Local Officials Deserve Some Blame For High Rents In Oil Patch

Since it’s an election year, it’s time for an endless flood of negative stories about North Dakota’s oil patch. One of the most high-profile stories of late is this one from the Associated Press about rents in Williston rivaling those in urban places like Manhattan and Los Angeles:

A 700-square-foot, one-bedroom apartment in Williston costs an average of $2,394 a month, according to Apartment Guide, an online website for apartment hunters. The same apartment would cost $1,504 in the New York area, $1,411 in the Los Angeles area or $1,537 in the Boston area, the Williston Herald reported.

The population of Williston, in the northwest corner of the state not far from the Montana border, has more than doubled since the 2010 Census, with estimates of more than 30,000 people now within the city’s limits.

Given the explosion of population in what were, before the oil boom, largely stagnant communities with little growth, it’s hard to imagine how these spikes in rents could have been avoided. Supply and demand is an inexorable force, and the high rents are necessary in order to drive development of more supply in the most efficient manner.

Some loudmouths have cried out for rent control in the past, but that’s the surest way to protract, rather than alleviate, the rent problem.

But there are some local policies that have contributed to the housing log jam. “Officials in the heart of the North Dakota oil patch are continuing their efforts to rid the area of temporary housing,” reported the Associated Press back on February 8th, describing the decision by Williams County (Williston) to shoot down two permits for temporary housing.

“After month of behind-the-scenes work, Williams County has begun to initiate a plan to reduce the number of temporary housing units in the county,” reported the Williston Herald back in June of 2013.

Even as demand for housing drove housing prices through the roof, local officials in the oil patch have fought a war against temporary housing. This has put a tremendous amount of pressure on the market for permanent housing (apartments, homes, etc.).

The market for housing seems to be plateauing in the west, which is something the Williston Herald reported on a couple of days ago, but I doubt rents would have spiked so sharply, would have become so much more expensive, had local officials been a little more patient with temporary housing solutions.