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More Workers, Lighter Regulation Needed to Spur Home, Apartment Building in the Red River Valley, Experts Say

More Workers, Lighter Regulation Needed to Spur Home, Apartment Building in the Red River Valley, Experts Say

| By Helmut Schmidt |

This article originally appeared on InForum. The featured image is by Dan Francis Photography.

Construction is strong in the region, but with 16,000 more homes and apartments needed in the next decade, builders need more workers and fewer regulations to build enough housing to keep the local economy humming. That’s according to area and national home builders representatives, who spoke Friday during a news conference at the Building Industry Association of the Red River Valley’s offices.

Bill Rothman, president of the BIA-RRV, formerly known as the Home Builders Association of Fargo-Moorhead, said that growth in the region requires a strong building industry and affordable housing.

Rothman, also chief financial officer for Kilbourne Group, said the local housing market compares well to that of the U.S. as a whole, but that a study released by the Fargo-Moorhead Metropolitan Council of Governments in June 2023 projected that 16,000 more housing units will be needed in the next 10 years. One particular area of need is “missing middle” housing, such as townhomes, duplexes and triplexes, he said.

A region-wide partnership with state and local governments is needed to tackle the region’s housing challenges, particularly for workforce housing, Rothman said during the event at 1802 32nd Ave. S.

“We know that we can do more together,” he said.

Rothman said housing permits and valuations are regularly gathered for Fargo, Moorhead and West Fargo, the bordering towns of Dilworth and Horace, as well as Barnesville, Casselton, Harwood, Hawley, Kindred, Mapleton and Oxbow.

The most recent report found that through November 2023, those cities recorded more than $1.1 million in property valuations from 4,196 building permits for housing and commercial projects, remodeling, and public and miscellaneous projects.

The report by Brady Martz and Associates found that construction valuations were down about 15% from 2022, but the number of permits had risen 9%. Twinhomes were a bright spot, with permits up 773%, and valuations up 568%, Rothman said.

And among the cities, Moorhead recorded 111 permits in 2023, up 88% from the year before, and valuation rose to nearly $28.9 million, up 74% from the year before.

But multifamily construction in the area saw a 58% decrease in permits and a 31% decrease in valuations, Rothman said.

Jim Tobin, president and CEO and president of the National Association of Home Builders, also spoke.

Tobin said inflation appears to have been corralled. In mid-2022, it had topped 9%, but is now just over 3%. However, the 11 interest rates hikes imposed by the Federal Reserve since March of 2022, while effective, had “a chilling effect on the housing market across the country.”

Mortgage interest rates are now in a transition phase, Tobin said, down about 1% in the last two months, which is getting homebuyers back into the market.

Tobin said the NAHB expects the “new normal” for interest rates to dip to the 5-5 ½% range by 2025, which should loosen up the housing market.

Economic growth in the Red River Valley will need housing for workers if it is to continue, Tobin said. He urged lawmakers to support lighter regulations on housing construction to keep costs down.

“I am very, very optimistic about 2024 as a pivot year, as we move into the future. Now is the time” to get our house in order, Tobin said.

He said three “headwinds” must be addressed:

  • Workers in the industry are aging. About 400,000 trained workers are needed in coming years. Trades programs need to be reinvigorated, Tobin said.
  • Regulation has hurt affordability. Tobin said 25% of the cost of new homes is tied to rules at local, state and federal levels. For multifamily buildings, he pegs that cost at 43%.
  • Supply chains for lumber and other materials must be bolstered to be sure they can handle increased construction demands.

As part of the event, Rothman also explained the decision to change the name of the Home Builders Association of Fargo-Moorhead to the Building Industry Association of the Red River Valley.
The new name better represents the group’s “scope and vision,” he said.

“We are thrilled that this new name better reflects the makeup of our membership” and hope it encourages membership growth, Rothman said.

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