The lack of diversification in employment makes the residents as a whole more vulnerable to the next sector based bust (see dotcom crash).
If there is a larger supply of housing then more properties will be put on the market in such an event. This could exacerbate any fall in prices or result in a large number of abandoned properties which can be pretty damaging to a neighborhood.
We get a sort of similar effect here in Australia. A mine opens in the outback somewhere and prices rise rapidly in the nearest town(s). Then a whole heap of new housing gets built to meet the demand and make some profit. One day resource prices fall, the mines cut back on operations, and suddenly there is a housing oversupply and the whole local market falls pretty harshly.
If you were a local resident who lived there the entire time you would probably be feeling pretty shortchanged by the end.
The correct answer is probably to build some new housing supply but definitely not as much as the peak demands.