report and developing strategies to solve some of the city’s housing problems.

“We need more affordable housing for low-income families and more housing for the elderly,” said commission member Terry Hanson.

His statement lines up with the report, which says the Grand Forks housing market is classified as “moderately unaffordable.”

Grand Forks’ median home price has been climbing since a dip three years ago — increasing from $153,300 in 2009 to $169,900 in 2012.

An increasing median home price is an indicator of market stress signifying that supply is not keeping up with demand, according to the report.

The number of homes selling for less than $150,000 is decreasing, dropping from 56.55 percent of Grand Forks’ total housing stock to 46.3 percent in the past five years, according to the report.

This increase in home prices contributes to the city’s affordability rating of 3.59. The rating is determined by taking the city’s current median home price of $169,900 and dividing it by the median household income of $47,400.

A rating of 3.0 is considered affordable, meaning an affordable home in Grand Forks should be $142,200.

Grand Forks received a lower affordability rating than other surveyed cities such as Fargo and Minneapolis, which have a rating of 3.0 and 2.5 respectively.

The report also noted Grand Forks rent costs increased by 32 percent, or $155 a month, between 2000 and 2010. This means a tenant would have to make $6,000 more in 2010 than in 2000 to pay rent.

Inflation between 2000 and 2010 was 24 percent.

As a result, 51 percent of renters in Grand Forks spend more than 30 percent of their income on housing costs. Fargo is the next highest with 44 percent and Bismarck rounds out the top three at 43 percent.

The report’s conclusion led commission members to begin proposing ideas that could make homes more affordable in Grand Forks.

Several noted they would be interested in seeing some sort of incentive provided to developers to encourage more housing construction.

Some members agreed it could be a good idea, but how to implement the incentive was a point of contention.

“We need to be sure the incentive is not just increasing the profit margin (for developers),” said commission member Meghan Marshall. “We need to see prices come down.”

Ideas for creating incentives included putting money into community land trusts, venture capital funds or matching funds for existing state programs. This money would then be used to alleviate some costs associated with developing land for housing or holding on to land until the homes are purchased.

Where the money comes from to put into these funds is still up for debate.

“When I hear the word ‘incentive,’ I think —and I’m sure other people do, too —what’s that going to do to my taxes,” said commission member Tom Ford.

While other members said their ideas wouldn’t influence property tax rates, other members were still torn over the idea of providing incentives at all.

“I’m struggling personally with making things easier for developers,” said Co-chairman Dana Sande. “Eventually somebody needs to take out their checkbook and pay for this infrastructure.”

With the report completed, the commission will continue discussing potential policy changes the city could pursue to solve some of its housing issues.