Today I looked through the free “Real Estate Preview”, published by the Dickinson Press & The Advertiser. There are a tremendous number of homes for sale in Dickinson and western North Dakota.
The house prices range from overpriced to ridiculously overpriced. In general the houses are priced about 50% above where they should be if they were to have any chance of selling. For instance, a house that might actually sell within several months at $200,000, is instead listed for $300,000. This is the case for listing after listing, page after page.
People in Dickinson are trying to sell their homes now for three main reasons. One, they recognize that the oil boom is over and that real estate prices are going to fall, so now would be a better time to sell rather than later. Two, they can not see being able to afford the home they are in now, now that the oil boom is over, because they have greatly reduced income. Three, they can not afford the home they bought in Dickinson, now that the oil boom is over, and they must leave Dickinson, or they have already left Dickinson.
Everybody in western North Dakota knows that the oil boom is over now. Everyone knows that real estate prices are going to drop. Everyone knows and can see that people are desperate to sell their homes now, for the three reasons that I just explained in the previous paragraph.
I don’t understand, and then again yes I do understand, how the several hundred home sellers and the one hundred real estate agents expect to sell homes for 50% more than what they could sell for now. Just for fun, to check the sanity and stupidity of the home sellers and the real estate agents, here are some questions that I would like to ask them:
- How is it that everyone knows that the oil boom is over, that now is the time to sell because real estate prices are going to drop, and you don’t know, that everyone knows?
- Real estate agents and home sellers, how is it that the oil boom is over, that there are several hundred homes for sale because the oil boom is over, people have lost their jobs, people have reduced income, people have had to move away, and you are pricing homes like there is an oil boom going on?
- Real estate agents and home sellers, can you describe the imaginary buyer that you have pictured in your mind, that is going to buy an old, not very attractive home on a city lot in Dickinson for $227,000, when most blue collar workers, trades people, and oil field workers have lost their jobs, are fearful of losing their jobs, or are working reduced hours?
The only sane recommendation that I could make to a home seller now would be, that if you want to sell your home within the next several months, you had better drop the price to the point that it is clearly a very good deal in comparison to the other several hundred houses that are for sale in western North Dakota.
The advice that I would give to a home buyer would be to wait. The home prices are going to drop, whether the home owners and real estate agents like it or not. My estimation is, that a home that is currently advertised at $300,000 now in the Dickinson area, should actually be priced at $200,000 in order for it to sell within several months. One year from now, this same home would have to be priced at $175,000 for it to sell within several months. Two years from now, $150,000. I base this on what happened in Dickinson after the oil boom of the late 1970s. It is not that the home is actually worth so much less, it is that people will be leaving Dickinson, so many houses will be for sale at the same time, and there will be not many people wanting to buy a house in Dickinson.
I want to point out and remind the people in Dickinson, especially the real estate agents and property owners, that if you had not tried to take advantage of the out of state workers so bad during the oil boom, they all would not have planned on leaving Dickinson. If the local people would not have been so hateful and hostile, Dickinson would have had permanent growth and a larger economy. Dickinson will possibly or likely see a decline in population that continues for the next twenty years. Other towns and cities that are welcoming and hospitable will grow and experience new development.