Do not buy a home now in Dickinson, North Dakota unless the price is very low, and it is a property that you will be able to rent out in the future. I will thoroughly explain why I make this statement. But I need to caution you right away that you do not want to let your employer or your coworkers find out that you are having any hesitation in wanting to buy a home in Dickinson. Employers want to see that their employees are committed to being here, that they are dependent on their job here, and that they don’t plan on leaving. Your coworkers will tell on you, believe me they will. They all know that you are renting, and that you are looking at houses to buy. The husband needs to blame the wife, that she is just so picky, the wife says, “The yard is too dark, the yard is too small, the bathroom is too small, the closets are too small, the kitchen is outdated, the bedrooms are too small.” That way, everybody will just think that there is no pleasing his wife, everybody might even feel sorry for the husband, and have admiration for him in persevering with such a difficult wife. The wife can blame the husband for not being able to find the right house, and everybody will just think the wife is crazy. However, no one can find out that the truth is you are skeptical about buying a house in Dickinson right now.
Reasons not to buy a house in Dickinson, North Dakota right now:
- There is about a 50% chance that the oil field work in western North Dakota will continue to decrease, for years. Not only will oil field related jobs continue to decrease, all jobs in all areas of the economy will subsequently decrease. You can research this for yourself by reading about the history of North Dakota, and by talking to old local people that are not in business or real estate. A good website to read is “A Brief History Of North Dakota Oil Production”, which is a collection of newspaper articles from the past about the Oil Boom in the 1950s, and the Oil Boom in the 1970s. Supplement your reading by talking to old blue collar workers in Dickinson. They will tell you about the difficulty in getting any employment for ten years after the 1970s Oil Boom, and that all employment was very low wage. What I am telling you is there is a 50% chance that you or your husband may lose your job in a year or two, and that so will everybody else. You will not want to live here, because there will be very few jobs, and they will be low paying jobs. You will not be able to sell your house, because everyone else will be trying to sell their house too, and no one will have any money. This all happened before in Dickinson, go read about it for yourself, and go ask old local blue collar workers.
- This is somewhat related to Reason #1, but I need to explain this separately. I will begin by saying that the home prices are too high in Dickinson right now. But let’s just say that you find a home that you like for $350,000 right now, and that this price seems fair. Reading about the history of Dickinson, and talking to old local people, you find out what happened after the Oil Boom of the 1970s. Based on what happened in the past, this house that you bought for $350,000 right now, two years from now if the oil field work has continued to decrease, you might not be able to sell this house for $180,000 because everyone else will be trying to sell their house too, no one will want to live here, and no one will have any money. It is not that your house is worth so little money, it is that no one wants it, everybody wants to leave. Do you want to lose that much money? Are you prepared to leave the state and rent your house out? Is your house the kind of property that you could rent out?
- There is a 50% chance that the price of oil will climb, will remain high, and oil drilling operations will begin again in North Dakota. You can go and read for yourself news articles from all the different oil companies where they state, “In order for our company to begin again with drilling operations, the price of oil would have to climb to over $60 per barrel and remain there for several months before we would take any action. Then, at that time we would begin bringing personnel back in all areas of operations. It would take nine to twelve months to get enough personnel back to resume full operation.” What this means to me, is that as long as the price of oil is low, employment in North Dakota will not increase. There will continue to be new apartment buildings with occupancy rates of 30%. Apartment rents will continue to decrease, consequently house rents will continue to decrease. There is no justification for home prices to remain high, other than wishful thinking of the homeowners and real estate agents. Where are the owners of these houses that are for sale? Are they still making high wages in the oil field, probably not. How long can they afford to pay $2,000 to $3,000 per month mortgages, not forever, because if they could afford to wait, they would just wait for the Oil Boom to come back and make a profit. They are not waiting because they can’t wait, they need to sell, more and more each day as they keep having to pay their mortgages, and new apartment rents become lower and lower. A buyer right now can afford to wait for prices to drop in Dickinson. A buyer should look at everything that is available, know what is available, and wait. If the price of oil climbs for several months, and remains high for several months, and oil companies begin increasing their personnel, that might be the time to consider buying a house if you plan on staying in Dickinson and the oil field may be busy for more than a couple of years. But you will have several months of advance warning before you have to decide whether to buy or not.
- Since you don’t have to hurry up and buy anything right now, Keep Looking. I would not only be looking for my ideal house, I would be looking for something that might be a really good deal. This good deal could be a house closer to Belfield, South Heart, Richardton, or Gladstone, that may have so much land, have such a good view, or be so low priced that you feel it is too good to pass up.
To answer your question about real estate agents, property managers, and property investors gouging people. Prior to 2007, there were three bedroom/two bathroom older homes in Dickinson that sold for $30,000 to $40,000 and rented for about $400 to $600 per month. Retail workers, restaurant workers, construction workers, and retirees lived in these homes. By 2011 these rents had increased to $3,000 per month, about five to six times what they had been. The retail worker and restaurant worker wages increased by maybe 40%. The construction worker wages increased by maybe 50% to 60%. The retiree income might have increased by 5%. But the rent increased by 500%.
All over Dickinson, the price of goods and services increased. Grocery prices might have increased 15%, car repair prices might have increased 15% to %25. Everybody could understand 15% to 25% price increases, but not the 500% housing price increase. Everybody who moved to Dickinson to work was angry about the cost of housing and being ripped off. Everybody who moved to Dickinson decided right away that as soon as the Oil Boom was over, they were leaving. No one wanted to stay or could afford to stay after they lost their oil field job. The real estate agents, property managers, and property investors might have been able to gouge people for about five years, but the people got gouged so bad that they all left, and now nobody wants to live here. All the other business owners have the real estate agents, property managers, and property investors to thank for ruining what could have been permanent growth of the area. All over the United States for the next fifty years, people will be talking about how bad North Dakota was, and really most of everybody’s bad experience was being gouged on housing.