Fargo, N.D., real estate market, home sales going strong

— -- This spring, as the national economy sputtered, Fargo, N.D., endured the biggest flood in its history. A double whammy that sent the housing market and local economy into free fall, right? Not so much — the Fargo housing story is not what you might think.

After floodwaters receded, the local economy rebounded. By May, home sales seemed back on track, with sales up 22% compared with May 2008.

The city of about 90,000 residents survived the flood, and it has largely escaped the recession, too.

The unemployment rate is less than half of the national average, says David Flynn, director of the Bureau of Business and Economic Research at the University of North Dakota.

"Fargo has a very balanced and well-diversified economy," he says.

Its housing market avoided the boom and bust seen elsewhere. Yet Fargo is not in a bubble.

It has experienced some job losses. In May, California-based Alien Technology said that it is closing its Fargo plant, which employed about 30 people.

"Maybe there was a hiccup, but that was just a brief downturn," Flynn says.

First-time home buyers are driving the bulk of the current home sales, says Scott Breidenbach, president of the Fargo Moorhead Area Association of Realtors.

The $8,000 housing tax credit, low interest rates, healthy job market and good weather are attracting them, he says. Homes for $160,000 and less are being scooped up.

But homes for $400,000 and higher are moving much slower. "We have an overabundance of the high-end inventory," Breidenbach says.

If that's the area's major problem, Fargo's housing market is fortunate.

Unlike many other cities, it has hardly suffered from home foreclosures. During the surge in subprime loans, local lenders remained conservative.

"At the time, we weren't excited about that," Breidenbach says. "But we now are very thankful."